Bitcoin has come a long way since it was created in 2009. What has remained constant, however, is the hard limit, set by its supposed creator, Satoshi Nakamoto, whose real identity remains a mystery. Nakamoto set the cap at 21 million in the source code, meaning no more Bitcoins above that number can be mined or put into circulation. Nakamoto did not explain why the limit was chosen as 21 million, but many see it as a huge advantage for the world’s oldest cryptocurrency. They say the limited supply keeps the cryptocurrency scarce and will keep its price stable for years to come.
How many have been mined so far?
About 18.78 million Bitcoins have been mined so far, meaning 83 percent of all Bitcoin ever created has already been put into circulation. This leaves just over 2 million Bitcoins to mine. The market cap of all Bitcoins in circulation today is approximately $866 billion (approximately Rs. 64,35,270 crores). Bitcoin price in India stood at Rs. 36.02 lakhs from 6pm IST on 17th August.
When will all Bitcoins be mined?
In just ten years, almost 97 percent of Bitcoins will probably have been mined. But the remaining 3 percent will emerge in the next century, and the last Bitcoin would be mined around 2140 – more than a century later. The reason behind this slow mining is a process called halving. Currently, Bitcoins are introduced at a fixed rate of one block every ten minutes on average. But halving reduces the number of Bitcoins released by 50 percent every four years.
How does this hard limit benefit Bitcoin?
It’s simple economics. The rarer a commodity is, the higher its value – albeit subject to demand. Since there could only be 21 million Bitcoins, investors think, the price of the virtual currency will surely rise as more people want to buy it, as they learn more about the “store-of-value” promise. This limited supply and increasing demand have boosted the value of Bitcoin.
In comparison, the “fiat” currency provided by governments around the world has no hard limits. Governments are free to print as many dollars or rupees as they need, but they usually don’t print it beyond a limit as this will result in high and unsustainable inflation.
How has Bitcoin evolved over the years?
Economists are still studying the impact the hard cap has had on it, but on the face of it, Bitcoin price has skyrocketed since it launched more than a decade ago. In 2009, mining one block yielded 50 Bitcoins (but the value was less then). A year later, a person exchanged 10,000 Bitcoins for two pizzas.
In 2012, four years after the cryptocurrency’s launch, the first ‘halving’ took place. After this, each block started yielding only 25 Bitcoins. It caused the virtual currency to gain a lot of value, by the end of 2013, one Bitcoin rose to $200 (about Rs. 14,860). The second halving further reduced that number to 12.5 Bitcoins in 2016 and by another half four years later. In 2020, each block mined yielded 6.25 Bitcoins.
Last year, one Bitcoin was valued at around $10,000 (about Rs. 7.43 lakhs) and has risen four times since then. As Bitcoin became ‘harder’ to mine, the coins gained in value.
Can the hard limit be changed?
In theory it is possible. That would require a majority of Bitcoin participants to agree to accept a lower value for their holdings. So, thinking rationally, this is an unrealistic assumption that most people will agree to lose money on their cryptocurrency investment.
