Barely a couple of weeks after bitcoin entered the ninth year of its existence, it passed yet another significant milestone on January 13, 2018, when the number of all coins mined reached 16.8 million. Of the total 21 million bitcoins expected to be extracted in total, 80 percent have thus far been mined. The remaining 4.2 million bitcoin will continue to be mined over time until they are all in circulation.
Supply and Demand
According to the white paper written in 2008 by the creator of bitcoin, Satoshi Nakamoto, the limited supply is a feature designed to deliberately induce scarcity in the cryptocurrency. With time, as the amount of currency in circulation continues decreasing due to various factors, its value will rise proportionately. In this way, bitcoin has relied on the fundamental economic principle of supply and demand for the past nine years since its inception.
While miners are currently paid 12.5 BTC as a reward for mining a single block, the bitcoin protocol dictates that the figure is halved every 210,000 blocks. Assuming that the average time between the mining of each block is 10 minutes, it is estimated that the next halving will occur two years from now, or more specifically, sometime in June 2020.
Similarly, halvings will continue to occur pretty much indefinitely, with the last bitcoin not expected to be mined before 2140. The next halvening event, however, will only reduce the reward to 6.25 BTC per block.
For several years now, the primary motivation for miners to continue mining bitcoin was the BTC reward given out after a block had been mined. In recent times though, with bitcoin suffering from scalability issues and an overall decline in dominance at the hands of other altcoins, miners have earned more money through transaction fees than block rewards.
After news of bitcoin reaching new highs reached mainstream media in 2017, a surge of new investors flooded the cryptocurrency market. Based on data available from blockchain.info, miners facilitating transactions between Bitcoin wallets earned close to $23 million in total on December 21, 2017, when the price of the cryptocurrency reached an all-time high near $20,000.
The possibility of increasing the total bitcoin supply cap cannot be ruled out either, even if the likelihood of it happening is relatively low. Moreover, 51 percent or Sybil attacks are substantial risks to the future of not only bitcoin but almost all significant cryptocurrencies.
However, considering the overwhelming support of the Bitcoin Network, as well as the untenable amount of effort required to facilitate such an attack, such manipulations were never attempted. In fact, the only instance of such an attack occurring was against Krypton, an Ethereum-based token, in August 2016.
Even though bitcoin miners are profiting from the currency’s surging transaction fees, it is negatively affecting adoption rates and harming its reputation among newer investors. Despite this problem, however, Bitcoin still dominates the entire cryptocurrency market by a significant margin regarding market cap, price, and even brand recognition.