Is bitcoin still rising

What Happens to Bitcoin After All 21 Million Are Mined?

Bitcoin is like digital gold in many ways. Like gold, bitcoin cannot simply be created arbitrarily; it requires work to «extract.» While gold must be extracted from the physical earth, bitcoin must be «mined» via computational means.

Bitcoin also has a stipulation—set forth in its source code—that it must have a limited and finite supply. For this reason, there will only ever be 21 million bitcoins ever produced. On average, these bitcoins are introduced to the Bitcoin supply at a fixed rate of one block every ten minutes. In addition, the number of bitcoins released in each of these aforementioned blocks is reduced by 50% every four years.

Key Takeaways

• There are only 21 million bitcoins that can be mined in total.
• Once bitcoin miners have unlocked all the bitcoins, the planet’s supply will essentially be tapped out.
• As of February 24, 2021, 18.638 million bitcoins have been mined, which leaves 2.362 million yet to be introduced into circulation.
• Once all Bitcoin has been mined the miners will still be incentivized to process transactions with fees.

The Supply of Bitcoin Is Limited to 21 Million

In fact, there are only 21 million bitcoins that can be mined in total. Once miners have unlocked this number of bitcoins, the supply will be exhausted. However, it’s possible that bitcoin’s protocol will be changed to allow for a larger supply. What will happen when the global supply of bitcoin reaches its limit? This is the subject of much debate among fans of cryptocurrency.

Currently, around 18.5 million bitcoins have been mined. This leaves less than three million that have yet to be introduced into circulation.

While there can only ever be a maximum of 21 million bitcoins, because people have lost their private keys or have died without leaving their private key instructions to anybody, the actual amount of available bitcoins in circulation could actually be millions less.

Bitcoin Mining Rewards

The first 18.5 million bitcoins have been mined in the ten years since the initial launch of the Bitcoin network. With only three million more coins to go, it might appear like we are in the final stages of bitcoin mining. This is true but in a limited sense. While it is true that the large majority of bitcoins have already been mined, the timeline is more complicated than that.

The Bitcoin mining process rewards miners with a chunk of bitcoin upon successful verification of a block. This process adapts over time. When bitcoin first launched, the reward was 50 bitcoins. In 2012, it halved to 25 bitcoins. In 2016, it halved again to 12.5 bitcoins. As of February 2021, miners gain 6.25 bitcoins for every new block mined—equal to about $294,168.75 based on February 24, 2021, value. This effectively lowers Bitcoin’s inflation rate in half every four years.

The reward will continue to halve every four years until the final bitcoin has been mined. In actuality, the final bitcoin is unlikely to be mined until around the year 2140. However, it’s possible that the Bitcoin network protocol will be changed between now and then.

The Bitcoin mining process provides Bitcoin rewards to miners, but the reward size is decreased periodically to control the circulation of new tokens.

Impacts of Finite Bitcoin Supply on Bitcoin Miners

It may seem that the group of individuals most directly affected by the limit of the bitcoin supply will be the Bitcoin miners themselves. Some detractors of the protocol claim that miners will be forced away from the block rewards they receive for their work once the bitcoin supply has reached 21 million in circulation.

But even when the last bitcoin has been produced, miners will likely continue to actively and competitively participate and validate new transactions. The reason is that every Bitcoin transaction has a transaction fee attached to it.

These fees, while today representing a few hundred dollars per block, could potentially rise to many thousands of dollars per block, especially as the number of transactions on the blockchain grows and as the price of a bitcoin rises. Ultimately, it will function like a closed economy, where transaction fees are assessed much like taxes.

El Salvador made Bitcoin legal tender on June 9, 2021. It is the first country to do so. The cryptocurrency can be used for any transaction where the business can accept it. The U.S. dollar continues to be El Salvador’s primary currency.

Special Considerations

It’s worth noting that it is projected to take more than 100 years before the Bitcoin network mines its very last token. In actuality, as the year 2140 approaches, miners will likely spend years receiving rewards that are actually just tiny portions of the final bitcoin to be mined. The dramatic decrease in reward size may mean that the mining process will shift entirely well before the 2140 deadline.

It’s also important to keep in mind that the bitcoin network itself is likely to change significantly between now and then. Considering how much has happened to Bitcoin in just a decade, new protocols, new methods of recording and processing transactions, and any number of other factors may impact the mining process.

The latest significant events are the Office of the Comptroller of the Currency (OCC) letter in January 2021 authorizing the use of crypto as a method of payment, Paypal’s introduction of Bitcoin, and Tesla’s acceptance of Bitcoin to purchase Tesla cars and solar roofs. Tesla reversed course on accepting Bitcoin in May 2021, citing environmental concerns around the resources required to mine Bitcoin.

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Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bradley Keoun

Muyao Shen

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bitcoin’s prices reached an all-time high of above $40,000 less than a month after breaking $20,000 for the first time. Since the start of the most recent rally, ostensibly begun in October, its value has increased fourfold.

So for pros and newbies alike, or if you want to be the cryptocurrency expert at your next Zoom party, it’s natural to ask: Why are prices going up, and will bitcoin crash?

Bitcoin was invented just 12 years ago as a new type of electronic payment system, built atop an Internet-based computing network that no single person, company or government could control. The reality is the bitcoin cryptocurrency’s trading history is so short, with methods for valuing the asset still largely untested, that nobody really knows for sure what it should be worth now or in the future.

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That hasn’t stopped digital-asset investors or even Wall Street analysts from putting out price forecasts ranging from $50,000 to $400,000 or beyond.

Based on CoinDesk’s reporting, here are a few key reasons why bitcoin prices have recently rallied:

• Demand from institutional buyers, many of them eyeing bitcoin as a hedge against inflation. The cryptocurrency is seen as a hedge against inflation because, under the network’s original programming, only 21 million bitcoins can ever be created; so there’s a contrast with central banks like the Federal Reserve that can decide based on a committee vote to print more money. Big asset managers including Tudor Investment and Guggenheim Partners have announced bitcoin purchases or wagered on prices using futures contracts on the Chicago-based CME exchange. Even old-line Wall Street firms such as Morgan Stanley have weighed in with bullish pronouncements. Analysts at JPMorgan Chase, the biggest U.S. bank, recently predicted a price of $146,000 over the long term.
• The U.S. dollar’s decline in foreign exchange markets. The U.S. Dollar Index, a gauge of the dollar’s value against major world currencies like the euro and Japanese yen, slid 6.8% in 2020 and is down again in 2021. That’s key for bitcoin because the cryptocurrency’s price is mostly denominated in U.S. dollars. Possible reasons for the greenback’s decline include the Federal Reserve’s $3 trillion-plus of money printing over the past year, which is roughly three-quarters of the entire amount previously created in the U.S. central bank’s 108-year history. Images of protestors storming the U.S. Capitol on Wednesday probably didn’t burnish America’s leadership role on the global stage, and now many economists are predicting that big spending plans under a Democratic-controlled government would lead to new stimulus bills and potentially outsize government budget deficits for years to come. Much of those extra costs could be financed through additional Fed money printing.
• Retail purchases. Many individuals are speculating on bitcoin prices, and it’s become increasingly easy to buy bitcoin, with big services like PayPal enabling purchases last year. Analysts for the digital-asset firm ByteTree noted this week that blockchain data appear to show a high concentration of bitcoin purchases in the amount of $600 — the same amount as the American stimulus checks sent out in the latest U.S. coronavirus emergency aid package.

All this may have led to a tremendous rally over the past few months. But could bitcoin prices crash? Of course they could, several analysts told CoinDesk.

The cryptocurrency’s price is notoriously volatile, and substantial and unexpected price swings aren’t uncommon. Below is a sampling of comments from cryptocurrency analysts and other financial experts on how a pullback might look, and what might cause it.

• Bitcoin “has been and remains extremely volatile,” said Joe DiPasquale, CEO, BitBull Capital, a cryptocurrency-focused hedge fund. As recently as Monday, he noted, after prices had climbed to a new all-time high, they tumbled almost $7,000. “What causes this is that people can use lots of leverage, so they can easily get washed out.” He sees a correction as possible, though there appear to be plenty of interested buyers around $28,000, so that level might function like a price support.
• There hasn’t been a single year since 2013 when prices have not fallen at least 25% from a high point reached earlier in that year, said Gavin Smith, CEO of the digital-asset firm Panxora. He said he wouldn’t be surprised to see bitcoin prices rise to $70,000 or $80,000, nor a setback of 40%. Medium term, he’s bullish: “Over a three-year period, this is a great asset.” But over the long term, there’s a risk that technological developments could overtake bitcoin. “Even with quantum computing, there’s nothing on the horizon that indicates that could happen,” he says, “but it’s always dangerous to completely ignore the risk.”
• Bitcoin prices could rally two to three times from their current level before falling back to about where they are now, said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing exchange-traded fund, which invests in blockchain-related stocks. That would imply a retracement of more than two-thirds from that hypothetically new all-time high. “What’ll cause a crash more likely is overexuberance on the upside. I don’t think we’re there yet.”
• “There will be swings, and yes, the swings will be wild,” said Denis Vinokourov, head of research for the cryptocurrency prime broker Bequant. “You have a lot of retail flow that tends to panic.” He sees prices going up in the long term, at least partly based on the bullish expectations of big Wall Street firms. “Can it go to $4,000? Yes.” One potential trigger for a rapid sell-off could be any actions brought by authorities against the company behind tether (USDT), a privately issued, dollar-linked digital token known as a “stablecoin” that has become a key source of liquidity in digital-asset markets. New York State prosecutors are currently battling Tether in court due to its finances.
• “The history of financial markets is the history of bubbles,» said James Angel, Georgetown University finance professor. He notes that authorities could move to crimp the bitcoin rally if they start to get worried that it’s becoming a threat. “Almost everybody who tries to start their own money does so in competition with a national currency, and it usually gets shoved aside by regulators.”
• «While we’re currently seeing an unequivocal expression in the market’s bullish sentiment, a correction could well be on the horizon,» said Sui Chung, CEO of CF Benchmarks, a cryptocurrency provider. «This is a natural part of market mechanics. While it may dampen near-term enthusiasm, it will ensure future price rises remain grounded.»
• “There is likely to be profit taking along the way, causing temporary dips,» said Guy Hirsch, managing director for the U.S. at the trading platform eToro. «But given the extraordinary amounts of adoption by institutions, it would be a surprise if bitcoin dropped below $20,000 any time soon.”

So for the Zoom party, you can tell them: Yes, according to the experts, a crash is probably coming but that’s typical for bitcoin, and if history is any guide, prices will probably recover.

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Why is Bitcoin rising? Essential factors

The world is changing rapidly, and new opportunities and challenges are emerging every day. The rise of the first cryptocurrency, Bitcoin, is one of those opportunities. Bitcoin gained a lot of interest with its rapid growth. But why is Bitcoin going up? What causes the rise and fall of Bitcoin? Will Bitcoin continue to go up? If the stock market crashes, will Bitcoin rise? In this article, we look at the essential factors that make Bitcoin rise.

Why is Bitcoin going up?

After investigating all the fundamental causes into the question “why is Bitcoin going up”, we identified the three most significant essential factors for growth.

Supply and demand

Countries and governments can control the circulation of their currencies by adjusting the discount rate, changing reserve requirements or conducting open market operations. Through these financial instruments, the central bank may affect the currency exchange rate.

We are witnessing the Federal Reserve take actions during the current economic downturn related to the coronavirus pandemic. Immediately after cutting the benchmark interest rate, over $2.5 trillion of liquidity were injected into the market. The Fed’s balance sheet exceeded $6 trillion for the first time in history. In the future, such massive liquidity injections might lead to hyperinflation.

The supply of Bitcoin is affected by two different factors. First, the Bitcoin protocol allows new Bitcoins to be created at a fixed rate. When miners process transaction blocks, new Bitcoins are added to the market. The production of new coins slows down over time.

That may create a situation in which the demand for Bitcoin grows at a faster rate than the increase in supply that leads to a Bitcoin value rise. The number of daily Bitcoins issued decreases over time due to the halving of block rewards provided to Bitcoin miners. In May 2020, miners’ reward was reduced from 12.5 BTC per block to 6.25 BTC.

Second, the supply may also be affected by the amount of Bitcoin allowed by the system. This number is fixed at 21 million Bitcoins. Once 21 million Bitcoins are in circulation, the artificial inflation mechanism that halves the block reward will stop its impact on the price of Bitcoin.

However, according to the adjustment rate of the current block reward, the last Bitcoin will be mined around the year 2140. Fixed supply and growing demand cause Bitcoin’s value to rise.

Production cost

Although Bitcoins are virtual, they are still produced. Bitcoin mining relies on a complex cryptographic math problem that miners are solving. The first person to finish the task will get a newly minted Bitcoin. In addition to the minted Bitcoin, the miner receives the accumulated transaction fees since the last block found. Mining equipment is pretty expensive, but the most crucial factor in Bitcoin production is electricity consumption. Countries with cheap electricity are where the mining business is booming.

The unique feature of Bitcoin production is that, unlike other produced goods, Bitcoin’s algorithm can only find one block of Bitcoin every ten minutes. That means that the more producers (miners) participate in the competition to solve the mathematical problem, the more difficult (and therefore more expensive) it will be to solve the problem!

Regulations and legal matters

The rapid spread of Bitcoin and other cryptocurrencies has led regulators to debate how to classify such digital assets. The US Commodity Futures Trading Commission (CFTC) considers Bitcoin to be a commodity. At the same time, the Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities. Despite Bitcoin’s rise in market value, the confusion over whether regulators will set rules for cryptocurrencies has created uncertainty. Nevertheless, the market has witnessed the launch of many financial products with Bitcoin as an underlying asset. For example, exchange-traded funds (ETFs), futures and other derivative products.

That may affect prices in two ways. First, it provides access channels for investors to speculate on Bitcoin, thereby increasing demand. Second, it can reduce price volatility by allowing institutional investors to bet on Bitcoin’s future price.

If the stock market crashes, will Bitcoin rise?

Bitcoin is very sensitive to stock market fluctuations. There is a high correlation between the S&P 500 and Bitcoin. They have both recovered since the market drop in March, but it remains uncertain how the stock market will perform in the upcoming years. If stocks take a hit and tank, Bitcoin will follow, without a shadow of a doubt.

However, we expect Bitcoin to follow for only a certain time and up to a certain price before the decoupling takes place. Bitcoin will go up while stock markets will continue to fall. The stock market factor is one of the most important behind the question of what causes the rise and fall of Bitcoin’s price. When you trade cryptocurrencies, it’s recommended to track stock market trends.

Will Bitcoin rise again to $20K?

The emergence and spread of Bitcoin and cryptocurrencies indicate the existence of a particular demand in society. Technical innovations in the financial sphere are healthy for the future community. Day by day, we see how new fresh ideas are implemented in our lives. With upcoming economic challenges, hyperinflation, financial crisis, Bitcoin and blockchain technology are here to stay. Governments are continuing to push for cryptocurrency’s legalisation as they recognise the potential behind blockchain.

The main question is when Bitcoin will rise to $20K? The facts tell us that the high price Bitcoin reached was not the limit. Only 1% of the world’s population owns Bitcoin! Supply is limited to 21 million Bitcoins, and the continuously growing demand and interest in cryptocurrencies give us a broader perspective on the future of Bitcoin and world economy. Owning Bitcoin is investing in your future fortune. StormGain is made to help you navigate through the cryptocurrency industry!

The original story was published on the official StormGain site blog

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