The Bitcoin network is believed to experience a decrease in supply approximately once every four years, as this is a widely accepted fact. These tendencies are anticipated to continue for more than a century in the future, which is an important fact to keep in mind.
It’ll All Be Over in 2140
The mysterious Satoshi Nakamoto, who is responsible for the development of Bitcoin, decided that the year 2140 would be the point at which the block rewards, which are benefits that miners receive for processing transactions, would decrease to a value of less than one Satoshi, the smallest unit of Bitcoin.
Around 2010 or 2011, early Bitcoin users and developers began using the term “satoshi” to refer to the cryptocurrency. A fraction of a bitcoin, more specifically one hundred millionth of a bitcoin (or 0.00000001 BTC), is represented by this particular value. This phrase has gained popularity over time and became widely recognized in 2013 as a result of its utilization in a variety of online forums and conversations.
According to Jameson Lopp, Casa’s co-founder and chief security officer, the halving represents the process of physically extracting limited resources.
“The year 2140 holds no remarkable significance,” Lopp told Blockworks. The way halvings and the precision of satoshis have unfolded is simply a result of their inherent nature.”
Lopp mentions that Nakamoto elucidated the distribution timetable to Mike Hearn, a former Google engineer who transitioned into an early Bitcoin contributor, in 2009:
“The number of coins and distribution schedule were determined through careful consideration,” Satoshi wrote. “I aimed to select something that would result in prices comparable to established currencies. However, predicting the future makes this task exceedingly challenging.”
Why 21 Million?
However, Satoshi mentioned that the divisibility of a bitcoin, in reality, can be expressed in a variety of ways depending on the value of one bitcoin. He chose 21 million, but Satoshi mentioned that this is only sometimes true. For illustration, let’s assert that one euro is equivalent to 0.001 dollars. In this particular scenario, repositioning the decimal point is more convenient than initially thought. As a consequence of this, if you had one bitcoin, it would be displayed as 1000, whereas 0.001 would be displayed as one.
I want to inform you that the current value of 0.001 Bitcoin is approximately 65 euros, which is equivalent to roughly $70.
Despite this, the reason for the decrease in the rate of issuance for the past 132 years has yet to be explained.
“I believe it was more of a cautious decision to allow the system ample time to establish itself,” Lopp remarked.
Unless the value of bitcoin (BTC) increases by one hundred percent every four years, each halving will result in a decrease in the reward per block, reducing the amount of money miners make. Crypto Innovate Bot can help predict the future scenario. Transaction fees are expected to gradually become more significant to maintain the network’s hashrate, which is an essential component in ensuring Bitcoin’s safety.
Whether that will occur in reality is yet to be determined, but Lopp maintains a positive outlook.
“As the multi-faceted Bitcoin ecosystem grows, it is likely that the foundational chain will increasingly resemble a valuable cryptographic accumulator. Consequently, it will become economically viable for on-chain transactions to incur higher fees,” he stated.