LifeinTECH

In my previous article “Cryptocurrency”, I provided an overview of Bitcoin, including details of how it works.

The article described the concept of mining, which is used to process and verify transactions, helping to keep the block chain (shared public ledger) consistent, complete and unalterable. The reason miners contribute their computing resources to help process and verify transactions, is that they receive new Bitcoins as a reward.

However, knowing that Bitcoin has a limited supply (approximately 21 million Bitcoins), it raises the question…

What happens when all the Bitcoins have been mined?

I will attempt to answer this question in three parts:

1. The most obvious answer is that miners will simply be incentivised differently, focused on transaction fees. For example, instead of receiving new Bitcoins, miners could simply be paid for every transaction from existing Bitcoins. This model may not be as lucrative, but is still a viable alternative, especially when you consider the improved power efficiency of future computer systems.

2. Knowing that Bitcoins are carefully released, the last Bitcoin is not predicted to be mined until 2104 (92 years from now). A century of technology innovation is difficult to predict, especially at the exponential rate of change we have witnessed over the past decade. However, it is likely that computer systems capable of mining will have become increasingly common and power efficient. As a result, every “smart machine” in the world could be used for mining, including every smart phone and even smart appliances, such as a fridge, thermostat or toaster. This paradigm shift would enable the mining process to be achieved inherently, without direct human intervention.

3. Finally, it is worth highlighting that Bitcoin may not stand the test of time or a new alternative cryptocurrency may emerge. Either of these scenarios would obviously remove or mitigate the concern.

Personally, I predict that all three parts of my answer are a likely outcome, simply happening at different points in the evolution of Bitcoin (or other comparable cryptocurrencies). The good news is that due to the controlled rate in which Bitcoins are released (dropping by half every four years), minors will have plenty of time to adapt.