Key Takeaways
- Bitcoin’s Fixed Supply differs from regular money because there can only be a limited number of Bitcoins.
- Once all Bitcoins are mined, miners will earn income from transaction fees.
- The halving events help keep Bitcoin’s price from going down too much.
One of the most important things to know about Bitcoin is its supply. There will only ever be 21 million Bitcoins in total. But how does Bitcoin make sure there are no more than 21 million?
In the next few parts, we’ll explain how Bitcoin’s supply works. We’ll discuss what Bitcoin supply is, how new Bitcoins are made, and how this affects Bitcoin’s value.
Understanding The Bitcoin Supply
Bitcoin was created after a major financial problem in 2008. Satoshi Nakamoto, Bitcoin’s founder, wanted it to be different from regular money. Governments or banks can’t control it. With a set amount, Bitcoin aims to keep its value and be a good way to save money.
How Bitcoin Supplies Are Created
Bitcoin is different from regular money. Instead of being controlled by a government, it’s made by people who use powerful computers to solve puzzles. When they solve a puzzle, they get new Bitcoins as a reward.
The mining process is designed to be challenging. The more miners are involved and the more powerful their computers are, the harder it becomes to find new Bitcoins. This ensures that the supply of Bitcoin remains limited and prevents inflation.
Bitcoin’s 21 Million Limit
There are about 20 million Bitcoins now, but there can only be 21 million in total. This means that there are only a few Bitcoins left to find. Finding new Bitcoins gets harder and harder over time, which is good because it helps keep the value of Bitcoins stable.
Bitcoin’s Fixed Supply Has Two Benefits
Scarcity
Bitcoin is like gold because it is only a limited amount. This makes it more valuable than regular money, which the government can make less valuable.
Inflation Rate
Bitcoin’s supply is slowly decreasing. Even though new coins are made, there’s a limit to the number that will ever exist. This means that each new coin becomes less valuable over time.
Related Article: What Will Happen When All The Bitcoins Get Mined?
Is Bitcoin Losing Value?
Bitcoin isn’t losing value. Even though there’s a limit on how much Bitcoin can exist, more Bitcoins are being made. Some people think Bitcoin is getting less valuable because there’s a limit. But it will take a very long time to reach that limit.
The price of Bitcoin helps keep things fair. When the price is high, it’s harder for people to buy more Bitcoin. This helps to keep the supply and demand fair.
For Bitcoin to become less valuable, the network would have to lose more Bitcoin than it makes each day. This is not likely to happen soon.
How Bitcoin Gets Scarcer
The Bitcoin network has a halving event. This means that fewer new Bitcoins are created, making it harder for the market to adjust to sudden changes in demand.
The next section will discuss how halving events affect Bitcoin supply.
Bitcoin Halving
A halving is an event that occurs every four years in the Bitcoin network. It reduces the rate at which new Bitcoins are created. During a halving, the reward that miners receive for making transactions and adding new blocks to the blockchain is cut in half, meaning fewer new Bitcoins are added to the supply.
The last halving occurred on April 19, 2024. Before the halving, miners received 6.25 Bitcoins for finding a new block. After the halving, they received only 3.125 Bitcoins.
How Bitcoin Miners Work
Bitcoin miners secure the network and process transactions. They use powerful computers to solve hard computations, which helps maintain the network’s strength. Miners often join groups called ‘pools’ to increase their chances of success. When miners solve hard computations, they receive new Bitcoins as a reward, which can influence the Bitcoin market.
Can Lost Bitcoins Be Found?
Bitcoins can be lost forever if sent to the wrong address or the private keys are forgotten. Lost Bitcoin also reduces the total number of Bitcoins available.
However, there are data recovery services that can help if you’ve forgotten passwords, your wallet is damaged, or your hardware fails. These services try to rebuild lost data, but they need the original device to be successful.
Related Article: Can Lost Bitcoin Be Recovered?
What’s Next After Bitcoin Mining Ends
Once all Bitcoins are created, miners will earn money from transaction fees.
Bitcoin’s economic activity is expected to grow, so miners shouldn’t worry about what happens after all Bitcoins are mined. With a limited supply, Bitcoin’s price could be even higher.
Final Thoughts
Bitcoin differs from regular money because there can only be a limited number of Bitcoins. This makes it more valuable. Every few years, it gets harder to find new Bitcoins, which also helps keep its price high. Even though there’s a limit on how many Bitcoins can exist, more are being made, but some get lost. As more people use Bitcoin, it will stay valuable, even when all of them have been mined.
Check out these related articles.