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The Future of Bitcoin After Every Coin Is Mined

bitcoin mining

The Future of Bitcoin After Every Coin Is Mined

It was not too long ago that Bitcoin, cryptocurrency and block-chain technology were subjects that were only discussed in a few small circles. Now these are household terms, and some of the largest and most influential companies in the world are developing applications and preparing for a world where cryptocurrencies are commonplace.

Despite all of the potential and excitement, cryptocurrency is still in its infancy, and there are many unknown factors on the horizon. Current estimates put a timeline on all Bitcoins being mined by 2140.  One of the most important issues in the future of cryptocurrencies is to know what happens after every single Bitcoin is mined.

Bitcoins and Bitcoin Mining

Bitcoin mining is the process that allows Bitcoin to function as a decentralized record of transactions. Sparing the unnecessary technical details, Bitcoin functions through the voluntary use of computing power to create a ledger of all bitcoin ownership at a certain point in time. The Bitcoin miners who “solve” this process for each point in time are awarded with a small transaction fee and the newly minted bitcoins that this process creates.

Bitcoin was designed from the beginning to have a decreasing and ultimately limited number of final Bitcoins from the mining process. As time passes, each Bitcoin reward for mining is halved, until the final tally of mined Bitcoins reaches 21 million. At this point, Bitcoin miners will simply be awarded the transaction fee, and there will be no more Bitcoins awarded for the act of mining.

Bitcoin After Bitcoin Rewards

The end of Bitcoin rewards for mining does not mean the end of the actual mining process that keeps Bitcoin functioning as a means of transaction and a store of value. Without this process, the entire Bitcoin system would break down.

This raises two interesting and important questions:

What happens to the value of Bitcoin?

What happens to the mining process?

The Future Value of Bitcoin

While nothing is certain, the generally accepted thought is that the value of Bitcoin will continue to increase as more transactions are performed through the same 21 million Bitcoins.

The more that people desire a form of currency to enact transactions, the more that the currency is worth. If you cannot mine more Bitcoins to meet the increasing demand for their ownership, then their value relative to all goods must necessarily increase.

The Future of Bitcoin Mining

The question of what happens to Bitcoin mining is far more interesting. Bitcoin mining is currently a major business. Most of the Bitcoin mining is performed by massive specialized farms in China where the necessary power input is cheap. If people are no longer rewarded with Bitcoins for performing the mining that keep the Bitcoin system running, then why would they continue to support that system?

While there is a lot of discussion in the Bitcoin community about changing the current rules for Bitcoin, if nothing changes, then the reward for mining will necessarily need to come solely from the transaction fees. Every miner will be paid according to the amount of transactions that they support.

At the moment, the transaction fees for Bitcoin mining represent a relative pittance compared to the value of the Bitcoin rewards, so either the value of the transaction fees will need to increase or the cost of performing Bitcoin mining will need to fall, most likely through advances in the block-chain technology that underpins the Bitcoin system.

The Murky Future of Bitcoin

No one really knows what the future holds for Bitcoin. There are very serious debates about how Bitcoin will adapt after reaching the 21 million maximum and whether these original rules need to be changed.

If you are considering investing in Bitcoin or other cryptocurrencies, be sure that you are following these debates, as their outcomes will have a major influence on the future of Bitcoin and other cryptocurrencies.