The Bitcoin prize, which is competed for by millions around the world
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| The Bitcoin prize, which is competed for by millions around the world |
What should any country do to increase the money supply of its currency?
It could print paper currency at its discretion well, what is the situation with regard to cryptocurrencies that are virtual currencies that are just codes and do not have a tangible texture as mentioned in the previous episodes?
In answering this question.
we will focus today on Bitcoin specifically as the most famous, oldest, and most valuable cryptocurrency in the world today as the leader of digital currencies.
How are the new bitcoins coming into existence?
How are bitcoins [that never existed before] being created?
Do they come out of nowhere, or there must be a complicated process behind its creation?
This is what we will try to understand together in this article, there is only one way to create new bitcoins and it is meticulously drawn and regulated by the inventor of Bitcoin Satoshi Nakamoto. This process is called mining. We will talk about it in detail later. But in a nutshell and simply, as we mentioned before, there is the so-called Blockchain which is a distributed database in which data or transactions are stored accurately and securely in the form of blocks when the block is filled with a number of transactions, it is closed and joined to the previous blockchain, and so on.
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| The Bitcoin prize, which is competed for by millions around the world |
Who makes sure that Bitcoin transactions are correct before putting them into a new blockchain?
It is the miners who do the mining operations They even compete with each other, which one is faster in confirming transactions The competition itself depends on the mining power of each miner or strength and the number of mining devices he/she has, which we will talk about in detail in the next episodes.
Okay, so what do they get in return? What makes a person use very expensive mining equipment?
That consumes a high amount of energy in order to verify transactions and then put it in a block and include it in the blockchain؟
They do this to win two things:
1) First, the biggest and most important reward is the block mining reward, which is new bitcoins.
2) Second, the fees on transactions
Any miner who can prepare a new block and include it in the blockchain takes a certain number of bitcoins as a reward That is why they call it block rewards and it is the only way to extract bitcoins. However, according to Satoshi Nakamoto's Bitcoin protocol, the coin was designed to be available only in a limited amount, 21 million bitcoins He wanted the currency to be scarce so that inflation would not occur and the value of the currency would decrease accordingly. Because as you know, any increase in the number or supply of any commodity reduces its value accordingly. The same applies to traditional currencies as well. When the central bank of any country increases the supply of its local currency; The value of this currency will decrease and remain worthless Therefore, Satoshi refused to offer the coin randomly, preferring to have only 21 million bitcoins around the world first and foremost.
So, how will those 21 million bitcoins come into existence?
As we said a little while ago through mining. Every miner who makes a new block and joins it to the blockchain takes a number of bitcoins as a reward. Here comes a crucial point: According to the white paper published by Satoshi Nakamoto in 2008 which is the constitution of Bitcoin as we said before. The block reward size will be halved after every 210,000 blocks are generated. This number of blocks takes approximately 4 years to be mined because there is a new block that is being mined every 10 minutes, as we explained before. So, we can simply say that 144 blocks or blocks are mined per day When bitcoin mining began in January 2009, a miner would take a reward of 50 bitcoins for every block mined.
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| The Bitcoin prize, which is competed for by millions around the world |
Do you remember the formation block, the first block, and the zero blocks?
1) We said that Satoshi took a reward of 50 bitcoins at that time. They were the first 50 bitcoins to come into existence. He took 50 bitcoins in the second block and the same in the third block, and so in all the blocks that were included in the blockchain, up to the number 210 thousand, which was mined in 2012,
2) and at that time the number of bitcoins reached 10,500,000. Then the reward was halved and became 25 bitcoins for each block that was mined reaching the number 420 thousand that was mined in 2016
3) and at that time the number of bitcoins reached 15,750,000. After that, the reward was halved to 12.5 bitcoins for each block that was mined, up to the 630 thousand block that was mined in May 2020, when the number of bitcoins reached 18,375,000.
4) After that, the reward was halved to 6.25 bitcoins for each block mined in the past two years or will be mined to reach block number 840 thousand, which will be mined in May 2024, God willing. This means that miners mining right now at that moment in 2022 are taking a 6.25 Bitcoin block reward for every block they include in the blockchain. On the day this episode was written, the number of bitcoins all over the world reached 19,060,000 bitcoins and a little change. This represents about 90% of the total number of bitcoins planned to be mined, which is 21 million bitcoins, as aforementioned.
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| The Bitcoin prize, which is competed for by millions around the world |
Conclusion:-
every 4 years the block reward is halved, and this will continue for the month of May 2140, God willing. At that time, the entire 21 million bitcoins will be extracted, which is the maximum number of bitcoins, and after that, the rewards for mining any block will be zero.
You might be asking what the miners will gain in return?
What is left for them whenever the rewards are zero? What is the incentive for them to continue mining?
They will have the transaction fees that we mentioned quickly,
Finally,
I want to know what you think in the comments below.
In your opinion, will the rewards offered for Bitcoin mining return again, and its value increase? Will the number of Bitcoins exceed the number we mentioned in the article or not?
I will follow all your answers in the comments. Above all, tell your friends about us,
