What Happens to Bitcoin After All 21 Million Are Mined?
One of the chief characteristics of Bitcoin (BTCUSD) is its limited supply. Other forms of money, including fiat currencies, can be printed at will by central banks—i.e., they have unlimited supply.
Bitcoin inventor Satoshi Nakamoto capped the number of bitcoin at 21 million, meaning there will only ever be 21 million bitcoins in existence. On average, these bitcoins are introduced to the Bitcoin supply at a fixed rate of one block every 10 minutes. In addition, the number of bitcoins released in each of these aforementioned blocks is reduced by 50% every four years. By August 2021, 18.7 million bitcoins were available, leaving roughly 2.3 million to be mined.1 The supply limitation makes Bitcoin scarce and controls inflation that might arise from an unlimited supply of the cryptocurrency.
As Bitcoin reaches its capped supply, its economics will alter. The incentives for various members in its ecosystem, such as miners and traders, will change. For example, miners may rely less on block rewards and more on transaction fees to earn revenue and profits for their operations. The cryptocurrency’s network will also transform, and its participants will be different from the retail traders that populate its current ecosystem.
However, given the cryptocurrency’s relatively undeveloped ecosystem, it is difficult to predict with certainty the effect of Bitcoin reaching its capped supply.
What Happens When All 21 Million Bitcoin Are Mined?
A consequence of Bitcoin not reaching its planned cap is that it leaves open the possibility that the cryptocurrency’s network will remain functional for a long time after 2140. No bitcoins will be issued, but transaction blocks will be confirmed, and fees will become the primary source of revenue. Ultimately, Bitcoin’s network may function as a closed economy, in which transaction fees are assessed much like taxes are.