Since the cryptocurrency was invented in 2008 by an unknown group of people or just one person under the name of Satoshi Nakamoto, Bitcoin has gained popularity in the past few years due to the fact that its limit is capped at 21 million bitcoins in total. Since we are welcoming you to this article about how many Bitcoins are there left, you are probably familiar with their role and how are they used. Nevertheless, let us take a few moments for a small introduction to freshen your memory with some key points.
Bitcoins can be described as a decentralized digital currency, meaning that they can be sent from user to user without a central bank or administrator, and without the need for any intermediaries.
These transactions are verified through cryptography and recorded in a public distributed ledger called a blockchain. Hence, Bitcoin can be exchanged for other currencies, products, or services.
In 2017, it was estimated that there were around 3 to 5.8 million people using a cryptocurrency wallet, and most of them using bitcoins. Over the years, bitcoin was many times perceived as a controversial topic as bitcoins were regularly used in illegal transactions. Also, there are other important factors that one may call worrying such as theft from exchanges, price volatility, and an incredible amount of electricity used by miners in order for the bitcoins to be produced.
Even so, bitcoins have frequently been used as an investment even with several regulatory agencies issuing investor alerts about bitcoin.
How Many Bitcoins Are Currently in Circulation?
As of today, there are 18.63 million bitcoins in circulation. However, this does not mean that there are 18.63 million Bitcoins that the world can dispose of. From those 18 million, around 1 million were stolen with the help of various hacks, and 4 million bitcoins are lost. Moreover, “lost” does not mean that they actually disappeared. Bitcoins that have been reported lost are bitcoins locked away forever.
Now, 28% of the total bitcoins circulation belongs to big players referred to as the Whales (or people who own a huge amount of bitcoins). In other terms, from the total 18 million Bitcoins we subtract the stolen 1 million, the 4 million reported lost, and the 5 million that belong to the Whales. That leaves us with 44% of the total technical bitcoins in existence which is about 8 million disposable bitcoins.
Every 10 minutes a new block is mined. The process known as mining is what keeps the blockchains consistent, complete, and unalterable by repeatedly grouping new transactions into a block. Witch each new block that is mined, 6.25 bitcoins are added into circulation. So the average amount of bitcoins mined per day is 900.
When Will The Bitcoin Circulation End And Why is There a Limit?
The bitcoin blockchain was designed in a certain way so that it releases a fixed number of bitcoins which are obtained through mining. This mining reward system is also built in a specific way in order to decrease after every 210,000 mined blocks. This phenomenon is known as bitcoin halving.
Therefore, every four years the reward will be cut in half until there will be no reward for bitcoins at all due to reaching the halving point.
To understand why these cryptocurrency’s wonders were designed to end one day let’s remember why bitcoins were created in the first place.
The concept behind bitcoins has the image of strong opposition or an alternative structure of transactions someone might say, to the centralized banking system. Since banks have the ability to curb or dilute the supply of money in the market, it is in their power as well to have control over the purchasing power, inflation, and the economic conditions overall.
Bitcoins were created to represent the opposite of this system which means a decentralized form of network. The purpose behind bitcoins was, therefore, to design an automatically adjusting supply of bitcoins so that no entity could influence the supply.
By saying that bitcoins represent a decentralized form of network this is what has to be taken into account:
- Bitcoin does not have a central authority.
- There is no central storage.
- There is no central server as the bitcoin network is peer-to-peer.
- The ledger is public so that anybody can store it on their computer.
- The ledger is maintained by a network of equally privileged miners meaning that there is no single administrator.
- Anyone is able to become a miner if they wish to.
- Until a new block is added to the ledger, it is not known which miner will create the block so the additions to the ledger are maintained through competition.
- Bitcoins are issued as a reward for the creation of a new block.
- Anyone can create a new bitcoin address (a bitcoin counterpart of a bank account) without needing any approval.
- Anyone is able to send a transaction to the network without needing any approval; the network merely confirms that the transaction is legitimate.
Why Is The Limit Important?
Let’s imagine that there was no limit to bitcoins. What would have happened then? Given an infinite supply, people would have continued to mine as much as they wanted. This would prevent bitcoins from gaining value and representing a good investment vehicle.
Furthermore, let’s pretend that only the supply is capped. Everything should be good then, right? That’s not the case if the mining block reward would not decrease geometrically. If the mining block reward remained constant and didn’t decrease every four years, it would have taken around 8 years t6o reach the supply cap. Let’s keep in mind that presently it’s been 12 years since bitcoins are in the game.
If the general adaptation had ended in 8 years, it means that all the BTC would have been mined by early adapters and there would be nothing left for the late enthusiasts. This would destroy the idea of a stable, successful digital currency.
Moreover, you might ask yourself why no one thought of somehow forging bitcoins. There is no proof that such attempts never existed but it can be said with confidence that attempts as such will never be successful. Since the number of bitcoins in circulation can be easily and correctly estimated at each time, any additional coins that were forged will stand out and can be effortlessly traced to their not-from-the-block origins. As the network grows, it is exponentially harder to change the code.
However, miners might not be so motivated in the near future considering the fact that transaction fees may not be enough to keep them financially afloat. Hence, there is a possibility that the mining fees will be increased, which will most likely discourage the users to continue to transact in BTC.
What Is The Current Situation And What Will Happen After All Bitcoins Are Mined?
As it was mentioned before, around 18 million bitcoins have already been mined. This means we are close to the 21 million limits. As over 85% of the bitcoins are already in the game and the reward decreases over time, the remaining 20% percent will be generated in the next 120 years. Now we know what you must be thinking: How could 80% of bitcoins be mined in 12 years and the remaining 20% in 120 years?
Let’s not forget one important thing. The mining reward is currently set at 12.5 BTC per block mined, meaning that since the launch in 2008 it has halved two times already. in 2012 and 2016. It was set to half in July of 2020, reducing the reward even further to 6.25 BTC per one block that is mined. Bitcoins have been around since 2009 and most likely Satoshi has more of them than anyone.
With every halving as well, technically the worth of circulating bitcoins left tends to spike, indicating a rush of interest in the ever-declining supply of BTC, However, an ultimate end to the reward mechanism may have interesting implications. Once all the bitcoins will be mined and the limit will be hit, transaction fees will be the main source of income for the miners.
These transactions are defined using a Fourth-like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction.
As we mentioned before, about 120 years from now, in the year 2140, the nodes will have effectively mined all 21 million bitcoins reaching the maximum supply. There are about 200,000 miners. They have 12% of the network hash rate. Assuming all pools have similar numbers, there are likely to be over 1,000,000 unique individuals mining bitcoins.
The reward for bitcoin when it first launched compared to now differentiates enormously which is very natural due to the halving. The reward was 50 bitcoin when it first launched. In 2012, it halved to 25 bitcoin. In 2016, it halved again to 12.5 bitcoin. As of February 2021, miners gain 6.25 bitcoin for every new block mined—equal to about $294,168.75 based on February 24, 2021, value.
There is certainly an end to the bitcoin supply, however, this does not necessarily mean a negative outcome. A known limit for cryptocurrency means that some value is guaranteed and can be considered a safe investment. It is also possible that developers might agree to unanimously increase the supply to maintain the stability of the network.
Taking into account new protocols, methods of recording and processing transactions that may impact the mining process, starting from January 2021 the Office of the Comptroller of the Currency (OCC) announced that it is now authorized to use cryptocurrency as a method of payment.