Bitcoin has become immensely popular around the globe. The last 12 months were monumental for the growth of this cryptocurrency. This fame came with a challenge. One that experts saw coming but, probably not so soon. It’s a known fact that there are just 21 million Bitcoins. The cap was put by Bitcoin creator Satoshi Nakamoto to make the cryptocurrency scarce and control inflation that might arise from an unlimited supply.
The concept is simple – if there is limited supply of Bitcoin, its value will eventually rise as there will be more demand and less supply. The challenge is that Bitcoin reached 90 per cent of its maximum supply earlier this month.
According to research by blockchain.com, 18.89 million Bitcoins have already been mined, and they are already circulating in the market. It took nearly 12 years for Bitcoin to sell close to 19 million coins. This means that only 2 million Bitcoins are left to be mined. So, what happens when Bitcoin runs out of supply?
It’s obvious that once the remaining Bitcoins are mined, Bitcoin as an asset, will become more scarce and miners will be dependent on transaction fees, instead of block rewards.
For those who are unaware, the miners are awarded a block of Bitcoins for performing a set of transactions successfully, as part of the mining process. The reward is halved every four years. In 2008, the miners would get 50 Bitcoins. In 2012, this was halved to 25 Bitcoins, later to 12 Bitcoins and by the end of 2024 it is expected that miners will only earn 1.56 Bitcoins for verifying a block of transactions.
The process will continue till every single Bitcoin is mined. As per blockchain.com, the remaining supply of Bitcoins will be mined by February, 2140. The price will go up with each year, needless to say.
Honestly, it’s tough to predict how Bitcoin and the rest of the crypto market will react when the Bitcoin supply runs out. The crypto is relatively young, and a lot will depend on how the demand shapes up.
One thing is for sure, that Bitcoins will no longer be mined and fees will become the primary source of revenue. Ultimately, Bitcoin’s network may function as a closed economy, in which transaction fees are assessed much like taxes are.
As of now, about 3.7 million of Bitcoins mined, have gone out of circulation. They have been lost because of loss of access to one’s private key, death and other reasons. It hasn’t had a negative impact on the value of crypto.
As far as the investors go, this may shape up another interesting scenario. As mentioned before, there is a general belief that Bitcoin prices will go up once the supply reduces. But, nothing is for sure.
There is also a great chance that Bitcoin has a more defined purpose by the time its supply runs out. For example, India has been trying to classify cryptocurrencies as a digital asset. This way you may not be able to purchase anything using Bitcoin but can use it as a store of value. Just like Gold.
At this point, it’s difficult to accurately predict the future of Bitcoin but the possibilities seem endless.