Let us tell you the story of the last Bitcoin. It is fun, promise.
(By fun we mean that you will find a thing or two that you did not know before. Nerdy? Yes. We Know.) ??
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.
Once reached, no more Bitcoins will be minted on the current algorithm and consensus. (all things that happen on blockchain networks 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 will govern the network.
So according to the current and the original the limit of the supply of the bitcoin is set to be 21 million. More than 17 million of these have been mined.
Only 4 (million) more to go before the last one.
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 block .
The reward is (please, guess?) freshly mined bitcoins. This means by each block the miner is able to generate a new fresh and unused bitcoins. The new coins belong to the miner. The miner can do with, whatever they like. It is a gift or compensation used as an incentive for the work, patience and computing power they put into each block. The coins are extracted by practical efforts.
Thus the term mining.
So what is the complication?
The changing mining power, halving, lost bitcoins and uncertain demand.
As the network becomes larger, the number of transactions on each block become large. As if this is not bad news for miners, the reward for mining halves too. Yes, the reward was a lot more when the network just begun, back in 2001. What started as 50 coins per block has now fallen to 12.5.
In the total supply of 21 million, a total of 32 halvings will occur. This means that by the time the last bitcoin is mined, the reward would have quite low if the mining power improves and it becomes possible to mine more in less time. Or, the reward would have ended.
By the time that the last bitcoin would have been mined the reward is more likely to have fallen to zero. This is some time in 2140. By that time no more bitcoins will be mined on calculating hash rates (also known as block management).
By the last Bitcoin people will be able to make more money in tips than they ever did with the mining incentive. So not so bad after all?
So, isn’t this story of the Last Bitcoin as crazy as we promised?