Bitcoin reaches a key milestone: only 120 years left

According to a recent report by foreign media Coindesk, the 17 millionth Bitcoin will be mined in the next few days, which will be another important milestone after the 1 millionth Bitcoin was mined two years ago . As a result, investors, miners, exchanges, etc. related to Bitcoin will also face many variables.

According to the latest data disclosed by the Blockchain.info website, unless something unforeseen happens, the 17 millionth Bitcoin will be mined in the next few days, and with the mining of this Bitcoin, it will also mark a new milestone for the world's first cryptocurrency. According to the existing rules of Bitcoin, the total number of Bitcoins is 21 million.

This milestone, which will follow the mining of the 1 millionth bitcoin in mid-2016, is perhaps an important moment in the history of bitcoin as a whole. It is a reminder of the core computer science achievement that shared software creates digital scarcity.

In short, the Bitcoin code, copied and used by other cryptocurrency upstarts since its inception, ensures that only a certain number of new Bitcoins can be introduced into the economy periodically. Miners, or those who track Bitcoin transactions, earn this scarce data every time they add a new entry to the official record.

Nevertheless, there are still many variables in this process.

Because there are many small differences in how regular mining software is synchronized, it is difficult to predict when the 17 millionth bitcoin will be mined, or by whom. That said, this prediction is only relative.

Each Bitcoin block will generate 12.5 new Bitcoins, and it takes about 10 minutes to generate each Bitcoin block, which means that about 1,800 new Bitcoins can be mined every day.

Therefore, Alex Sunnarborg, partner of Tetras Capital, said in an interview with foreign media CoinDesk that the best way to look at this matter is to regard it as "a psychological barrier."

For example, Sunnarborg stressed that all bitcoins will be mined sooner or later, and that about 80% have already been mined. In other words, only one-fifth of the final supply is currently available to miners and future buyers.

Others see it as a sign of the technology maturing and an important achievement in its development.

“I think it’s awesome,” venture capitalist Tim Draper, who bought millions of dollars worth of bitcoin at a 2014 U.S. government auction, said of bitcoin.

“I bet in their wildest imaginations the founders never imagined that Bitcoin would become so important,” he said.

Other Views

There is also a view that this milestone can be seen as an important opportunity to educate users about all cryptocurrencies represented by Bitcoin.

For example, there is really no way to mine more Bitcoin unless all those operating the mining machines that mine Bitcoin decide to make changes (which is obviously not realistic in the current environment). This achievement is a technological reality that has played a key role in Bitcoin's connection to money, the economy, other scarce resources, and natural assets.

It is precisely because of this approach that financial professionals and readers of the Austrian School of Economics, who embraced Bitcoin early on, quickly realized the value of this feature, perhaps giving rise to the professional term "cryptocurrency".

Trace Mayer, one of the group’s most vocal members, summed up the idea in a recent tweet, arguing that governments could prevent users from holding Bitcoin in the future.

He wrote in his article:

Increasing the money supply means expropriating assets through inflation and can be considered a form of taxation without representation or due process of law.

Even if there were new ways to generate new Bitcoins, namely “mining,” it would be a compromise to the symbolism of gold.

Unlike the central bank issuing currency in the existing economic system, Bitcoin is created by a network that maintains blockchain technology. When a miner finds a valid hash value in a recent transaction and solves a problem in the Bitcoin protocol, he (she) will receive a "coin base transaction" as a reward for the node's hard work in accounting.

As mining comes to an end, it will become increasingly difficult to mine new bitcoins.

Bitcoin supply curve

Of course, over time, the way participants earn rewards is also changing.

When Satoshi Nakamoto mined the first Bitcoin block on January 3, 2009, he created the first 50 Bitcoins. When the first "halvening," or reward reduction, occurs, the reward will remain the same for the next 209,999 Bitcoin blocks.

In fact, this is not surprising. According to a set hard-coded schedule, the reward is cut in half every 210,000 blocks. The most recent "halving" occurred in July 2016, and the reward was reduced to 12.5 bitcoins.

This means that although there are only 4 million bitcoins left to be mined, if this trend continues, all of them will be mined within 9 years. If the "halving" happens again, the growth rate of Bitcoin's supply will slow down significantly.

On the Bitcoin subreddit, an anonymous moderator named BashCo plotted the trajectory of Bitcoin’s total supply (blue curve) against the currency’s inflation rate (orange curve):

Bitcoin is about to reach another milestone in its history. Does it really only have 120 years left to live?

Note: The picture comes from BashCo

As shown in the figure, assuming that the Bitcoin protocol remains unchanged (a new block is mined every 10 minutes on average, and the halving roadmap and supply cap are not adjusted), the last Bitcoin will be mined in May 2140.

The next 120 years

With that in mind, this chart tells us about this milestone while also hinting at something else that we’ve been missing — namely, that Bitcoin has been online for a long time.

In this regard, Jameson Lopp, chief engineer of the infrastructure framework at wallet provider Casa, said that Bitcoin can be divided, but even so, the smallest part of each Bitcoin contains infinite value.

"While 17 million bitcoins may sound like a lot, they are in fact very scarce - not even enough for every millionaire on the planet to own one," he said. "But luckily, each bitcoin can be divided into 100 million satoshis, so there are more than enough to keep them going."

However, the Bitcoin algorithm also has some "quirks".

First, Bitcoin will never really reach 21 million units, because unless the protocol changes, the total supply is likely to decrease by at least one. This is because, on May 17, 2011, a miner named "midnight magic" claimed that he only received 49.999999999 block rewards instead of the full 50 bitcoins, but the specific reason is still unclear.

In the future, it should also be made clear that the Bitcoin system will not stop functioning when the 21 millionth Bitcoin is mined. At that point, miners will be compensated entirely through the fees they have already collected (although some scientists are trying to predict whether this reward model will work in practice).

Overall, there are still many unanswered questions. If anything, this milestone may serve as a reminder of when Bitcoin was born, when it entered the public eye, and where it will go in the future.

In the words of senior developer Adam Back:

Bitcoin still has 4 million to go.