Bitcoin is one of the most popular and the first cryptocurrencies to be released in the market for trading. Since its release in 2009, this cryptocurrency coin has performed really well, and most traders prefer buying and selling Bitcoin to earn profits.
But there’s a major catch with Bitcoin and its potential to be the only currency in long-term trading. Bitcoin is designed to be digital gold that has similar properties to physical gold. This means that the maximum supply of bitcoin is limited to a finite number of coins.
The maximum number of bitcoins that will be released and mined is 21 million coins. Every 10 minutes a new block is created to release new coins. However, at about four years after 210,000 blocks,the number of coins that can be minted is reduced by half.
So, what does it mean for bitcoin as a long-term trading cryptocurrency coin? What will happen once bitcoin reaches its maximum supply value of 21 million? Let’s find out!
Will Bitcoin Ever Reach its Maximum Supply Value of 21 million?
The short answer is NO! Bitcoin will never reach its maximum supply value of 21 million. Here’s why!
Bit-shift operators are a special type of arithmetic operator that is used by the Bitcoin network to calculate its value. These bit-shift operators usually round off the decimal value to its nearest smallest integer. But when does this happen?
This happens when the value of a bitcoin block is divided in half. This gives rise to a new reward with decimal values that are expressed in Satoshi. Now Satoshi is the smallest unit to measure bitcoin and can’t be divided in half. Hence, bit-shift operators will round the decimal value to the nearest whole integer.
This system of rounding off Satoshi values during new blockchain reward generation is the reason why Bitcoin will never reach its maximum supply value of 21 million.
Due to this system, it is unlikely that the last bitcoin will be released before the year 2140! However, it will be interesting to know what will happen if bitcoin reaches the maximum supply value of 21 million.
What Happens If Bitcoin Reaches Maximum Supply Value of 21 million?
If bitcoin reaches 21 million which is highly unlikely, no new bitcoins will be released in the market for mining. The transaction will still be processed but any trader/miner will gain profits only from transaction fees.
If in 2140, there are several bitcoin transactions, miners will be able to get profits from transaction processing fees. However, if bitcoin serves as storage of value, miners will still be able to get some profits but with lower transaction processing fees.
However, some negative outcomes can be anticipated if bitcoin mining rewards are not so profitable.
- Selfish Mining: In this situation, a group of miners will keep valid blocks in hiding and release them as orphan blocks. In such a case, there will be an increase in block processing times and high fees will be required to be paid when these blocks are released in the market.
- Miner Cartels: Yes, miner cartels are very much a possibility if bitcoin reaches a maximum supply value of 21 million. A group of miners will try to control the mining resources and demand high transaction processing fees.
Bitcoin’s market is continuously evolving. It is highly unlikely for bitcoin to reach its maximum supply value. However, if it does, bitcoin traders will experience some negative impact. Now, what happens in the future remains to be seen. The truth is that you can keep investing in bitcoin for the near future without worrying too much!
Keep reading more news and insights on the cryptocurrency market at Coin Informer!