Ever wondered what will happen when all the 21M bitcoins are mined, who will support the network without any mining incentives?
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we all know how new Bitcoins come in circulation through mining, that involves users solving cryptographic puzzles in order to receive a block reward. Initially this reward was 50 Bitcoins and after every 210, 000 blocks which is roughly 4 years, this reward gets reduced in half through process of halving. Now current block reward is 6.25 Btc which will become 3.125 in next year, and eventually this reward will become zero in 2140 when all the Bitcoins are mined. Then what's left to incentivize miners? Well, this is where transaction fees comes in picture. Addition to the block reward, miners also receive fee for validating the transaction which is paid by the sender. Now we are assuming, by the time all the Bitcoins are mined, adoption will be widespread enough for this fee to be substantial, so they continue to validate Bitcoin transactions. However, data dictates fee is a very small part of Miners earnings currently, but assuming Bitcoin will be a dominant currency in the future, the number of transactions will be big enough to motivate miners. Also the development like Ordinals that increases on chain activity is boon for miners, and there is more such concepts expected over the time when scalibility improves. Alternatively miners will have the option to participate in incentive programs offered by government. Similar to the one we seen in Texas where miners were getting paid for voluntarily pausing operations in order to balance out load on the electrical grid in Texas where wind and solar energy is on the rise, miners have earned up to 10 percent of their revenue via these programs. Lastly the major force would be self interest. Large entities who are heavily invested economically like big corporations, funds that hold Bitcoin or countries that made it as legal Tender, or keeping Bitcoin as reserve currency, will be highly motivated to keep the network secure. Tldr; Bitcoin is designed in a way that there will always be people securing the network. Post is inspired by a video from coingecko submitted by /u/justcamefromcaves |
