Bitcoin had a total supply of 21 million, while 18 million of this supply was extracted during the 12 years it existed. Remaining supply is expected to be removed within a fairly long period of time by 2140. So do you ever think, “what happens when the last bitcoin is removed? what awaits bitcoin in 2141?” did this questions come? Even if you haven’t thought about it before, you must now be wondering the answers to these questions. Let’s take a look at the research on the subject.
Bitcoin (btc) is a mining asset, almost like gold. Bitcoin miners extract blocks from the blockchain network with high-energy computers and various hardware. Miner’s new block sticker means confirmation of transactions on the network, while a new bitcoin is also produced.
The total number of bitcoins miners produce per day decreases by half every four years. As an example, 800 bitcoins will be produced every day between 2016-2020, while 900 bitcoins will be produced every day between 2020-2024. This is why 18.5 million bitcoins can be produced in 11 years, while 2 and a half million bitcoins can only be produced in 120 years.
Formula explaining how the amount of bitcoin is restricted to 21 million;
What exactly do miners who play a key role in bitcoin do?
Bitcoin miners charge high rates due to many factors, such as electricity consumption, when removing blocks. There are two main revenue gates that miners rely on to cover this cost: the block reward from the blocks they produce and the transaction fees they receive from users.
Bitcoin miners receive a 6.25 btc reward for each block they issue. However, the average amount miners receive from constantly changing transaction fees is $ 3 as of december 2020. Along with the rewards and transaction fees they earn, miners are encouraged to keep the bitcoin network safe and approve new transactions. It is actually miners who keep the bitcoin blockchain network afloat.
According to bitcoin’s code, the block reward will not be distributed when the 21 million supply is reached. In this way, a revenue gate of miners will be completely disappeared. So what about what encourages miners in such a situation to still work, to approve transactions, to keep the network safe? In other words, what will happen in 2141?
There are two scenarios for the year 2141
Because miners receive rewards from each block they produce, it is suggested that this will affect them the most when the supply of 21 million is reached. Among the issues discussed is that it may not be possible for miners who make quite costly transactions to operate on the network without any reward incentives. However, there are also some predictions that miners will be able to actively compete and continue to make new transactions because of the fee on each btc transaction
In light of all this, there are two main scenarios that are focused on:
- scenario 1- miners will be satisfied with transaction fees: the bitcoin network will continue to trade.
- scenario 2- miners will not find transaction fees sufficient: the bitcoin network will be compromised.
Scenario 1- bitcoin network to continue processing
After the removal of the last btc in 2140, transactions on the network will still need to be approved, and this transaction will again be owned by miners. The argument put forward in this scenario is that miners will continue to work, content with the transaction fees they will earn from block transactions. Although miners will no longer be able to receive a large amount of btc rewards, it is thought that with the prospect of transaction fees rising, miners can make a satisfactory profit.
Transaction fees will be a driving force driving miners to work, according to an article published in hackernoon:
“With the depletion of bitcoin supply, a huge jump in price can be seen as a result of strong btc demand, which can lead to an increase in transaction fees.”
Another article supporting this scenario was published on fxcm. Shared article suggests that the btc price could rise as bitcoin supply reaches the upper limit, thus increasing demand. btc transactions, which rise with the increase in demand, may also be affected, and fees may increase. another paper on the issue says that transaction fees can reach a sufficient level for miners and that miners can continue their activities:
“Transaction fees can reach a level that will allow miners to make sufficient profits. if the whole world uses this digital currency as the primary exchange after all bitcoins are issued, it is likely that transaction fees will increase due to the increase in transaction demand.”
What if the fees aren’t enough?
Scenario 2-bitcoin network will be compromised
In this scenario, an argument is generated based on the bitcoin block size. An average block of bitcoin currently stands at 1 mb, and only 1 block can be extracted every 10 minutes. There is some debate over whether the block size, limited by satoshi nakamoto, could be increased in later times. there are those who argue that it is necessary to gradually increase the size of the block, while some say that it should remain so. so what does block size mean for miners?
Mentioned above bitcoin.com the paper also suggested that the block size, which will gradually increase, could negatively affect miners:
“if the block size continues to grow, the fees for transactions that users must approve will also fall. if we look at this possibility, miners will have to trade at low wages. this, in turn, could pose a threat to the bitcoin network.”
Addressing the same issue, paxful argues that as block sizes grow over time, transaction fees may fall and miners may be adversely affected. if transaction fees fall, the miners may have no motivation to approve the transaction because they will already be out of block rewards. Because miners are in a key position for network security, It can be said that in this scenario, the bitcoin network may be compromised.
Looking at the arguments presented in these two scenarios, it seems that it remains unclear what we will encounter in the coming years related to the supply of bitcoin. But this is for sure: 2141 will be a very important year for bitcoin.