Fresh on-chain data shows that only 10% of Bitcoins are left to be mined. While these coins will take more than a century to be minted, the deflationary supply mechanism ensures that the block rewards will get smaller and smaller over time, thus creating ever shortening supply of the digital currency.
On Monday, Bitcoin miners officially mined the 18.89 millionth coin in existence. Now, we are close to the 18.9 million figure and that has started debate around the important milestone for the cryptocurrency. 90% of all Bitcoin has been mined already and that only took 12 years since its creation. Now, there are only 10% left for miners and that will take a significantly more amount of time than the first 90%, around 119 years to be exact. But why is it so?
The answer lies in the Bitcoin block reward halving mechanism. Every four years (almost), the supply of the digital currency is halved per block. When the network was started back in 2009, the block reward (also called the supply of new Bitcoins in the system) was 50 BTC. After the first halving in 2012, this was cut down to 25 BTC. Four years later, this was further cut down to 12.5 BTC in 2016 and then in 2020, it was further halved to 6.25 BTC. In 2024, it will be further sliced to 3.125 BTC and so on. This allowed a major part of the coins to be mined during the early years and that had big advantage for early movers as the supply became constricted over time and each halving led to a massive uptick in the price index itself.
As a result of this mechanism, by 2040, more than 20.92 million BTC will be mined and only 80,000 BTC will be left to be mined and the block reward will be less than 0.2 BTC. This monumental advantage is going to be useful for only a few more years and that is when miners and HODLers who want to just hold the crypto for a long period of time can reap the most rewards. This is where the dough of the crypto market is and that is where history will look back and see it as the early mover years.
With time, Bitcoin’s price will get higher and higher and will get more and more stable.
Image Source: pixabay.com
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