Produced 17 million BTC: why it matters

Today, the number of mined bitcoins has exceeded 17 million. Given the fact that the rules of the Protocol the maximum number of bitcoins is limited to 21 million, this is a very important event because this is rare and will occur less often. For example, the previous million mark (16 million) were completed in mid-2016.

The event can be seen as a reminder of the unique achievement of computer science – creating and maintaining a digital deficit with distributed memory.

Borrowed and adapted by many other cryptocurrencies Bitcoin code ensures that for a certain period of time are issued a limited number of new bitcoins. Miners are rewarded after each add new records to the blockchain. However, this process lacks stability.

First of all, it should be noted that accurately predicting exactly when and by whom will be produced 17 millionth bitcoin is impossible due to the presence of the random factor. Thus, all forecasts are relative. Each block in Bitcoin network produces 12.5 new bitcoins, and since blocks occur about every 10 minutes, every day creates about 1800 BTC, if not to take into account fluctuations in hash rate yet.

Enthusiasts consider the events as a confirmation of the maturity of the technology and its achievements.

«I think it’s amazing, said venture capitalist Tim Draper, I bet the creators of even the best dreams never could have imagined how significant will be the Bitcoin».

Way of knowledge

A separate group of people looking at the event as an opportunity to increase the level of knowledge about Bitcoin and cryptocurrencies in General. For example, to change the limit of the maximum number of bitcoins possible only under the condition that this idea is supported by a majority of the members of the network (which today is very unlikely). This characteristic plays a key role in shaping the perception of bitcoin as a money form, a scarce resource and an important component of the digital economy.

This property is like the gold standard supporters and followers of Austrian Economics, quickly realized the potential of bitcoin, and, perhaps, marked the beginning of the very term «cryptocurrency».

Bitcoins are not issued by a Central Bank, and created a network aimed at maintaining the blockchain. When a miner finds a suitable block hash for the last transaction, he receives compensation in the form of bitcoins transferred to their account. Creates small number of new cryptocurrencies, the amount of which is deducted from the final stock.

The supply curve of Bitcoin

Of course, with time schedule remuneration of the miners is changing. When on 3 January 2009, the Bitcoin inventor Satoshi Nakamoto mined the first block, he got 50 BTC. This remuneration remained for the next 209 999 blocks, and then there was the first «halving» or reduction in rewards.

This event, however, was not unexpected. In accordance with the schedule, every 210 000 blocks network halves the amount of remuneration for the block. After the last date of Polovinnaya, which took place in July 2016, the remuneration amounted to 12.5 BTC.

This means that, although the production there are only 4 million bitcoins (around 20%), the maximum limit will need much more than nine years, were required for extraction of the existing 80%. As soon as Polovinnaya reduce the award, the rate of monetary inflation of bitcoin is slowing down.

On the chart below the forum moderator of r/bitcoin subreddit showed the trajectory of the total supply of Bitcoin (blue curve) relative to the rate of monetary inflation (orange curve):

If the Bitcoin Protocol does not change (the new block will be mined every 10 minutes, and the schedule of polovinnyi and limit production will not change), the last new bitcoin will be mined around the year 2139.

It should be noted a slight acceleration of production due to the constant growth of the network hash rate yet, adjustment for which occurs only after 2016 blocks (about two weeks), in terms of complexity. Initially, the actual limit of mining was planned for the middle of 2140 years, but the miners have already «snatched» from algorithm almost six months, and this trend may continue.

The next 120 years

Given this, we can recall another feature of cryptocurrency — bitcoin programmed very long existence.

Engineer for the infrastructure of the company Casa Jameson Lopp (Jameson Lopp) said that bitcoins can be divided:

«Although it may seem that 17 million BTC is a lot, in fact it is incredibly small – not even enough to ensure that every existing now a millionaire to have the full bitcoin. Fortunately, each bitcoin is divisible into 100 million Satoshi, so handling will always be plenty of cryptocurrency!».

One hundred millionth of a bitcoin may seem incredibly small number. But this is not true. For example, when in December last year, the price of bitcoin has exceeded 1 million rubles, the price is 1 Satoshi, respectively, equal to 1 penny. But if John McAfee and other optimists are right and bitcoin will rise to $ 1 million, the value of 1 Satoshi will equal 1 cent, and this value can not be called a neglectfully small. On the other hand, with the consent of the community, the number of decimal places can be increased.

In the end, and after the extraction of 21 million BTC, the Bitcoin network will stop. After that, miners will earn transactional commissions, which now give them a certain amount to the actual issue. So, now the miners get on the commissions of 1-3% in each block, and during the crisis scale, the share of commissions is often up to 15%.

Thus, achievement of 17-millionnov abroad can be considered another reminder of how far bitcoin and how much he still needs to go.

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