Bitcoin’s Biggest Question: What Happens After All Blocks Are Mined?
April 2018 marked a significant milestone in the history of Bitcoin (BTC) – its 17th million block was mined, out of a total of 21 million. However, with the benchmark taking only nine years to reach, the community fancies a related question: What happens after all 21 million blocks have been mined?
Understanding the Mining Protocol
If one were to apply simple mathematics to answer this question, they would think of the 21 million block milestone being fulfilled within the next decade. But, Bitcoin’s fundamental make-up make it progressively difficult for miners to “solve” new blocks, deeming any time prediction void if one doesn’t understand the underlying protocol.
Another essential characteristic is that of block “halving,” which cuts the miner’s reward in half every 210,000 blocks. For the uninitiated, miners receive a “reward” in the form of BTC for maintaining the network, thus giving them an incentive to provide their computing power.
At the time of writing, miners stand to make 12.5 BTC each time a new block is “unlocked.” According to BitcoinBlockHalf, this figure is on course to halve in May 2020 to 6.25 BTC.
Furthermore, with the current protocol, the 21 millionth block won’t be mined until 2140, 122 years from today.
Over 80 percent of the total Bitcoin took only nine years to be mined, and the increasing difficulty is shown in the graph below:
(Source: Blockchain Info)
As shown, the Blockchain’s size has increased proportionally:
(Source: Blockchain Info)
“The Last Bitcoin”
As mentioned above, miners are incentivized to keep the network running, getting paid in BTC, of which is priced at ~$9,090 at the time of writing. However, following the last block, the mining reward would cease to exist, and the source of income for miners would be via transaction fees for “validating” the blocks.
For the uninitiated, a transaction fee is charged each time a user decides to use the Bitcoin network. A higher transaction fee gives better incentive for a miner to confirm your transaction, and prioritize it to be included in a block, ensuring a faster process. In short, the higher the fee, the quicker the transaction.
It is important to note that the transaction fees would become the only incentive for keeping the network running 122 years later. This aspect is confirmed in Bitcoin’s whitepaper:
“Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.”
What Happens in These 122 Years?
Given the fact that Bitcoin has only been around for ten years, a lot of changes could govern the pioneer cryptocurrency’s future, including environmental activists protesting against bitcoin mining’s electricity usage, changing political stance, and regulatory and legal reforms.
In the fast-growing cryptocurrency sector, there’s arguably newer businesses and developer teams building faster systems, with some, like NANO, eliminating the transaction fees and providing near-instant payment speeds.
A strong competitor to Bitcoin is the upcoming Chia Network, which prides itself as being “environmentally friendly” as it uses a proof-of-space algorithm, as opposed to the proof-of-work consensus algorithm.
In a similar vein, smart-contract centered Ethereum is moving towards a proof-of-stake algorithm, alongside introducing “sharding,” thus giving Satoshi Nakamoto’s creation a serious run for its bitcoin.