The term Bitcoin first became known to people in the year 2009 when a mysterious person named Satoshi Nakamoto developed it. It was created as a digital currency also known as cryptocurrency. It was not very famous back then. But in recent years, cryptocurrencies, especially Bitcoin, have seen a huge rise in popularity.
Along with mutual funds and stock markets, people have also started investing their money in Bitcoin and other such cryptocurrencies. Some people have also invested a lot of money to set up Bitcoin mining as well. Over the last few years, the value of Bitcoin has only increased thus, giving people more reason to invest in this particular cryptocurrency.
But, Bitcoin does not work on the demand-supply chain. Even though the demand for Bitcoin is rising steadily in the past few years, its supply is limited. No matter how many mines are being set up, there is a limit to the number of Bitcoin that can be mined. And recently on 1st April 2022, the 19 millionth Bitcoin has been mined.
This shows that there is only 2 million Bitcoin left to be mined after which the supply of Bitcoin will stop permanently. So what will happen after that? If you are interested in knowing everything about Bitcoin, how it is mined, and what effect Bitcoin mining will have in the future, this article is for you. I will be discussing all these topics here in detail.
What is Bitcoin?
Bitcoin is the first decentralized digital currency. Unlike traditional currencies that need to be regulated and controlled by the governments and the banks, Bitcoin can be transferred from one party to another without having to involve any intermediary in the whole transaction process.
Since its creation in 2009, its value has been increasing dramatically. The whole cryptocurrency system runs on a blockchain network. The digital payment method is based on cryptographic proof. All the coins mined are unique and encrypted. This also makes the whole cryptocurrency market very secure. But why do people invest their money in Bitcoin?
Most people buy Bitcoin as an investment and use it as a medium of exchange. The steep rise in the value of bitcoin has made people invest in Bitcoin and store it for a long time and sell it when its value rises. A lot of major companies like Tesla also said that they would accept only Bitcoin payments for the purchase of any of their products.
A year ago, El Salvador also became the first country to accept Bitcoin as a legal means of exchange along with their traditional currency. Even PayPal encourages all Bitcoin transactions. The popularity of all cryptocurrencies also lies in the fact that all transactions here are completely anonymous. Bitcoin gets transferred from one person to another where both parties do not have to disclose their identity.
The peer-to-peer network verifies every transaction that takes place. And where do users store their Bitcoin? Every Bitcoin gets stored in a digital wallet which can either be cold or hot. The wallet also saves all the important information like the address of the user as well as the addresses the user has made transactions with. The wallet can also be accessed with a private key that is known only to the user.
The anonymous feature of Bitcoin seems like a big threat to policymakers and the government. Even in the US the policymakers try to regulate the use of Bitcoin as almost anybody can purchase any illicit things without having to disclose their identity. That is also why Bitcoin now requires every user’s identity to be attached to every traditional currency.
As mentioned above, the supply of Bitcoin does not depend on its demand. No matter how high the demand for bitcoin is, its supply will always be limited. There can only be 21 million bitcoins out of which 19 million have already been created in 2022. So there are only 2 million more coins that can be created.
How Does Bitcoin Work?
So how does Bitcoin work? Bitcoin works on a distributed digital ledger also known as the blockchain. Since the creation of cryptocurrencies on this network, the blockchain network has changed the technology immensely. The blockchain is a type of public ledger that records all the transactions and other important data regarding the coins.
It is also the blockchain network that validates every coin and makes sure that a single coin cannot be used multiple times by one single holder. Every block in the blockchain network contains someone’s address along with important data about the transactions – date, time, and the user’s addresses. The blocks also store code for every single exchange.
The blockchain network is very secure and immutable. It prevents hackers from getting into the system and hacking or forging data stored in it. Other than that the identifying codes also make it difficult for the hackers to get hold of it. The blockchain network is also completely decentralized and not controlled by any organization, thus nobody is responsible for its security.
People store their Bitcoins in digital wallets and they can access them through their computers and smartphones. The wallets are also very secure. Some of the wallets allow the user to store some of the coins in the online wallet so that they can be used for daily purchases. But the majority of coins are stored in the offline wallet. This protects the user from the fraudulent activities of hackers.
You can easily send Bitcoins through these wallets from your address to someone else’s. All you would have to do is initiate a transaction or transfer request from your end to the recipient’s address. You would also have to select the amount of coin and it would get transferred easily.
For every transaction, a small amount also has to be paid by the bitcoin miner. The amount of fee charged also depends on the factors like how fast the coin transfer has to be confirmed.
How Does Bitcoin Mining Work?
The process of the creation of new Bitcoins is known as mining. Miners set up computers that are connected to a continuous source of energy to solve cryptographic and mathematical puzzles to mine new coins. There is a huge competition among the miners and thus the first one to solve the puzzles gets awarded with a coin.
In the initial years, when Bitcoin was not that famous among people, it could be mined in normal computers and processors or CPUs. But with their increase in popularity, the competition has also increased, and there are a huge number of miners out there trying to mine Bitcoins. In such a situation, normal CPUs would not bring any profit.
So Bitcoin users now use multi-graphic card systems, application-specific integrated circuits, etc to increase the puzzle-solving speed and reduce energy consumption. Back in the initial days, anybody could mine Bitcoin. But with time, the puzzles are getting challenging, and more technologically advanced computing resources are needed to mine Bitcoins.
Thus, now Bitcoin mining needs a lot of resources along with access to continuous sources of electricity. The miner must also keep their mining devices safe from cryptojacking as with the rise of Bitcoin’s value, such fraudulent activities have also become prevalent.
Where Bitcoin Is Heading?
In March 2022, Bitcoin had a narrow set back and thus the investors are worried about where Bitcoin is headed towards. Experts believe that in 2022, Bitcoin has only 2 options – it can either reach the US $ 100k mark, or the value of Bitcoin might drop down and disappear completely. Both of their extreme options are possible for Bitcoin this year.
In the year 2021, Bitcoin started with a lot of enthusiasm, but that is not the case in 2022. Bitcoin was just created a decade ago and this industry is still in a very infancy stage and is evolving every single day. That is exactly why every Bitcoin high is again followed by a low. The exact predictions are completely impossible.
Now that the 19 millionth Bitcoin has been mined in just 12 years, the next 2 million coins will not be mined before the year 2140. Also, right now every miner earns about 6.25 BTC per block being mined.
Experts believe that if you are investing in Bitcoin, do not look at it as a short-term investment, but as a long-term one. Over the past few years, Bitcoin has shown its volatility but in the long run, the value of Bitcoin has only increased.
Will Bitcoin Mining End?
Right now the Bitcoin miners are discovering new blocks every 10 minutes. And after solving a cryptographic puzzle they can create a new coin in the blockchain network. The maximum amount of Bitcoin that can ever be mined is 21 million. Now that the 19 millionths Bitcoin has already been mined, there is only 2 million more Bitcoin left to be mined.
Although 19 million Bitcoins have been mined in 12 years, experts believe that the next 2 million Bitcoin will not be mined before 2140. So yes, there will be a time when no more Bitcoin will be discovered no matter how much the demand rises.
With time, the block reward is also being reduced. It started at 26 BTC and then it got cut down to 12.5 BTC. Recently it has been cut down to 6.25 BTC. The next halving will approximately happen in 2024. So, Bitcoin miners will keep earning Bitcoins till the 21 millionth coin gets created but the reward margin will also keep reducing.
What Will Happen After the Last Bitcoin Gets Mined?
It will take another 120 years for Bitcoin to get completely mined. But what will happen after that? Bitcoin works on controlled supply meaning there is only a fixed number of bitcoins that can ever be mined. So after all the Bitcoins get mined, the miners will not have anything new to produce and thus, Bitcoin will also be used for transactions and will be transferred from one person to another.
Nobody knows what will happen after the last Bitcoin gets mined. But theoretically speaking, the miner might charge a lot of transaction fees so that they can make up for the lower amount of block reward. Although the transaction fee amount will depend on the network’s condition in the future.
Once the last Bitcoin gets mined, people all over the world will also try to buy at least one Bitcoin and that would lead to a buying frenzy. Thus, Bitcoin’s value as an asset will also increase. Also, even if 21 million coins get mined, there will not be 21 million of them in circulation as a huge amount of coins have been lost that can no longer be accessed.
Only a very small percentage of the population understands how it really works and how it can positively change the future of the global economy. So, it does not matter how much the value of Bitcoin rises in the future, it will still not be globally accepted unless a majority of the people start understanding it. But if that happens, an unlimited amount of money will flow into the market for a limited amount of Bitcoin.