Newbe Question - -what happened when we reach the 21,000,000

[urlcool]

Hello

Totally new here. I I have read some of the guides here and the FAQ but I have two questions that I can not get aswers for..

1st. What happens when all 21,000,000 coins have gone? All I'm see is that never happen but they said that about ip4 and we run out of ip address. There are 2,000,000,000 people in the world which means that they less that 1 bitcoins each.

2nd question, in all the videos they say one of the big plus side of bitcoins that unlikely PayPal there no fees, but this not true as I see a transaction fee. Why the transaction fee for and why do we need it?

I think the idea is great just finding hard to understand.

Thanks

Rob

[organofcorti]

1. When all 21 000 000 coins have been mined, there will be 21 000 000 coins (minus lost coins). This will occur in the next 20 ~ 120 years. The coins are not gone, but in the hands of miners and investors, who will sell the coins to others for a price. The price will depend on the market value of btc compared to fiat (government currency).

Edit: So it doesn't matter if everyone in the world uses bitcoin and will have less than one coin each - if that is the case, the fiat price of a bitcoin will increase since bitcoins would be scarce. Bitcoins are currently divisible down to 8 decimals and can be subdivided further if necessary. It may get to the point that a car could be purchased for 0.1 btc.

2. Yes, there are transaction fees and anyone who says otherwise is unfamiliar with the bitcoin transaction mechanism. It's possible to make a transaction without fee, but the tranaction may not be completed, or may take a long time to complete. The transaction fee is necessary as a reward for miners to continue to secure the network after all 21 000 000 coins have been mined.

[DeathAndTaxes]

When all 21 000 000 coins have been mined, there will be ~21 000 000 coins (minus lost coins). This will occur in the next 20 ~120 years or so.

FYPFY

[organofcorti]

When all 21 000 000 coins have been mined, there will be ~21 000 000 coins (minus lost coins). This will occur in the next 20 ~120 years or so.

FYPFY

Ta.  

Hell, what's an (approximate) order of magnitude between friends?

[DannyHamilton]

Bitcoin is just a nickname for a very large unit of currency.  The actual base unit is often called a "Satoshi".  There are 100,000,000 Satoshi coins per Bitcoin.

This means that if 2,000,000,000 people are using the system there could be 1,050,000 coins each.

Obviously many will have much less than this, and some will have much more.

[urlcool]

Thanks for your reply.

It clears a lot up. So if I mining how do I get the transaction fee for other transactions. also if we have coins already surely if we send them to someone else they should go to directy to them as we use p2p.

Is this not the case?


Rob

[organofcorti]

.......So if I mining how do I get the transaction fee for other transactions.

You'll probably be pooled mining, so if as a miner you want your share of the transaction fee, mine at a pool that also pays the trandaction fee to miners. Not all pools do that yet.

..... also if we have coins already surely if we send them to someone else they should go to directy to them as we use p2p.

Is this not the case?

The coins don't go anywhere. Instead, imagine a huge ledger that everyone shares. If you send coins to someone else, a debit is written in the ledger for you, and a credit for whomever wished to credit the coins.

You might need to read the wiki for a bit - lots of good answers there.

[BitcoinAshley]

I thought the 21 million coins is an asymptotical limit? As in, we'll never actually reach 21 million. Also, we might assume that although far fewer coins will be created approaching the limit, each coin may be worth vastly more.

Also, it is free to receive transactions, and a certain range of Tx amounts can be sent for free.

This can also be confusing to merchants who are told they can receive USD from BTC transactions then find that the payment service charges a fee. "I thought Bitcoin was free!" Well, merchants who accept BTC directly (and use no external service) enjoy no fee for receiving bitcoins. Merchants who want to "have their cake and eat it too"  will be charged a fee for having their BTC sold for fiat currency and deposited via ACH transfer to their fiat bank accounts. Of course, the easy volatility work-around is to accept BTC directly but peg the price to a more stable currency like the *cough* U.S. Dollar.

Of course, a currency being stable does not mean that it is not constantly losing value, just like BTC is comparatively not stable, but is consistently increasing in value. So in the long run it's better for folks to accept & hold in BTC, which is ~free and doesn't result in slowly losing all your money, but many merchants simply don't trust BTC enough and don't want to expose themselves to it so pay for a service that converts upon payment.

[DeathAndTaxes]

Well 21M is an asymptotically limit however the current protocol is limited to 8 decimal places (1 satoshi = 1E-8 BTC).  The network actually has no concept of a "Bitcoin" all accounting is done at the satoshi level in pure integers.  So if you send someone 1 BTC the network sees that as a transfer with a value of 10,000,000.

Long story short although 21M won't be hit, the subsidy is right shifted every ~4 years and since all accounting is in integers that results in small amount of truncation.  The subsidy will be exactly zero in roughly 117 years.  Well more correctly at block 6,930,000 the subsidy will be zero and the total coins minted 20999999.97690000 BTC.  

That means without a change in the protocol 0.0231 BTC will remain unminted.  While there is some coins left even if Bitcoin became a single world currency the amount of coins left unminted would be a small value.  The world money supply is on the order of ~5T USD so if Bitcoin replaced all currency globally (unlikely but we can use this as an upper limit) that would put the value of 1 BTC on the order of $240,000 USD.  The unminted coins would be worth ~$5,500.  While that may sound like a lot in the first four years half would be paid to miners as a subsidy (0.5 "current satoshis" per block).  That would be a block reward worth about $0.02 USD.  Of course every four years the subsidy would decline.  ~$0.01 per block in the next four years.  At which point the number of unminted coins would be ~0.005775 BTC worth no more than $1,400 for all future miners combined.

TL/DR version:
The simplest way to explain all this without using an entire paragraph is to just say

There will be no more than 21 million Bitcoins minted.

  

[DannyHamilton]

TL/DR version:
The simplest way to explain all this without using an entire paragraph is to just say

There will be no more than 21 million Bitcoins minted.

Especially when you consider that due to a bug in someones mining code early on, some blocks didn't mine the full reward.  Therefore the total that will ever actually be created will actually be less than 20999999.97690000 BTC.