Table of Contents:
- 1. What will happen if we mine all the Bitcoin out there? Let’s talk about the future
- 2. But what if we manage to mine the last Bitcoin?
- 3. Brand new look at Segwit
- 4. How fast the changes in protocol happened?
- 5. The introduction of Lightning network
- 5. What are the pros and cons of Lightning Network?
What will happen if we mine all the Bitcoin out there? Let’s talk about the future
Not many people realize but some time ago Bitcoin blockchain, one of the most popular cryptocurrency and crypto technologies available out there, hit a gigantic milestone. In April this year, people managed to mine 17 millionth BTC. Why is this even such a big deal? One of the most obvious reasons is that there is only 4 million Bitcoin to mine left. It is because the total cap of all BTC mined is 21 million. Luckily for us, it is most likely that no one will live up to the day when the last BTC is mined.
There is a simple explanation hiding behind it. First of all, Blockchain protocol was prepared in such way that the more people join mining pool and the more BTC is mined, the less rewarding it all becomes. Currently, every time we unlock new block, miners receive 12.5 BTC as reward. However, it is assumed that in May 2020, the numbers will be halved, only to 6.25 BTC. It is because every 210.000 blocks, the rewards are halved. It means that if we were to observe the same speed of mining new blocks, the last Bitcoin will be mined in 2140, namely in 122 years. Of course it is true only if we are taking into account the fact that Bitcoin protocol remains unchanged.
But what if we manage to mine the last Bitcoin?
At this moment most of the money miners receive is because of “digging” new blocks. The reward they receive is, as you can guess, in BTC. Nevertheless, when the last Bitcoin is over, there will be no more BTC to give to all these miners out there. How would earning from Bitcoin look then?
Although there will be no more mining, the necessity to prove financial transactions is going to drive the entire Bitcoin field. It is the result of the structure of the whole system itself. As you know, all transactions need to be validated before they land in the blockchain. This process takes not only time, but also a bit of money. This is why there are fees when it comes to using BTC as a paying currency. This is how miners will benefit from BTC in the future.
Of course Satoshi Nakamoto, the creator of Bitcoin, knew about that and we can read in the white paper regarding Bitcoin that later on, as BTC reaches its threshold, most of the people will focus on transactions, making it free from inflation whatsoever.
Brand new look at Segwit
As a consequence of popularity of BTC and problems with block capacity, there was a need for implementing changes. It regarded not only the capacity of blocks, which was limited to 1 MB (as Nakamoto did in 2010 to make sure that miners wouldn’t be able to producer bigger blocks, since the system would automatically reject them), but also two other issues, namely scalability and transaction costs. Because of these problems, the core developers and the biggest players on the market came out with the idea of Segregated Witness, or also known as Segwit.
To put it simply, Segwit takes non-signature data out of signature data from each and every transaction that happens. Because of that, it reduces the size of the transaction which is stored on a block. In addition to that, we shouldn’t forget about cancelling out transaction malleability, which is also connected with removing signatures. It is also the reason why lightning network integration could appear.
Of course we should remember that the introduction of Segwit in 2017 was not the only thing that people wanted to do. There were even proposes for the implementation of the so-called Segwit2X, which would introduce one of the most controversial changes in BTC, which is doubling the block size. For this idea to happen, the entire community had to be in consent, just like it was in the case of Segwit. However, half of the community was for improving Segwit2X, whereas the other half was not interested in including such change. This is why Segwit2X failed to happen.
How fast the changes in protocol happened?
One should bear in mind that although everyone wanted for Segwit to happen, the entire process took longer than one could expect. It all started in Aug. 2017, but the biggest players in BTC market introduced the changes in Feb. 2018.
The introduction of Lightning network
As we mentioned earlier on, the changes that Segwit included made possible for Ligning Network to appear. This is yet another solution that can improve the network of Bitcoin. However, it can do that in much greater scale. The idea of Lightning network is that instead of implementing every single payment through the Bitcoin blockchain separately, they can firstly appear on a specially created channel. Of course this channel will also be put in Blockchain, but all the payments will be done only when the channel is closed and accepted.
Basically the main goal of Lightning network is to transfer funds from one user to another and when they decide to close the channel, everyone will receive an appropriate amount of BTC once the channel is closed and integrated into the blockchain.
What are the pros and cons of Lightning Network?
Although Lightning Network feels to be an extraordinary way to further enhance the way BTC technology operates, there are some concern of implementing it in a larger scale. One of them is the fact that once Lightning Network is introduced, the role of miners in recording transactions will be limited. Of course it concerns only the situation, when Lightning Network is fully integrated into the system. Still, it is one of the best ways of improving BTC blockchain and the entire technology. It reduces the number of transactions.
Of course these are the problems that will concern the future generations, after the last Bitcoin is mined.