Produced 17 million bitcoins. What does this mean and why is it important?

The already limited supply of bitcoins has become even more limited. Was produced 17 million (17 000 000) of a bitcoin, according to the data of the blockchain, and it became another important milestone in the history of world of cryptocurrency. Because everything in the world can only be 21 million bitcoins.

In retrospect, it can be noted that this milestone is the first mark of one million, followed by mid-2016 — will be another reminder of the great achievement of computer technology. For the first time in the history of mankind was created by a digital value, which is supported by software and does not depend on a centralized authority.

In short, the code of Bitcoin, repeatedly cloned and adapted from the moment of creation, ensures that the economy will do only a certain amount of bitcoins at regular intervals. The miners, i.e. those who runs the special equipment to track transactions in Bitcoin network, receive a reward every time in the official history recorded the new record.

However, in this process, many variables.

When will the last bitcoin mined?

To begin with, what exactly to predict when mined bitcoin #17 000 000 (or #21 000 000), or who can get it, it was impossible because of the many small variations that are generated to maintain synchronization software. But the relative predictability still exists. Each bitcoin block generates a 12.5 new bitcoins, as every bitcoin block is created approximately every 10 minutes, every day is generated about 1800 new bitcoins.

Thus, it is best to consider this event as a “psychological barrier”, says Alex Sunnarborg of Tetras Capital. That is, what is important is the fact that produced 80% of bitcoins that will exist in principle. Now all we need is 1/5. Some four million.

Others see in this milestone opportunity to evaluate the technology and its achievements.

“I think it’s fine,” says Tim Draper, a venture capitalist who owns bitcoins worth millions of dollars. “I’m willing to bet that the creators could not imagine in my wildest dreams, how important it will be Bitcoin”.

17 000 000 bitcoins already mined

Maybe this milestone should be viewed as an opportunity to get acquainted with the features of Bitcoin and other cryptocurrencies

For example, if most of the people who run the computers with the software of Bitcoin, suddenly decide to make changes to the system (now unlikely), there will be no way to increase the total number of bitcoins. This achievement, which technically became a reality, played a big role in the fact that Bitcoin became associated with the value of money, with “digital gold”, economy and other familiar assets. Or even gold, which has enough value to always stay in price.

In view of the above, Bitcoin can be called a deflationary currency — that is, the value of which does not decrease over time (unlike dollars, which are printed in large quantities on a daily basis), but only increases (like gold, for example). The increase in the money supply is essentially confiscation through inflation, taxation without formal legal constraints. Therefore, proponents of Bitcoin like to talk about that “dirty dollar” is not backed by anything and at any time can be printed in any quantity needed by the U.S. government. Bitcoins can only lose or get, print them, no one can. Even the mining process (i.e., “mining” by the miners) recalls the gold.

Instead serviced by a Central Bank, Bitcoin creates a network that is working to preserve and maintain the blockchain. When a miner finds a valid hash for the recent transactions, solving the puzzle of the Bitcoin Protocol, he receives the award for transaction of coins in the block, and bitcoins are credited to his account.

And every time a new block is signed, the little cryptocurrency is created and subtracted from the stock.

Curve bilinovich deposits

The remuneration of the members of the network changes over time.

When the Creator of Bitcoin Satoshi Nakamoto mined the first block of bitcoin on 3 January 2009, he created the first ever 50 bitcoins. The same rewards was maintained for 209 999 blocks, and then there was the first decrease in reward: the division in two, or halvening.

It was not a surprise. Every 210 000 blocks, in accordance with the hard-coded schedule, the network reduces the reward per block is 50%. After the last division in July 2016, the reward per block amounted to 12.5 bitcoins.

It also means that although there are only 4 million bitcoins, the network will never cease to give a reward for finding a block. Only slows down the growth rate of the money supply or, in this case, the rate of creation of bitcoins.

BashCo, the moderator of the subreddit r/bitcoin, has left the path of reduction of the total inventory of bitcoins (blue curve) on its rate of monetary inflation (orange line).

Assuming that the Bitcoin Protocol will remain the same (a new block is mined on average every 10 minutes, and the reduction of the remuneration remains unchanged), the last new bitcoin will be mined only in 2140 may.

Bitcoin and the next 120 years

With all this in mind, one can notice another interesting thing: bitcoin is programmed to work for very long.

Jameson Lopp, senior infrastructure engineer at Casa, says that bitcoins can also be divided into many parts, and the smallest of each bitcoin, so can have almost unlimited value.

In his words:

“Although 17 million BTC may sound like a lot, it is incredibly little — if every millionaire in the world would want at least 1 BTC, bitcoin would not be enough at all. But, fortunately, each bitcoin can be divided into 100 million satoshis, which means, there will always be space for growth!”.

The software Bitcoin there are other quirks. For example, in the world will never be 21 million bitcoins, partly because of mathematics, partly due to the fact that miners don’t always get the full reward. 17 may 2011, for example, midnightmagic received the award in 49,9999999 per block, not 50.

Besides, the unknown part of the total inventory of bitcoins have been lost and will be lost on.

But the Bitcoin will not fail, even when there will be 21 million bitcoins. The idea is that miners continued to maintain the network, receiving a Commission for the search block, and the transaction occurred more often and in large quantities.

We have to answer a lot of questions. But we can already see how far gone Bitcoin and how far he can still go.

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