One of the big unknowns is what will happen when Bitcoin number 21 million is mined or extracted. But for that it is necessary to emphasize that, in theory, more than 100 years are missing. One of the biggest questions currently in the cryptocurrency market is: what will happen when all the coins are mined? Most mineable cryptocurrencies have a maximum number of coins that can be obtained by mining. Bitcoin, Ethereum or Zcash are the most representative. Today we want to explain what will happen to Bitcoin when it reaches the top of 21 million coins, because last April 2017 we exceeded the barrier of 17 million mined coins.
There are just under four million Bitcoin left to mine, before we hit the top of 21 million. But don't worry, it is very likely that none of us are alive to contemplate that milestone, which is expected to happen in the year 2140, 122 years from now. How is this possible?
Bitcoin established within its blockchain that the difficulty (also known as the difficulty bomb) would increase as stages were burned. Every certain number of blocks the difficulty increases, because the number of coins that are delivered with the mining of each block in the chain is reduced. Bitcoin established that every 210.000 blocks, the reward for each mined block would be reduced by 50%. So each time the portion that touches us is less.
Therefore, these 210.000 blocks of this phase, equivalent to 2.625.000BTC, so the next group of 210.000 blocks, will be worth half, specifically 1.312.500BTC. Now, in just nine years, 80% of the available Bitcoin has been mined, which is equivalent to about 520.000 blocks. If we look at the graph that we leave you below, we see that the curve is smoothing.
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WHAT WILL HAPPEN WHEN THE LAST BITCOIN IS MINING, NUMBER 21 MILLION?
The current great reward makes the exploitation of Bitcoin mining farms profitable, especially for the value of this cryptocurrency. Typically, as the number of removable tokens is reduced, the price increases exponentially.
Although the great doubt is that it will happen when the 21 millionth Bitcoin has been extracted, since from that moment, rewards will stop being given for each block extracted. It is true that the blockchain needs validation and the blocks must be stored on the chain, so the miners will benefit from the transaction fees. These fees are nothing more than commissions and therefore, miners will have this incentive, but it can cause commissions to be high, so that operations remain profitable.
This could be the new base for the mining of the future, since since all Bitcoin is in 'circulation', only what is generated by the normal operations of the network will be obtained as a reward. This was already contemplated in the original document by Satoshi Nakamoto, who created the foundations of Bitcoin: 'Once a predetermined number of coins have entered circulation, the incentive can go completely to transaction fees and be completely free of inflation. '
THE WAY
There are more than a hundred years for this situation to occur. We must bear in mind that Bitcoin is young, very young, since it is barely ten years old and has a long life ahead of it and from this point to the last Bitcoin mined, an infinite number of things can happen.
Nakamoto already thought about this and established that the nodes were responsible for maintaining the blockchain and verifying the transaction. This would be to go from a current proof of work (PoW) trust system to a proof of consensus (PoS) system, using a longer chain: 'They [nodes] vote with their CPU power, expressing their acceptance of blocks Valid working on extending them and rejecting invalid blocks by refusing to work on them. All the necessary rules and incentives can be applied with this consensus mechanism '
The important thing is the last sentence, as it is very illuminating. It states that miners and exchanges have to operate in tandem, no matter what, since in the end, they are all critical to maintaining the network.
SEGWIT
If there is a field that has given a lot of war in recent months, it is the great problem of the scalability of Bitcoin, which, why deny it, is crap. Last year 2017, the Bitcoin network reached a critical point due to the size of the blocks and the costs of the transactions, the latter being a real nonsense.
Nakamoto in 2010 set a limit of 1MB per block, something that was fine for the time. This idea had the mission of stopping the miners that produced larger blocks, which could be rejected by the network and could cause a bifurcation of the network. At the time the limit was more than sufficient, due to the tiny number of transactions and the possibility of implementing changes later, if necessary, has already been established.
Bitcoin has grown in popularity and has brought with it the problem of the blocks being undersized. The Bitcoin Core developers worked and created the solution called Segregated Witness or SegWit, as it is known. This system basically separates the non-signature data with the signature data of each transaction, something that reduces the size of the transactions that are stored in the blocks. It also nullifies the malleability of transactions by removing the signatures of the transaction data, something that allowed the integration of Lightning.
SegWit was implemented in August 2017, mainly because the interested parties were large mining farms and companies that operate with BTC, which wanted a solution to the high commissions caused by the limit of each block.
The mess started when some wanted more. This is how SegWit2X was postulated, an evolution of SegWit that intended to increase the size of each block by 2MB. This proposal ran into three walls: the lack of protection of repetition, the need for a hardfork and the acceptance of the miners, or what is the same, the large mining farms. None passed. SegWit had full consensus, as Nakamoto stated in his whitepaper, but SegWit2X met with great opposition from the big mining farms.
CHANGES IN THE BLOCKCHAIN
The implementation of SegWit is not that it was immediate, far from it. Despite its introduction in August 2017, some peso exchanges have been reluctant to implement it. Coinbase and Bitfinex introduced this protocol in February 2018, which was nonsense. If we look at the graph below, we see that with the implementation of SegWit in these two exchanges, the fees or commissions have plummeted. Commissions are clearly seen to have dropped as SegWit has been implemented.
LIGHTNING NETWORK
SegWit has made it possible to implement a second improvement based on the Bitcoin blockchain network. The Lightning Network (LN) is trying to do the same as SegWit, but on a large scale.
LN is basically a payment gateway that users can open outside of the Bitcoin blockchain itself. This channel will be opened and recorded on the blockchain, but transactions will take place outside of this blockchain until the channel is closed. Users will deposit the BTC in this channel and carry out all the transactions they want. The conditions are that the transactions must be less than $ 100 and these gateways last about ten minutes, which takes to generate a new block. When the channel is closed, each user receives the BTC that they touch and everything will be registered in the blockchain. This will increase the speed of transactions.
CONCLUSION
The big question is what will happen to the miners when the 21 millionth Bitcoin is mined, they will live off the transactions, being the only incentive. The Lightning Network will by then be fully integrated and a large number of transactions will be recorded. This would affect the income miners receive and we could see an increase in commissions or individualized commissions per group of miners, entering a commission war. Be that as it may, there are more than 100 years for this to happen and others will have to see what to do.
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