Bitcoin has come a long way since it was created in 2009. What has, however, remained constant is its hard limit, set by its assumed creator, Satoshi Nakamoto, whose real identity remains a mystery. Nakamoto set the upper limit at 21 million in the source code, meaning no more Bitcoins over that number can be mined or brought into circulation. Nakamoto did not give any explanation 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 hold its price steady for years to come.
How many of them have been mined so far?
About 18.78 million Bitcoins have been mined so far, meaning 83 percent of all the Bitcoin that will ever come into existence have already been brought into circulation. This leaves a little over 2 million Bitcoins to be mined. The market capitalisation of all Bitcoins in circulation today is roughly $866 billion (roughly Rs. 64,35,270 crores). Bitcoin price in India stood at Rs. 36.02 lakhs as of 6pm IST on August 17.
By when will all Bitcoins be mined?
A mere decade from now, nearly 97 percent of Bitcoins are likely to have been mined. But the remaining 3 percent will come into existence during the next century and the final Bitcoin is said to be mined around 2140 — more than a century later. The reason behind this slow mining is a process called halving. On average, currently, Bitcoins are introduced at a fixed rate of one block every ten minutes. 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 its demand. Since there could be only 21 million Bitcoins, investors believe, the virtual currency’s price is bound to go up as more people would want to buy it as they come to know about its “store-of-value” promise. This limited supply and increasing demand have pushed the value of Bitcoin up.
By comparison, the “fiat” currency supplied by governments across the world does not have hard limits. Governments are free to print as many dollars or rupees as they need but they usually do not print it beyond a limit as doing so will result in high and unsustainable inflation.
How has Bitcoin evolved through the years?
Economists are still studying what impact the hard limit has had on it but, on the face of it, Bitcoin price has risen massively since it was launched over a decade ago. In 2009, mining one block yielded 50 Bitcoins (but the value was less then). A year later, a person traded 10,000 Bitcoins for two pizzas.
In 2012, four years after the cryptocurrency was launched, the first ‘halving’ happened. Following this, each block began yielding only 25 Bitcoins. It made the virtual currency pick a lot of value, taking one Bitcoin to $200 (roughly Rs. 14,860) by the end of 2013. 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 around $10,000 (roughly Rs. 7.43 lakhs) and it has since climbed four times. As Bitcoin got ‘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, rationally thinking, this is an unrealistic assumption that most people would agree to lose money on their cryptocurrency investment.