Are You Aware of the Fact That the Supply of Bitcoin Is Limited?

Are You Aware of the Fact That the Supply of Bitcoin Is Limited

There are a lot of theories for the founder of bitcoin Satoshi Nakamoto for keeping the supply of bitcoin only limited. However, the majority of the people hold the belief that this was his attempt to produce a digital currency without inflation. This has led to a lot of questions being asked, like just how long does it take to mine the bitcoins? How will this affect the Bitcoin miners? If you want to invest in bitcoins, you can visit bit-indexai.net.

Reasons behind keeping the bitcoin supply limited

There are a lot of similarities that exist between gold and bitcoin. Both gold and bitcoin are believed to have a limited supply and the maximum amount of bitcoins that can be mined is 21 million. Just like gold, bitcoin cannot be created all of a sudden. Though, gold has to be extracted by digging out the earth while on the other hand, bitcoin has to be mined through computational powers.

All 21 million bitcoin have already been processed

It is believed that miners produce new bitcoins on their own, but it’s not the case. In actuality, Satoshi Nakamoto processed all 21 million bitcoins on the same day he launched it.  The actual job of a miner is to protect the network and process the transactions of a bitcoin. A successful miner is believed to find a new block every 10 minutes by solving cryptographic equations and he can also add it to the blockchain of Bitcoin.

Blocks are similar to the journal and are filled with the transactions of bitcoin that have not been passed yet. In return for this service, miners are paid fees in form of new bitcoins.

When will all the bitcoins be mined?

In the release event of Bitcoin V.0.1, the founder of bitcoin made a one-sided offer for the people who are ready to fulfil his distribution agreement.  The miners would be successfully rewarded with the bitcoins every time they secure a network and process transactions of Bitcoin. The bitcoin agreement represented the rate at which miners would be awarded for their service and it also included a statement that this rate would be cut down to half every four years till all the bitcoins are extracted.

It also concluded that once all the bitcoins are mined the transaction fees system will take place instead of rewarding. Initially, every miner used to receive 50 bitcoins as a reward for finding a new block. This was reduced to half at 25 in 2012 and after 4 years it was again halved. Currently, miners only receive 3.125 Bitcoin.

How will it affect miners once all the bitcoins are mined?

Bitcoin’s limited supply of 21 million, connected with the system’s dependency on miners’ service,  bothers most bitcoin fans. The miner’s main motive to provide their service is the bitcoin rewards. However, the founder of bitcoin has already provided the answer to this question in its announcement event. It was mentioned that once the supply of bitcoin reaches its limit, the bitcoin rewards will be replaced by the transaction fees system. However, when all the bitcoins will be mined the miners may consider raising the transaction cost to cover the revenue loss in the end.

If the cost of bitcoin doesn’t increase in the future(which many experts believe to happen because of the shortage of fresh bitcoins), the rewards for discovering bitcoin blocks will be dropped notably. Even though the supply of bitcoin is limited, the reward system will continue to exist to motivate the miners to keep supporting the system.

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