I was just thinking, randomly. Which led to some research so I decided to share what I discovered.
This is a subject that has been in the mouth of investors of Bitcoin and aspiring investors. People are simply afraid of what will be left of them if all bitcoins are finally mined. now, let’s dig.
What’s Bitcoin Mining?
Bitcoin mining is the process by which transactions are verified and added to a public ledger, known as the blockchain, and also the means through which new bitcoins are released.
People who like the idea of bitcoin like it because of the way it works like GOLD and it also has critics who criticise it because of its fixed supply. And this quality of fixed supply is what that makes it look similar to GOLD.
It’s a fixed supply there are only 21 million Bitcoins that were supplied. And more than 15 millions of bitcoins have been used as at the time of this writing. If the remaining bitcoins are used up, there will not be any bitcoin left again to mine/use again except a miracle happens or a policy is laid down for the supply of new bitcoins for mining by miners of bitcoins. As we’ve discussed the most obvious similarity between BITCOIN and GOLD, their differences are more than the similarities.
Differences between GOLD and BITCOIN:
- Gold is a natural resource and that being said, it’s always mined out of surface of the earth(ground) while Bitcoin being a technology based cryptocurrency in Nigeria, it deals with digital mining. That is, you can mine a Bitcoin right from where you’re sitting without using any physical power but you have to dig out a gold from the ground making use of your physical power.
- Due to the fact that gold is a matter and a matter is anything that occupies space, it’s always kept in the bank for security and you sign some documents to make sure it’s safe in the bank and in this case, you have to be compelled to trust the bank for the safety of your gold which might still lead to betrayal and the bank changes the agreement by altering the papered documents resulting to the forfeit of your assets while bitcoin does not have a space to occupy talk less of occupying the space, it cannot be kept in the bank and there’s no need to sign any documents to keep it safe.
Do not let us divert our attention to talking about gold and bitcoin since our topic is based on what happens to bitcoin miners when all bitcoins are mined. So, let’s ask the question and explain it thoroughly.
What Happens To Bitcoin Miners When All Bitcoins Are Mined?
The end of bitcoin mining will have a very great impact on the miners because they are ones that deal with the business of mining bitcoins and if, eventually, all bitcoins are mined, they will not have any other choice than depend solely on the fees that come out of every transaction between a buyer and seller of bitcoin and these fees are called “Transaction Fees”. The thing is whether the price of the bitcoin goes up or down, the power is in will be in the hands of the miners and if the price is being inflated more than expected, it’ll leave people with no other choice than to leave the business and this might lead to less miners because they won’t have any transaction fee to rely on, network will be centralised to a set of miners and with people leaving the bitcoin business, it might lead to the complete fall of the whole business generally.
How Do The Miners Prepare For This Time When It Comes?
The cost of mining now cannot be predicted to be the same interests the next hundred years to come because nobody knows the mining technology progresses in coming years and comparing now to the next years will be seen as being dubious. With the way things are going and with the way the world is developing technologically, it’s most likely that smaller and cheaper mining chips are built and installed into any electronic device(s) for use. And this will turn bitcoin mining from “a purposeful business decision to an after thought, surviving in the background of daily life.” And hardware used for mining can be very efficient with energy to the extent that it might still keep miners in the business of bitcoin mining.
For a transaction fee to be high is an advantage to the bitcoin miners. So it will get to a time that the transaction fees will rise to a certain point that will attract profit to the miners. After all bitcoins have been mined, the world involves themselves in using the digital currency as its basic medium of buying and selling and so, due to the increase in the demand for transaction, there will be rise in the transaction fees.
But it’s not yet sure that this transaction fee will move up to such a rate because the aim of the bitcoin community is to have “a gradually increasing block size to ensure network scalability”. So, as the blockchain size keeps expanding and growing, people will still have the joy and opportunity of getting their transactions confirmed at lower prices but this may seem to pose a threat to the miners because they are compelled to confirm at lower prices which will keep them at loss. It’s more of a greater threat not to expand the block size because if a block is used up without being kept expanding, it leads to higher transaction fees and it bitcoin investors find these fees so uncomfortable, they will leave this business for good and this will result to the complete destruction of bitcoin.
There is no way that bitcoin will not be exhausted since it’s fixed and this will make the bitcoin miners surrender their block reward. It paves way for them to keep living on the simple monetary theory. And the non-increment of bitcoin supply between the demand and supply of money results to the slow and steady reduction in the general price level being proportional to the slow and steady increment of the purchasing power of money. Funds gain value whether the miners collect a large or minute money and this turns bitcoin business to a reasonable long-term investment rather than a centralised business.
In conclusion, ways by which Bitcoin miners profit are many and the above are examples of them. Don’t let’s forget that the block reward does not go suddenly. It goes down little by little and this will give the bitcoin miners the ability to restructure their ways of getting profit and adapt/adjust to, adopt depending on transaction fees for living. The bitcoin miners can still hope for technology that will make them to keep enjoying in this business in the future.
The main thing is that we should not allow our imagination of impossibility to cloud our belief that something is possible. We should think about the possible side of the business and that should keep us going in the bitcoin business.