In the month of April 2018, 17 millionth Bitcoin was mined. But why this number is significant? Well, only four million tokens are left to mine. Bitcoin’s blockchain protocol is what makes Bitcoin mining a bit difficult, and the Bitcoin reward for mining a block also splits every 210,000 blocks. As seen, 12.5 BTC reward is received by the miners for unlocking a new block.
Mining of the Last Bitcoin
At this time, miners are deeply encouraged to mine so that they can get gradually more treasured Bitcoin tokens as a reward — before the supply reaches the capacity. However, when 21 million market cap is hit, there won’t be any Bitcoin rewards for miners. Though, transactions will be still required to get validated and stored on blocks, so that miners can profit from the transaction fees.
- Last year, the issue of scalability – block capacity – transaction costs showed up.
- 1MB size limit for blocks was implemented by Nakamoto for halting miners making bigger blocks that were expected to be excluded from the network, as it could cause the blockchain to split.
- At that time, the limit was big enough because of the small number of transactions. However, apprehensions that elevated were ultimately comprehended as Bitcoin advanced in popularity.
- Ultimately, Bitcoin Core developers came up with a solution under the name “Segregated Witness,” which is more commonly known as SegWit.
- Fundamentally, Segwit splits non-signature data from signature data of all transactions — significantly reduces transaction sizes that are stored on a block.
- Moreover, it cancels out transaction flexibility by eliminating signatures from transaction data, paving the way for ‘Lightning Network’ incorporation.
Eventually, Segwit was implemented in August 2017, as a foremost stakeholder from the major Bitcoin mining pools and Bitcoin companies – for a solution to high transactions fees instigated by an accumulation due to the block size limits.
Core warning — the implementation of Segwit was possible because of the consent of the Bitcoin community. Even though there were huge concerns such as the inadequacies of Segwit2X, the community was divided up and the change was certainly not implemented.
- Since August 2017, the implementation of Segwit has been slow across the global network. However, Bitfinex and Coinbase only presented the alteration in February 2018.
- The launch matched with reducing the transaction fees – a testament to the envisioned outcome of Segwit incorporation.
- SegWit’s implementation laid the foundation for second layer solutions as well, in order to improve the network of Bitcoin.
- The most projected one is the Lightning Network – it will do the same as the SegWit – though on a grander scale.
- In terms of layman, the Lightning Network lets users excavate many payment channels amid themselves – off the Bitcoin blockchain.
- The channel is going to be opened and recorded on the blockchain, though transactions will be made “off chain” till the payment channel is closed.
- Basically, Bitcoin is deposited in this channel by users, so that they could make transactions by transferring potential of possession to each other.
- When they plan to close the channel, users take their part of the total sum – the ownership of those sums is recorded on the blockchain.
This second layer solution matters a lot, as it will significantly upsurge the speed of transactions and the whole network. But if we talk about the future of bitcoin mining, this does stance few interesting questions for miners in the upcoming time. Once all 21 million Bitcoin have been mined – transaction fees would be the one and only incentive for miners. If the Lightning Network is completely integrated by that time, there’d be quite fewer transactions being recorded per-day. This could at the same time affect the amount of money that miners will be getting from transactions. Though, if we look 100 years from now, it is expected that all of these issues will have been solved by the wider crypto-community and Bitcoin Core developers.