Bitcoin will be huge

What Happens to Bitcoin After All 21 Million Are Mined?

Bitcoin is like digital gold in many ways. Like gold, bitcoin cannot simply be created arbitrarily; it requires work to «extract.» While gold must be extracted from the physical earth, bitcoin must be «mined» via computational means.

Bitcoin also has a stipulation—set forth in its source code—that it must have a limited and finite supply. For this reason, there will only ever be 21 million bitcoins ever produced. On average, these bitcoins are introduced to the Bitcoin supply at a fixed rate of one block every ten minutes. In addition, the number of bitcoins released in each of these aforementioned blocks is reduced by 50% every four years.

Key Takeaways

• There are only 21 million bitcoins that can be mined in total.
• Once bitcoin miners have unlocked all the bitcoins, the planet’s supply will essentially be tapped out.
• As of February 24, 2021, 18.638 million bitcoins have been mined, which leaves 2.362 million yet to be introduced into circulation.
• Once all Bitcoin has been mined the miners will still be incentivized to process transactions with fees.

The Supply of Bitcoin Is Limited to 21 Million

In fact, there are only 21 million bitcoins that can be mined in total. Once miners have unlocked this number of bitcoins, the supply will be exhausted. However, it’s 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 the subject of much debate among fans of cryptocurrency.

Currently, around 18.5 million bitcoins have been mined. This leaves less than three million that have yet to be introduced into circulation.

While there can only ever be a maximum of 21 million bitcoins, because people have lost their private keys or have died without leaving their private key instructions to anybody, the actual amount of available bitcoins in circulation could actually be millions less.

Bitcoin Mining Rewards

The first 18.5 million bitcoins have been mined in the ten years since the initial launch of the Bitcoin network. With only three million more coins to go, it might appear like we are in the final stages of bitcoin mining. This is true but in a limited sense. While it is true that the large majority of bitcoins have already been mined, the timeline is more complicated than that.

The Bitcoin mining process rewards miners with a chunk of bitcoin upon successful verification of a block. This process adapts over time. When bitcoin first launched, the reward was 50 bitcoins. In 2012, it halved to 25 bitcoins. In 2016, it halved again to 12.5 bitcoins. As of February 2021, miners gain 6.25 bitcoins for every new block mined—equal to about $294,168.75 based on February 24, 2021, value. This effectively lowers Bitcoin’s inflation rate in half every four years.

The reward will continue to halve every four years until the final bitcoin has been mined. In actuality, the final bitcoin is unlikely to be mined until around the year 2140. However, it’s possible that the Bitcoin network protocol will be changed between now and then.

The Bitcoin mining process provides Bitcoin rewards to miners, but the reward size is decreased periodically to control the circulation of new tokens.

Impacts of Finite Bitcoin Supply on Bitcoin Miners

It may seem that the group of individuals most directly affected by the limit of the bitcoin supply will be the Bitcoin miners themselves. Some detractors of the protocol claim that miners will be forced away from the block rewards they receive for their work once the bitcoin supply has reached 21 million in circulation.

But even when the last bitcoin has been produced, miners will likely continue to actively and competitively participate and validate new transactions. The reason is that every Bitcoin transaction has a transaction fee attached to it.

These fees, while today representing a few hundred dollars per block, could potentially rise to many thousands of dollars per block, especially as the number of transactions on the blockchain grows and as the price of a bitcoin rises. Ultimately, it will function like a closed economy, where transaction fees are assessed much like taxes.

Special Considerations

It’s worth noting that it is projected to take more than 100 years before the Bitcoin network mines its very last token. In actuality, as the year 2140 approaches, miners will likely spend years receiving rewards that are actually just tiny portions of the final bitcoin to be mined. The dramatic decrease in reward size may mean that the mining process will shift entirely well before the 2140 deadline.

It’s also important to keep in mind that the bitcoin network itself is likely to change significantly between now and then. Considering how much has happened to Bitcoin in just a decade, new protocols, new methods of recording and processing transactions, and any number of other factors may impact the mining process.

The latest significant events are the Office of the Comptroller of the Currency (OCC) letter in January 2021 authorizing the use of crypto as a method of payment, Paypal’s introduction of Bitcoin, and Tesla’s acceptance of Bitcoin to purchase Tesla cars and solar roofs. Tesla reversed course on accepting Bitcoin in May 2021, citing environmental concerns around the resources required to mine Bitcoin.

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Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bradley Keoun

Muyao Shen

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bitcoin’s prices reached an all-time high of above $40,000 less than a month after breaking $20,000 for the first time. Since the start of the most recent rally, ostensibly begun in October, its value has increased fourfold.

So for pros and newbies alike, or if you want to be the cryptocurrency expert at your next Zoom party, it’s natural to ask: Why are prices going up, and will bitcoin crash?

Bitcoin was invented just 12 years ago as a new type of electronic payment system, built atop an Internet-based computing network that no single person, company or government could control. The reality is the bitcoin cryptocurrency’s trading history is so short, with methods for valuing the asset still largely untested, that nobody really knows for sure what it should be worth now or in the future.

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That hasn’t stopped digital-asset investors or even Wall Street analysts from putting out price forecasts ranging from $50,000 to $400,000 or beyond.

Based on CoinDesk’s reporting, here are a few key reasons why bitcoin prices have recently rallied:

• Demand from institutional buyers, many of them eyeing bitcoin as a hedge against inflation. The cryptocurrency is seen as a hedge against inflation because, under the network’s original programming, only 21 million bitcoins can ever be created; so there’s a contrast with central banks like the Federal Reserve that can decide based on a committee vote to print more money. Big asset managers including Tudor Investment and Guggenheim Partners have announced bitcoin purchases or wagered on prices using futures contracts on the Chicago-based CME exchange. Even old-line Wall Street firms such as Morgan Stanley have weighed in with bullish pronouncements. Analysts at JPMorgan Chase, the biggest U.S. bank, recently predicted a price of $146,000 over the long term.
• The U.S. dollar’s decline in foreign exchange markets. The U.S. Dollar Index, a gauge of the dollar’s value against major world currencies like the euro and Japanese yen, slid 6.8% in 2020 and is down again in 2021. That’s key for bitcoin because the cryptocurrency’s price is mostly denominated in U.S. dollars. Possible reasons for the greenback’s decline include the Federal Reserve’s $3 trillion-plus of money printing over the past year, which is roughly three-quarters of the entire amount previously created in the U.S. central bank’s 108-year history. Images of protestors storming the U.S. Capitol on Wednesday probably didn’t burnish America’s leadership role on the global stage, and now many economists are predicting that big spending plans under a Democratic-controlled government would lead to new stimulus bills and potentially outsize government budget deficits for years to come. Much of those extra costs could be financed through additional Fed money printing.
• Retail purchases. Many individuals are speculating on bitcoin prices, and it’s become increasingly easy to buy bitcoin, with big services like PayPal enabling purchases last year. Analysts for the digital-asset firm ByteTree noted this week that blockchain data appear to show a high concentration of bitcoin purchases in the amount of $600 — the same amount as the American stimulus checks sent out in the latest U.S. coronavirus emergency aid package.

All this may have led to a tremendous rally over the past few months. But could bitcoin prices crash? Of course they could, several analysts told CoinDesk.

The cryptocurrency’s price is notoriously volatile, and substantial and unexpected price swings aren’t uncommon. Below is a sampling of comments from cryptocurrency analysts and other financial experts on how a pullback might look, and what might cause it.

• Bitcoin “has been and remains extremely volatile,” said Joe DiPasquale, CEO, BitBull Capital, a cryptocurrency-focused hedge fund. As recently as Monday, he noted, after prices had climbed to a new all-time high, they tumbled almost $7,000. “What causes this is that people can use lots of leverage, so they can easily get washed out.” He sees a correction as possible, though there appear to be plenty of interested buyers around $28,000, so that level might function like a price support.
• There hasn’t been a single year since 2013 when prices have not fallen at least 25% from a high point reached earlier in that year, said Gavin Smith, CEO of the digital-asset firm Panxora. He said he wouldn’t be surprised to see bitcoin prices rise to $70,000 or $80,000, nor a setback of 40%. Medium term, he’s bullish: “Over a three-year period, this is a great asset.” But over the long term, there’s a risk that technological developments could overtake bitcoin. “Even with quantum computing, there’s nothing on the horizon that indicates that could happen,” he says, “but it’s always dangerous to completely ignore the risk.”
• Bitcoin prices could rally two to three times from their current level before falling back to about where they are now, said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing exchange-traded fund, which invests in blockchain-related stocks. That would imply a retracement of more than two-thirds from that hypothetically new all-time high. “What’ll cause a crash more likely is overexuberance on the upside. I don’t think we’re there yet.”
• “There will be swings, and yes, the swings will be wild,” said Denis Vinokourov, head of research for the cryptocurrency prime broker Bequant. “You have a lot of retail flow that tends to panic.” He sees prices going up in the long term, at least partly based on the bullish expectations of big Wall Street firms. “Can it go to $4,000? Yes.” One potential trigger for a rapid sell-off could be any actions brought by authorities against the company behind tether (USDT), a privately issued, dollar-linked digital token known as a “stablecoin” that has become a key source of liquidity in digital-asset markets. New York State prosecutors are currently battling Tether in court due to its finances.
• “The history of financial markets is the history of bubbles,» said James Angel, Georgetown University finance professor. He notes that authorities could move to crimp the bitcoin rally if they start to get worried that it’s becoming a threat. “Almost everybody who tries to start their own money does so in competition with a national currency, and it usually gets shoved aside by regulators.”
• «While we’re currently seeing an unequivocal expression in the market’s bullish sentiment, a correction could well be on the horizon,» said Sui Chung, CEO of CF Benchmarks, a cryptocurrency provider. «This is a natural part of market mechanics. While it may dampen near-term enthusiasm, it will ensure future price rises remain grounded.»
• “There is likely to be profit taking along the way, causing temporary dips,» said Guy Hirsch, managing director for the U.S. at the trading platform eToro. «But given the extraordinary amounts of adoption by institutions, it would be a surprise if bitcoin dropped below $20,000 any time soon.”

So for the Zoom party, you can tell them: Yes, according to the experts, a crash is probably coming but that’s typical for bitcoin, and if history is any guide, prices will probably recover.

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BTC: Why will 1 Bitcoin really be worth more than USD 1 million?

And. At what price and at what market capitalisation Bitcoin will be a true currency substitute?

There are a number of forecasts that see the Bitcoin at 1 million and more. Most recently, Jesse Lund, Global Head of Blockchain Solutions and Digital Currencies at IBM , gave the 1 million forecast in an interview in February 2019.

I tried to analyze this value from a purely macro-economic perspective. And by now I come to the same result of USD 1 million. Rather the value of the Bitcoin will be even higher, because many Bitcoins are already lost. In the end, there might be 16 or 17 million bitcoins that can be used.

In the following line, I will briefly present my insights to you and invite you to discuss .

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1. When does a currency become a currency?

We see three main currencies currently. Dollar, Euro and RMB (China). Dollar wants to remain the leading currency. Euro wants to become an alternative. And the Chinese want to create a new Asian reserve currency with RMB. Of course there are other important currencies. But I will leave them for now.

The first question is. Which smallest unit does a currency need? In the case of the dollar and the euro , it is Cent. At RMB it is a Fen. So 1/100. Especially for currencies with similar values, the «psychological exchange» is quite easier. Since we can imagine the value better. Question therefore. How high would the value of a Bitcoin or a Satoshi have to be, so that we can deal with it well? Relatively easy to answer: 1 Satoshi = 1 Cent (Penny). By th way. It is important that we focus on the usability of Bitcoin and not on the Bitcoin price. Only from a high market capitalization on is there a real usability. And this market capitalisation should be at least at 1 million, otherwise Bitcoin would maybe remain a speculative object and would not become a real currency.

1 BTC = 1,000,000 USD = 21,000,000,000,000 USD Market capitalization (21 trillion)
1 BTC = 100,000 USD = 2,100,000,000,000 USD Market capitalization (2,1 trillion)

For comparison:
The monetary supply m2 2017/18 from
China

25 trillion USD
USA

14 trillion USD
EUR

14 trillion USD
The total amount of gold in the world has a current value of 6 trillion USD

Why is a high market capitalisation easily possible? From today’s point of view this is just 21 times the market capitalization of Apple or Amazon. Lucid Investment Strategies believes that Bitcoin could go as high as $10 million per Bitcoin if Bitcoin were to emerge as a solution to the global debt crisis. For comparison, the market capitalization of the 100 largest companies worldwide is currently around 15 trillion, perhaps even more. The current global debt level is around 250 trillion. US national debt around 22.03 trillion US dollars. By the end of 2020 at the latest, many countries will have to put the financing of large parts of their national debt on a new basis. The International Monetary Fund (IMF) has identified debt as one of the major risks for the global economy.

Conclusion: Macro-economically, Bitcoin can become a real alternative currency. Requirement the price rises.

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2. What «technical» law speaks for it?

There are some who doubt the following approach, but I think it makes sense to discuss Moore’s Law. Moore’s Law says that the technical performance of computers is growing exponentially. More specifically, the number of transistors in new processors doubles every 12 to 18 months. Moore’s Law can be applied to all digital technologies. The Bitcoin price can also be modelled with Moore’s Law or exponential growth.

However, the Bitcoin price is growing even faster than the performance of computers. For Bitcoin , the price has even doubled every five to eight months to its peak at 20,000 USD. The starting point for the forecast was chosen when the Bitcoin cost more than 10 dollars for the first time. Based on the forecast, a Bitcoin will reach one million dollars by 2028 at the latest.

I think that 1 million is also the limit around that the price will oscillate at the end.

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3. What are the costs for producing a Bitcoin?

Current estimates assume that the production of a Bitcoin will cost around 300,000 dollars in 2022. Another aspect that speaks for a rising price. The probability that Bitcoin will go against zero is very risky. Because only that would be the actual alternative.

Look at my red lines in the Chart. How high is the probability that Bitcoin will follow a course along the red dotted lines? The entire crypto market must collapse. For this case the market is already too large. I am writing this because many people compare the crypto market with the tulip market hundreds of years ago. The cryptomarket is no longer a closed system. It is a global phenomenon with market power.

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4. Will the whole banking system change?

The landscape of banking, lending and payments will change radically. The most experts now agree on this. Paper money will be an obsolete model for the coming decades. What remains are real values such as real estate, gold and silver and other commodities and, on the other hand, digital currencies, which are instruments of value «transport».

More than 7.6 billion people live on Earth in 2019. The world’s population is growing by over 200,000 people a day. Every year, the population of the earth increases by more than 80 million. According to the German Foundation for World Population, this corresponds roughly to the population of Germany. This fact alone, that billions of people will soon be able to trade with Bitcoin worldwide, changes the perspective on banking and the Bitcoin-1-million-dollars-Forecast-Idea again.

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