The Impact Of Mining All The Bitcoins

CME CEO Ted Duffy reported to Business Insider a few months ago on his view that Bitcoin’s finite supply poses a problem for regulators.

“The governments can’t run unless they can run on a deficit. I am trying to figure out why they would say, ‘Sounds good to me, because I want to be responsible and run everything on even-for-even basis. I can’t borrow against anything,” Duffy said.

Bitcoin’s supply is capped at 21 million bitcoins and a s a result, the cryptocurrency is deflationary. Right now, miners are the driving force behind how many bitcoins are available, and they are compensated in block rewards for their efforts. One of the major questions that arises, though, is what happens when all of the 21-million of the world’s bitcoins have been mined.

A recent article that is part of the series “The On-ramp” by Interchange addressed the issue. The article, called Bitcoin’s Security Fine, touched upon the value of transaction fees to bitcoin’s future. According to the report:

”The block reward incentivizes miners to protect the network. As inflation trends towards zero, miners will increasingly obtain an income only from transaction fees. Some worry that transaction fees alone won’t provide adequate compensation for the miners. In storing large sums of wealth, security and trust are critical.”

It then goes on to explain that bitcoin’s security model is “critical” and that as Satoshi Nakamoto once stated:

“In a few decades when the reward gets too small, the transaction fee will become the main compensation for miners.”

Further, if bitcoin’s value increases over time and transaction fees increase, then miners may have the economic incentive they need to continue providing security for the network. It will certainly be interesting to see how things move along once all of the bitcoins have been mined.

Original Article

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