With fewer bitcoins left to mine, what will happen to the security of the Bitcoin network?
Bitcoin’s inflation rate is slowly drawing to a close. Some 85 percent of the 21 million bitcoins that are programmed to come into existence have been mined, leaving just 3.15 million coins left. But while the majority of the supply has been unlocked, the remaining 15 percent will slowly come into being over the next 100 years.
New bitcoin is minted every time a new block is created on the network, roughly every 10 minutes, increasing its supply over time. At present, 12.5 bitcoins are produced per block but this will be halved to 6.25 bitcoins in May 2020—in an event known as the halvening. This cut in mining rewards will keep occurring every four years, until just fractional amounts of bitcoin are created per block.
The bitcoin network is kept secure by its hashrate—the computing power expended to produce new blocks and gain the elusive rewards. Currently, the hashrate on the network is breaking new highs at 78 EH/s. However, when the rewards drop, there will be fewer incentives for miners to keep plugging away, unless the price of bitcoin rises enough to outweigh the decline. Instead, it’s expected that transaction fees will rise to replace the mining rewards.
The network is already moving this way. Transaction fees currently add up to half a million dollars per day and are averaging $1.50, with recent peaks at $6 per transaction. In fact, nearly $1 billion in transaction fees have been paid since the network launched. Proponents are saying that this will help to keep the network secure without introducing additional inflation while critics argue that the Bitcoin network is too expensive to be used for making daily payments.
The debate wages on.