Bitcoin has been celebrated by its supporters and scrutinized by its critics. Some believe that because there will only be 21 million coins made, the currency is more of a Ponzi scheme that will benefit its early investors and hurt those who later invest in it. Without taking the earth’s population into consideration, we will only ever have 21 million bitcoins that can be mined, and there will not be new bitcoins after that unless the currency makes a change to their current policy. The problem with that is that it will also wreak havoc on the coin’s value.
The supporters of Bitcoin love the currency because it has remarkable similarities of when the United States currency was backed by gold shares, and many of the supporters have made the same connections with Bitcoin. You have a fixed supply, and like gold, you cannot create this new currency from nothing. You have to extract it and add it to the market like gold.
The gold standard has hindered the banks’ abilities with issuing more currency because after a period of time, they will be held accountable and have to back up the paper currency with gold currency. If the Bitcoin currency ever achieves the same widespread popularity that gold has, it could accomplish the same thing with a fixed supply. Where Bitcoin has taken gold’s benefits further is that they offer the currency digitally. As a result, Bitcoin gets rid of that need for a paper substitute, and we have a weightless option that does not cost the store anything. Meanwhile, gold weighs a lot, and it can take up a lot of space. In addition, it is less secure because it needs to be guarded in vaults. The vast majority of people prefer to have a paper substitute of gold over keeping it themselves. As a result, banks have sometimes betrayed the trust of the people even under strict policy. Because of the digital nature of bitcoins, this problem becomes a thing of the past. It takes zero space, and you can carry it on you without being burdened.
It is easier on the environment, and banks cannot print money from out of nowhere, which causes a rise in inflation. Despite what looks promising, there is still the other side that has an issue with Bitcoin because they will only ever produce 21 million coins. A lot of critics harp on how the miners will start to fall apart after the rewards of mining are lost to the system. After every bitcoin has been mined, miners will earn their profits off the transaction fees to keep a profitable business. Because of this reliance on mining fees over block rewards, it could cause a total meltdown of the system. In total, it could lead to a total shutdown of the system where bitcoins become worthless.
After bitcoins have all been mined, the best income source will come from transaction fees, and some believe that this will not offer enough for the miners. That is hard to say because measuring the mining costs a century from now is not feasible. For example, we do not know how far this technology in bitcoin mining will advance over the course of decades, and mining chips could turn into tiny things that are energy efficient and simply operating quietly.
Another possibility in bitcoin mining is that the transaction fees will rise high enough to keep it profitable. While it seems unlikely, once every bitcoin has been mined and everyone in the world uses the currency, transaction fees will go higher and the increased demand will keep the currency afloat. The chances of these fees rising is not certain, and at present, the company wants network scalability, and there will be an ongoing growth of the size of the block. As a result, people can always confirm their transactions for a low fee. That may seem like an ominous sign to the overall network that puts miners on the lower end with fees, but once the block mining has ended, a failure to increase the block size could actually become an even bigger threat to the overall network.
Should the blocks ever reach what is known as their maximum limit, there will be no further transactions until new blocks have been created. That means that when there are excess transactions, it will be dropped from the network, and miners will receive higher fees. While the finite number of bitcoins translates to Bitcoin technology changing how things are done, it does create the opportunity for miners to earn their next profits on the transaction fees once the 21 million have been accounted for. To conclude, you have several methods of mining bitcoins that will keep the system profitable even after what was first known as mining bitcoins has ended. There are an interesting number of options for where this promising technology could go.