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Author Topic: [2017-06-08] What Happens to Bitcoin After All 21 Million are Mined?  (Read 7383 times)
BurstIncomeAsset
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June 08, 2017, 08:18:05 PM
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Bitcoin is like gold in many ways. Like gold, Bitcoin cannot simply be created arbitrarily. Gold must be mined out of the ground, and Bitcoin must be mined via digital means. Linked with this process is the stipulation set forth by the founders of Bitcoin that, like gold, it have a limited and finite supply. In fact, there are only 21 million Bitcoins that can be mined in total. Once miners have unlocked this many Bitcoins, the planet's supply will essentially be tapped out, unless Bitcoin's protocol is changed to allow for a larger supply. Supporters of Bitcoin say that, like gold, the fixed supply of the currency means that banks are kept in check and not allowed to arbitrarily issue fiduciary media. But what will happen when the global supply of Bitcoin reaches its limit?
Effects on Bitcoin Miners

It may seem that the group of individuals most directly effected by the limit of the Bitcoin supply will be the Bitcoin miners themselves. On one hand, there are detractors of the Bitcoin limitation who that say that miners will be forced away from the block rewards they receive for their work once the Bitcoin supply has reached 21 million in circulation. In this case, these miners may need to rely on transaction fees in order to maintain operations. Bitcoin.com points to an argument that miners will then find the process unaffordable, leading to a reduction in the number of miners, a centralization process of the Bitcoin network, and numerous negative effects on the Bitcoin system.

This argument assumes that transaction fees alone will be insufficient to keep Bitcoin miners financially solvent once the mining process has been completed. On the other hand, there are reasons to believe that transaction fees and mining costs will even out in the future. Looking ahead by several decades, it is not difficult to imagine that mining chips will become small and highly efficient. This would reduce the burden placed on miners and would allow mining to become an activity with a lower threshold of initial cost. Further, transaction fees may increase, and this could help to keep miners afloat as well.
Price of Bitcoin

Bitcoin has already seen massive hikes in price in just the past few months. While no one is entirely sure how Bitcoin will continue to spread to the larger financial world, it seems likely that a limited supply of the currency may cause prices to continue to increase. There are also stockpiles of inactive coins that are held around the world, the largest supply of which belongs to the person or group who founded Bitcoin, Satoshi Nakamoto. Perhaps this supply, consisting of roughly one million Bitcoins, is intentionally being saved for a time when the global supply is facing increased levels of demand.

Read more: What Happens to Bitcoin After All 21 Million are Mined? | Investopedia http://www.investopedia.com/news/what-happens-bitcoin-after-all-21-million-are-mined/#ixzz4jRar1vTY
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June 09, 2017, 12:42:05 PM
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It is good to plan for and theorize what will happen after the last Bitcoin is mined. However we won't know ourselves. The last Bitcoin will mined in 2140.

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June 09, 2017, 01:36:13 PM
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Assuming that nothing significant will change when it comes to the fundamentals of Bitcoin in the far future, miners will solely rely on the income they generate from transaction fees. At some point, taking every possible factor into consideration, the income that miners will generate through fees, per block, will exceed what miners currently are earning. Not only in coin quantity, but due to the increased price, also in terms of the value measured in fiat. I don't see any problems here as miners will always have enough incentive to continue their work.

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June 09, 2017, 06:41:25 PM
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Quote
This argument assumes that transaction fees alone will be insufficient to keep Bitcoin miners financially solvent once the mining process has been completed. On the other hand, there are reasons to believe that transaction fees and mining costs will even out in the future. Looking ahead by several decades, it is not difficult to imagine that mining chips will become small and highly efficient. This would reduce the burden placed on miners and would allow mining to become an activity with a lower threshold of initial cost. Further, transaction fees may increase, and this could help to keep miners afloat as well.

That paragraph is wrong in many ways

The reason for the concern over the value of the block reward as the subsidy goes to 0 is that the security of Bitcoin depends directly on the value of the block reward. The value of the block reward determines the cost of a 51% attack.

Fees alone may not keep all miners today still in the mining business, but it will be enough for the miners that remain. The purpose of the block reward is not to keep miners in business. The efficient ones will remain. The inefficient ones will quit. It is not clear if this will result in more centralization of mining.

Furthermore, the subsidy will not abruptly drop to 0 at any point. It will be 1 satoshi for 4 years before dropping to 0, and it will be 3 satoshis for 4 years prior to that. The subsidy will drop below 1 bitcoin in about 13 years, but it will be another 100 years before it finally reaches 0.

Finally, the size and efficiency of mining chips have no effect on the cost of mining. If chips are cheaper and more efficient, then the difficulty will increase accordingly, making it just as expensive in the end. Overall, the total  cost of mining is primarily determined the value of the block reward and little else.

As an example, look what happened in the switch from GPU mining to ASIC mining. An ASIC device is 10000 times more efficient than a GPU, yet the amount of energy expended and the cost of mining have continued to rise.

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June 11, 2017, 05:48:14 AM
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what happens after all 21 million are mined is very simple to predict:
everything will depend on two criteria: bitcoin price and adoption
if the price is high enough,miners will be living off the transaction fees,if the hard/soft works increasing the block size are implemented successfully
we will see the average block fees go up from 2-4 bitcoins per block to 4-10,if not more
this should be enough to keep the network alive even after all of the coins are mined
if adoption is high enough,then many more people will be transacting bitcoin
leading to more demand and possible another block size increase,hence higher fees reward again

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June 11, 2017, 09:55:55 AM
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Why does this form part of news? This might as well form part of a wiki.
When news is slow, publications tend to recycle such old articles as news.

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June 11, 2017, 03:36:21 PM
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Why does this form part of news? This might as well form part of a wiki.
When news is slow, publications tend to recycle such old articles as news.
Maybe for someone the news is that the number of bitcoins is limited, and there are only 21 million of them.
It seems to me that bitcoin will remain popular even after all the coins have been mined

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