The maximum number of bitcoins that will ever be mined is limited to 21 million units. The exact number that is in circulation or will be in circulation can be disputed due to bitcoin that is “lost forever” over the years, for example, when someone loses their private key that contains their bitcoin, and are no longer able to obtain it.
The unit of 21 million is arguably an irrelevant number, it could have been 100 million or another random number. The most important measure is that there is a hard limit to the number of coins and that this is common knowledge. Nobody can just decide to make more coins.
This occurrence happens with fiat currencies such as the euro or dollar and it seems that Satoshi Nakamoto was not in favour of this system. In the genesis block, he actually processed a reference to a newspaper article “Chancellor on brink of a second bailout for banks”.
How many bitcoins will be in total supply?
- (About) 21 million bitcoins
- What determines how much bitcoin is created?
- When will new bitcoins no longer be added?
- What does the future look like after 2140?
(About) 21 million bitcoins
A total of 21 million bitcoins are the total maximum supply. What is the purpose of this? Why this particular number has been chosen is not known, however, it is important and crucial that there is a limit.
This is therefore one of the biggest differences with fiat. Central banks can print their own currencies at a whim, making cash flow entirely unpredictable. Bitcoin is different. The release of Bitcoin into circulation is as predictable as knowing when the sun will set, and uses the following formula depicting that:
According to this formula, almost 21 million bitcoin will be in supply. To be precise, a total of 20,999,999,9769 bitcoins will be created in total.
There are still a number of reasons why the 21 million will never be fully achieved:
You can 'burn' bitcoins
It is possible to withdraw coins from the circulation permanently. This can be done with a code in the bitcoin software called OP_RETURN. With this code you remove access to the coins attached to the private key by marking an output transaction as invalid. Several bitcoin addresses have already been burned that way, the motivation behind such an act is unbeknownst to us
You can lose bitcoins
In addition, there is always the possibility that you lose your bitcoins. Your bitcoin wallet stores your private key(s) so if you lose your wallet and have not made a backup, for example by writing it down on paper, then it is almost impossible to gain access to your lost bitcoins. The amount of bitcoin that has been lost in this manner is not possible to determine. It is not cynical to think that many people have lost bitcoin through this process. Bitcoin that has not been moved from an address and considered inactive could simply be someone holding and not wishing to spend their bitcoin.
Do you want to know how you can best protect your bitcoin? No need to worry, with our handy tips you can be sure that you will always have secure access to your bitcoins.
What determines how many bitcoins are created?
At the time of writing about 17.3 million bitcoins are in circulation. More than 80% of all bitcoins are currently already in circulation, meaning in total, just under 4 million bitcoins are yet to be added to the circulating supply. So how does this number come about?
Bitcoins come into circulation through a process that we call mining. Every ten minutes a new block of transactions is added to the blockchain. The blockchain is thus a sequence of these blocks with all bitcoin transactions that have ever taken place. Mining is an essential part of the Bitcoin network and requires extraordinarily expensive equipment and power. As a financial incentive, the miner that finds the newest block first will be rewarded with 12.5 newly created bitcoins.
In the early days of bitcoin, this reward was 50 bitcoins per solved block. This reward is halved per 210,000 dissolved blocks. With a block time of ten minutes, these 210,000 blocks are mined in approximately four years. At the time of writing, the block reward is therefore 12.5 bitcoins per solved block. Soon this reward will be halved to 6.25 bitcoins. Inflation on the Bitcoin network is therefore gradually decreasing until the number of 21 million is reached.
Below is a graph depicting the amount of Bitcoin in circulation over time, clearly showing a logarithmic trend.
When will new bitcoins no longer be added?
With the help of the formula it is possible to calculate when the last bitcoin is mined. With the speed at which the bitcoins will be mined in the future, the last bitcoin will be mined in 2140. It therefore takes more than another 120 years before the last 20% of the bitcoins are mined and in supply.
What does the future of bitcoin look like after 2140?
A difficult question. The developments in bitcoin since its creation have developed at an unprecedented rate. There are a few scenarios that we could envision.
The remuneration per solved block decreases, until this reward disappears in 2140. After that year, the transaction costs- the miner's fees, are very important. This will be the motivation for miners to add a transaction block to the blockchain. This may cause transaction costs to rise.
This scenario is often outlined. But whether this will happen in this manner is difficult to predict? There are several new developments waiting for the bitcoin network, for example, it is quite possible that a large part of the transactions outside the blockchain will take place via the upcoming Lightning Network. In that case transaction costs are less important. Other developments can also ensure that the transaction costs do not rise much further.
Looking for the exact circulating supply of bitcoin? Then check out coinmarketcap.com. Under the heading “circulating supply” the number of coins is in circulation.