Bitcoin is like digital gold in many ways. Like gold, bitcoin cannot be created arbitrarily, It requires work to “extract” it. While gold must be extracted from physical earth, bitcoin must be “mined” through computational means.
Its also has a condition determined in its source code that it must have a limited and limited supply. For this reason, only 21 million bitcoins will ever be produced. On average, these bitcoins are offered to supply bitcoins at a fixed rate of one block every ten minutes. In addition, the amount of bitcoins issued in each of these above blocks is reduced by 50% every four years.
Bitcoin supply is limited to 21 million
In fact, there are only 21 million bitcoins that can be mined in total. 1 Once the miners have unlocked this amount of bitcoin, the supply will run out. However, it is possible that Bitcoin’s protocol will be changed to allow for a larger supply. What will happen when the global supply of bitcoin reaches its limit? This is a subject of much debate among fans of cryptocurrency.
Currently, about 18.5 million bitcoins are mined. This leaves less than 3, 000 that have yet to be introduced into circulation.
Bitcoin mining award
In the ten years since the initial launch of the bitcoin network, the first 16,500,000 bitcoins have been mined. With only three million more coins to go, it can seem as if we are in the final stages of mining. This is true but in a limited sense. While it is true that a large majority of bitcoins have already been mined, the timeline is even more complex.
The bitcoin mining process rewards miners with a portion of upon successful verification of a block. This process has adapted over time. When bitcoin was first launched, the reward was 50 bitcoins. In 2012 it was halved to 25 bitcoins. In 2016, it again halved to 12.5 bitcoins. On May 11, 2020, the reward again halved to 6.25 bitcoins. This effectively reduces the bitcoin’s inflation rate by half every four years.
This reward will be halved every four years until the last BTC is mined. In actuality, the last bitcoin is unlikely to be mined until around the year 2140. However, it is possible that the network protocol will be changed between now and then.