Will there ever be more than 21 million bitcoins?
Bitcoin has come a long way since its inception in 2009. However, what has remained constant is its strict limit, set by its supposed creator, Satoshi Nakamoto, whose real identity remains a mystery. Nakamoto set the upper limit at 21 million in the source code, which means that no more Bitcoins can be mined or put into circulation above that number.
However, Nakamoto did not give any explanation as to why the 21 million limits were chosen, but many see it as a huge advantage for the oldest cryptocurrency in the world. They say that the limited supply keeps the cryptocurrency in short supply and will keep its price stable for years to come.
How many of them have been extracted so far?
So far some 18.78 million Bitcoins have been mined, which means that 83 percent of all the Bitcoin that will come into existence has already been put into circulation. This leaves a little over 2 million Bitcoins to be mined. The market capitalization of all Bitcoins in circulation today is roughly $ 866 billion (roughly Rs. 64,35,270 crore). The price of Bitcoin in India stood at Rs. 36.02 lakhs at 6 pm IST on August 17.
By when will all the Bitcoins be mined?
In just a decade from now, almost 97 percent of Bitcoins are likely to have been mined. But the remaining 3 percent will come into existence over the next century and the final Bitcoin is said to 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 fixed rate of one block every ten minutes. But halving reduces the number of Bitcoins released by 50 percent every four years.
How does this strict limit benefit Bitcoin?
It is simple economics. The rarer a product is, the higher its value, although subject to its demand. Given that there could only be 21 million Bitcoins, investors believe, the price of the virtual currency is sure to rise as more people want to buy it as they learn of its “store of value” promise. This limited supply and growing demand have raised the value of Bitcoin.
In comparison, the “fiat” currency provided by governments around the world has no strict limits. Governments are free to print as many dollars or rupees as they need, but generally do not print beyond a limit, as doing so 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, but on the face of it, the price of Bitcoin has risen enormously since it was launched more than a decade ago. In 2009, mining a block produced 50 Bitcoins (but the value was less at the time). A year later, a person exchanged 10,000 Bitcoins for two pizzas.
In 2012, four years after the cryptocurrency was launched, the first ‘halving’ occurred. After this, each block started to produce only 25 Bitcoins. It made the virtual currency take on a lot of value, bringing one Bitcoin to $ 200 (roughly Rs. 14,860) at the end of 2013. The second halving further reduced that number to 12.5 Bitcoins in 2016 and another half four years later. In 2020, each block mined yielded 6.25 Bitcoins.
Last year, a Bitcoin was valued at around $ 10,000 (roughly Rs. 7.43 lakhs) and has since gone up four times. As Bitcoin became ‘more difficult to mine, the coins gained in value.
Can the hard limit be changed?
In theory, it is possible. That would require the majority of Bitcoin participants to agree to accept a lower value for their holdings. So, thinking rationally, this is an unrealistic assumption that most people would agree to lose money on their cryptocurrency investment.