Bitcoin is the world’s first decentralized (peer-to-peer) payment system that uses blockchain technology to store and transfer information about transactions. These transactions are made using a cryptographically protected decentralized virtual currency – Bitcoin (BTC). Users of Bitcoin network can send, receive and store cryptocurrency without any agents, like banks, payment operators, etc. A virtual currency is actually an algorithm, a programming code, so its emission is basically calculations and computing operations seeking to find necessary algorithm. This process is called cryptocurrency mining. How many Bitcoins have been already emitted, how many are still waiting to be mined, who emits Bitcoin and what does it depend on? Check The Coin Shark’s article to find out.
- What is cryptocurrency emission?
- Where does Bitcoin come from and who are the miners?
- How many Bitcoins are there in circulation today?
- How many Bitcoins can be mined in total?
- Why only 21 million Bitcoins?
- When will we get the last Bitcoin?
- Bitcoin Deflation
Emission of virtual coins is basically the creation of new blocks in the cryptocurrency blockchain. Blocks record information about transactions. The more blocks are there, the more information can be recorded and the more virtual coins are actually issued. The creation of new blocks is carried out through mining. To better understand what this process is, just imagine that a virtual coin is the result of an equation. In order to find it, you need to solve this equation. Mining is a computing operation performed using computer processors, graphic cards or special equipment (like it is with Bitcoin). The result of mining is the necessary cryptocurrency algorithm, called hash. Unlike fiat money or some centralized virtual.currencies, there is no other way to issue Bitcoin, rather than to mine it.
Miners are users who decided to use special mining programs and make calculations necessary to find hash. When miners finally manage to generate a new block (“solve the equation”) they receive a reward. In case of Bitcoin, it amounts to 12.5 BTC per one block. At the same time, this reward is reduced by half every four years, according to Bitcoin’s protocol written by Satoshi Nakamoto ten years ago, when the project was launched. The first miners received 50 BTC for one block, which is today more than 350 thousand dollars. Since then, the reward has decreased twice.
It decreases approximately every four years – with each 210,000th block of Bitcoin blockchain. This means that with each new 4-year cycle the number of coins to be mined will decrease – 10.5 million during the first cycle (210 thousand blocks x 50 coins received by the miners as a reward), 5 million 250 thousand coins during the second cycle (210 thousand blocks x 25 coins) and so on.
It is possible to check the current information on the number of coins of a particular cryptocurrency in circulation and the total supply on various online resources. One of the most popular is, of course, coinmarketcap. According to this website, the number of Bitcoins in circulation is currently 17,063,437 BTC. It is also interesting, that several million Bitcoins were lost forever. In 2017 Fortune published a research of Bitcoin blockchain made by the company Chainanalysis. The results show that the number of lost coins is from 2.78 million to 3.79 million. This means that a bit less than 20% of the current number of BTC in circulation is in fact no longer available.
Some altcoins like first of all Ethereum, and, for example, Dogecoin, have unlimited supply of coins. Bitcoin is different. Miners can get 21 million coins, then the emission will be over and mining will become impossible. It is worth mentioning that the more Bitcoins are mined, the harder it becomes to “extract” digital coins. Initially miners could use their laptops to mine Bitcoin but today it is necessary to use special equipment – ASIC-miners due to the increasing complexity of computing operations carried out to find hash.
So, it basically remains to get a bit less than 4 million Bitcoins.
The fixed amount of Bitcoin emission is recorded in the cryptocurrency protocol, published by Satoshi Nakamoto. This is a part of Bitcoin’s programming code and it can not be changed. One of the functions of this limited emission is the prevention of inflation. Many cryptocurrencies that have unlimited supply of coins can be subject to inflation.
Based on Bitcoin emission formula described above, we can calculate that the last Bitcoin will be mined around the year 2140. At the same time, more than 99% of all virtual coins will be mined during the first seven 4-year cycles (in 28 years) and it will take the whole remaining time (more than 100 years) to “extract” only of 1% of the cryptocurrency.
Deflation is the opposite process to inflation. It basically means that the market is growing and the supply of money is not. As a result prices fall, but not increase, like it happened in case of inflation. Bitcoin emission is limited to 21 million, which means that in the very long term it can be subject to deflation. Economic theory has different opinions on deflation, and some users often express fears for future generations who may face Bitcoin deflation. Often the reason for such concerns is that people think that the number of money (anything used as means of payment) corresponds to their value. Here’s an example – I invest 5 million and get 4,5 million return! However, in case the market experience deflation and all the prices decrease, 4,5 return does not mean my investment is unprofitable.