In a matter of hours, the 18 millionth bitcoin will have been mined and the
world?s first cryptocurrency will draw one step closer to its hard-coded cap of
21 million coins.
?The pie is shrinking. This [milestone] gives people some simple math to raise
awareness about where we?re at in the [bitcoin mining] process,? said Alex
Adelman, CEO of bitcoin rewards platform Lolli, adding:
> ?It?s good for people to see the progress of bitcoin, to look back on everything
that has been done and will be done for the next 3 million. ? You should pay
attention to the next 3 million.?
But don?t worry, you?ll have 120 years to do so.
The next 3 million bitcoins will be progressively slower to mine as a result of
block reward halvings which occur every 210,000 blocks (or roughly four years)
and reduce new bitcoin supply by 50 percent. The final bitcoin is expected to be
mined in 2140.
Or is it?
It seems blasphemous even to go there, given bitcoin?s value proposition as
digital gold. But outsiders foresee a day when the 21 million cap might, gasp,
come up for debate.
Eventually, once there are no more bitcoins left to mint, miners will rely
solely on transaction fees, which are paid by users to transfer coins through
the blockchain. This change gives cause for concern to some who view bitcoin?s
block subsidies as integral to bitcoin?s incentive system.
To skeptics, this could undermine the structure that motivates miners to record
validated transactions in the ledger.
?All of your assumptions about incentives, risk and value go out the window,?
said Angela Walch, a research fellow at the University College London Centre for
Blockchain Technologies. ?Please take the blinders off and stop assuming that
everything will still work well once everything goes to a pure transaction-fees
system as opposed to block [subsidy].?
Currently, with each block, miners get a subsidy of 12.5 newly created BTC,
worth roughly $99,370, plus any additional transaction fees, which normally
don?t totalmore than 1 BTC. [https://btc.com/stats/fee]
Along the same lines, Paul Brody, global innovation leader for audit firm Ernst
& Young (EY), said bitcoin?s limited supply could limit the cryptocurrency?s
utility as a global reserve currency.
Pointing to situations such as the Great Recession where monetary policy
interventions were needed to lift the U.S. out of economic turmoil, Brody said:
> ?If bitcoin were to become a substantial part of the global monetary system, we
would need to address [the hard supply cap] because a lot of economists agree
deflationary systems are not necessarily the best thing.?
Both Walch and Brody suggested that bitcoin?s 21 million supply cap might one
day be subject to change. What if?
?We need to acknowledge that the 21 million cap is aspirational,? said Walch.
?If people decide to change that [supply] cap for certain reasons and enough
people make that decision, the system will move to it. It?s aspiration, not
While technically feasible, a change to the supply cap would almost certainly be
a non-starter for bitcoin users who cherish its gold-like properties. Indeed,
bitcoin?s code has long been governed by a community with a bias toward
retaining the coin?s original features as created by its pseudonymous founder,
Unlike ethereum, the world?s second-largest cryptocurrency, the bitcoin
blockchain has rarely seen backward-incompatible, system-wide upgrades changing
core code features.
In the rare instances it has, the bitcoin community has gone through fierce
governance disputes ??such as the infamousscaling debates of 2017
[https://www.coindesk.com/information/can-bitcoin-scale], which centered on a
potential increase to bitcoin?s block size. The philosophical rift ultimately
resulted in the creation of bitcoin cashin August 2017
Still, a prospective hard fork that would change bitcoin?s 21-million-coin
supply cap is conceivable, if perhaps heretical.
?It?s not a given that bitcoin has to stay at that 21 million hard limit,? said
EY?s Brody (who, it should be noted, is building enterprise applications on top
of rival chain ethereum). ?There is a governance mechanism to permit changes in
bitcoin ??if the community agrees that would be good.?
The other side
Even so, bitcoin advocate and author Andreas Antonopoulos stressed that
governance drama surrounding bitcoin?s supply cap is nothing to lose sleep over
??especially since bitcoin?s transition to a purely transaction-fee rewards
model will take 120 years.
Antonopoulos added that from the very launch of bitcoin in 2009, mining was
always ?a marginally profitable endeavor? never intended to stay constant.
?[Mining rewards] dynamically adjust based on the network. ? It?s a very complex
economic environment. It?s not as simple as people think,? said Antonopoulos,
> ?There are half a dozen variables that determine miner profitability [right now]
including the cost of electricity, their access to bandwidth transaction, the
block subsidy, the transaction fees at the time, bitcoin price, their local
currency exchange rate, the type of equipment and how efficient it is at
converting electricity into mining.?
As such, Antonopoulos says the concerns surrounding a transition from a block
subsidy to purely transaction-based block rewards are grossly overblown.
?Nothing magical happens when block subsidy drops to zero,? said Antonopoulos.
?It?s a very gradual and predictable change that happens over a period of 120
years. It?s already happening and every day [miners] make their decisions.?
While the 18th million bitcoin may not be the best reminder of the ongoing
reality of a limited supply cap, the next upcoming milestone on bitcoin?s
horizon assuredly will.
Viewing the next bitcoin halving as a far more notable event in bitcoin?s
history, venture capitalist William Mougayar said:
> ?In my opinion, [the 18 million] milestone is not that significant in relation
to the next halving which occurs May 2020. ? On that date, the block [subsidy] will go from 12.5 BTC to 6.25 BTC.?