Bitcoin has come a long way since it was created in 2009. What, however, has remained constant is its rigid boundary, set by its assumed creator, Satoshi Nakamoto, whose real identity remains a mystery. Nakamoto has set the upper limit at 21 million in the source code, which means that no Bitcoins above that number can be extracted or put into circulation. Nakamoto didn’t explain why the limit was chosen as 21 million, but many see it as a big plus for the world’s oldest cryptocurrency. They say the limited supply keeps the cryptocurrency scarce and will keep its price stable for years to come.
How many of them have been mined so far?
About 18.78 million Bitcoins have been mined so far, which means that 83% of all Bitcoins that will come into existence have already been put into circulation. That leaves just over 2 million Bitcoins to be mined. The market capitalization of all Bitcoins in circulation today is approximately $866 billion (about INR 64,35,270 crores). Bitcoin price in India was at Rs. 36.02 lakhs from 6pm IST on August 17th.
When will all Bitcoins be mined?
Just over a decade from now, nearly 97 percent of Bitcoins have likely been mined. But the remaining 3% will exist over the next century and the final Bitcoin will be mined around 2140 – more than a century later. The reason behind this slow mining is a process called halving. On average, Bitcoins are currently introduced at a flat rate of one block every ten minutes. But cutting it in half reduces the number of Bitcoins released by 50 percent every four years.
How does this hard limit benefit Bitcoin?
It’s simple economics. The rarer a commodity, the higher its value – albeit subject to its demand. Since there could only be 21 million Bitcoins, investors believe, the price of virtual currency is likely to rise as more people will want to buy it as they learn of its promise of “store of value”. This limited supply and growing demand have increased the value of Bitcoin.
By comparison, the “fiduciary” currency provided by governments around the world has no hard limits. Governments are free to print as many dollars or rupees as they need, but generally do not print beyond a limit as this will result in high and unsustainable inflation.
How has Bitcoin evolved over the years?
Economists are still studying the impact the hard cap has had on him, but apparently the price of Bitcoin has risen enormously since it was launched more than a decade ago. In 2009, mining a block yielded 50 Bitcoins (but the figure was lower). A year later, a person exchanged 10,000 Bitcoins for two pizzas.
In 2012, four years after the launch of the cryptocurrency, the first ‘half reduction’ took place. After that, each block started to yield only 25 Bitcoins. This made the virtual currency pick a lot of value, taking a Bitcoin to $200 (about Rs. 14,860) by the end of 2013. The second halving reduced this number further to 12.5 Bitcoins in 2016 and another half four years later. In 2020, each block extracted yielded 6.25 Bitcoins.
Last year, a Bitcoin was valued at around $10,000 (about Rs. 7.43 lakhs) and has since gone up four times. As Bitcoin became ‘harder’ to mine, coins gained value.
Can the hard limit be changed?
In theory, it’s possible. This would require most Bitcoin participants to agree to accept a lower amount for their stakes. So, thinking rationally, this is an unrealistic assumption that most people would agree to lose money on their cryptocurrency investment.