Bitcoin, the first and most popular cryptocurrency in the world reached another milestone. With the block number 520,013, the total number of bitcoins mined reached 17 million. This presents a significant amount of bitcoins because there are only four million bitcoins left to be mined.
More than nine years passed since the creation of the Genesis block and since then Bitcoin has been growing in all areas: technological development, price, market capitalization, popularity, relevance and total number of coins in circulation.
The Bitcoin’s white list created by Satoshi Nakamoto, contemplates a maximum number of bitcoins established at 21 million coins. Nevertheless, even though it seems the maximum will be reached soon, it is estimated that the last bitcoins will be mined with the block number 6,929,999 in the year 2140. The adjustment of the mining difficulty that occurs every 2016 blocks and the reduction of the reward for the miners are the causes for this.
The programmed reduction of the created coins is known as halving and occurs every 210,000 blocks (approximately every fours years), lowering the rewards by half. The first reduction took place in November, 2012 and halved the reward from 50 to 25 bitcoins. The second reduction occurred in July, 2016 and now the miners’ reward is 12.5 bitcoins per every block mined. When the reward reaches 0, the miners will only receive rewards from the commissions paid for the transactions executed by the users in the Bitcoin blockchain network.
The fact that only 21 million bitcoins exist is important because this is a way to avoid the inflation. The quantity of coins produced by the mining operations is reduced in a programmed way, which helps to deflate the most popular cryptocurrency in the world.
With the increase of the mining difficulty, the mining of bitcoin requires more and more computing power. At the moment, it is only possible to mine the coins by using ASIC chips specialized for the SHA-256 algorithm. Bitmain, a Chinese company and the largest producer of this type of hardware offers the most powerful mining chip on the market, called Antminer S9. However, the miner called DragonMint T16 could put in danger the dominance of Bitmain while helping to keep the Bitcoin blockchain network decentralized.
It is estimated that a large concentration of ASIC miners in one blockchain network is a threat for the decentralization of that network, especially if these miners belong to the same producer, mainly because of the powerful computing capacity of this mining equipment.
Other cryptocurrencies such as Ethereum (ETH) or Ripple (XRP), on other hand, do not have a clear production limit, which is why they have important inflationary indexes. Nevertheless, at least the Ethereum community and its founder, Vitalik Buterin, started to examine this aspect and evaluate the convenience of establishing a maximum amount of coins to be mined.
On the other hand, the central banks, responsible for the functioning of the fiat currencies, have the power to create more monetary pieces. This generates inorganic money that brings as a consequence the growth of the inflation in the economy of such countries. The protocol on which Bitcoin functions completely removes this possibility.