Bitcoin is set to become even harder to get as its initial supply wears thin. This week marks an important milestone for the cryptocurrency as 80% of the total supply has now been mined.
A Limited Supply
Satoshi Nakamoto set a supply cap when he developed Bitcoin in 2009. His protocol stated that only 21 million Bitcoins would be developed and that this cap would never be extended. So far, about 16,800,000 BTC have been mined, leaving about 4 million BTC up for grabs. To date, no one has been able to develop more BTC although many have tried. Some experts even suggest that the set cap can be exceeded through manipulative techniques such as Sybil attack and 51 percent.
What Does This Mean?
The law of demand and supply states that a decrease in a product’s supply causes an increase in its price. As explained, the latest news is precedent to dwindling BTC supplies. Consequently, this means that the price of BTC will increase as the news sinks in – it may soar rapidly and considerably, considering the current value of BTC and the ongoing frenzy around cryptocurrencies.
Halving Set to Be Implemented Soon
In addition to the supply cap protocol, Satoshi Nakamoto also set a protocol dubbed the hashrate speed. The protocol states that the amount of Bitcoin that miners can get for every block will be halved after every four years until all BTC have been fully mined. Bitcoin miners currently get 12.5 BTC for every block that they mine. This means that the next halving schedule will lower this number to 6.25 BTC for every block they mine.
The implications are far-reaching. For starters, this will slow down the mining speed and, consequently, shrink the BTC supply even more. Additionally, BTC miners will have to step up their game by deploying even more sophisticated machines.
Possible Solution to Byzantine General’s Problem?
The Byzantine General’s Problem has for a long time been a computational equation causing issues. It has mostly plagued distributed networks by making them prone to attacks.
BTC is a digital asset unlike any other. However, it is set apart by the fact that it has a limited supply, cannot be copied, and a single unit of BTC cannot be double-spent. This makes it secure as any threats to the network could take years to execute and could be too costly to be rewarding. Consequently, computer scientists may take a cue from BTC and improve the design and security of their distributed networks.
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Are you worried by the fact that Bitcoin will soon become even scarcer? Do you think that this will cause its collapse or give way to even higher prices? Share your thoughts with us in the comments below!