How are bitcoins created and why there will only be 21 million of them
As of Feb 2022, there are 18.9 million #BTC in existence. The maximum number of bitcoins that will ever exist is 21 million. But how are they created? And why there will only be 21 million bitcoins?
In order to follow this article, you should know about the process of mining bitcoin. If you don't know about it then take a step back and learn about it from this Twitter thread. However, if you are feeling adventurous, you can follow along without it.
In bitcoin, every miner gets a block reward for finding a block. This block reward is the amount of new bitcoin that is created. So, the number of bitcoins that exist right now increases about every 10 minutes as new blocks are mined.
But this block reward decreases over time. It began at 50 bitcoins and is halved every 210,000 blocks. Eventually, the block reward will become 0, at which point 21 million bitcoins will have been minted.
In 2012, the block reward was halved to 25 bitcoins, and it went down to 12.5 in 2016. In May 2020, miners stood to earn 6.25 bitcoin for every new block.
What do you think will happen when all 21 million bitcoins will be minted?