Bitcoin has a fixed supply just like any high branded SKU that will not repeat itself and once sold, becomes a part of a larger legacy. Bitcoin’s supply is limited because this should add value to the whole network of coins once the limit is reached. So exclusive right? Super!
Once reached, no more Bitcoins will be mined on the current algorithm and consensus. All things that happen on a blockchain network undergo a poll or a vote,whereby the owners (also known as miners in this case) vote for their opinion to develop a consensus that then governs the network.
Thus, according to the current (and also the original) consensus the limit of the bitcoin supply is set to be 21 million.
As of 2018 (the time of writing), more than 17 million of these have been mined. Only another 4 million to go before the last one. Yes that is right! There is a last one!
They are running out. This is the beauty of it. Soon the reward will reduce, then next up no more will be mined, then the prices will begin to inflate and bitcoin will become super precious.
So, how does this works?
Basically, bitcoin miners get a reward for the effort they put in keeping the system run efficiently and smoothly by handling and maintaining each one of their node. The reward is specifically for calculating proof of work of the transactions that occur on the network. This is analogous to a traditional book keeper. An accountant calculates, updates and manages all accounts. They number of accounts they manage and the network or chain of transactional history the account manages is called a node in this case.
The reward is (please, guess?) freshly mined bitcoins. This entails that the accountant is rewarded for their node through a new bitcoin every few blocks later.
This also means that by each node the miner is able to generate a new fresh and unused bitcoin. This new coin belongs to the miner. It is a gift or compensation used as an incentive for the work, patience and computing power they put in.
Thus the term mining.
So like any high brand mining is becoming prestigious, bigger powerhouses are used for it, the expansion has led to a greater demand of miners but also a greater need for speed. The big powerhouses featuring lots of computers and electric supply lead to the satisfaction of this demand.
The limited supply works just like Zara – The fast fashion retailer. New items will be added until a specific date, then all will be sold out, the prices may go up and eventually may be deemed as designer, vintage, originals or signature items. The high prices also indicate high customer desirability and value. This means that the brand can make a lot of money out of the same product that was being sold earlier.
This also builds a sense of emergency, and thus, people must buy this stuff or they will be left out of the global race to be the most exciting and hip one out there. Gimme more!