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How would Bitcoin miners survive after the 21,000,000 BTC maximum supply has been mined?

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In several ways, Bitcoin has been referred to as the Digital Gold of our time. Gold and Crude oil are both mineral resources, but Bitcoin is a digital asset. Like mineral resources, Bitcoin cannot be created; it has to be mined. Gold and Crude oil must be extracted from beneath the earth crust (rock mining), while Bitcoin can only be mined through a complex computational equation; a unique algorithm developed by Satoshi Nakamoto, its pseudonymous creator.

Bitcoin’s total supply is fixed at 21 million.

Bitcoin is programmed by a source code, in this code, it is programmed that bitcoin must have a limited and finite supply. Due to this, there will only ever be 21 million bitcoins ever mined, regardless of the demand for it and the earth’s population. Immediately the 21 million bitcoins have been mined, no new bitcoins will be mined ever again. An additional supply can only be possible, if bitcoin’s protocol is altered to allow for a larger supply. Currently, over 18.5 million bitcoins have been mined, with less than 2.5 million bitcoins left to be introduced into circulation. On the average, bitcoins are introduced to the bitcoin supply at a fixed rate of one block every ten minutes.

Bitcoin Mining Rewards

The individuals involved in bitcoin mining are known as bitcoin miners. They collate transactions and store them into blocks. Bitcoin miners are rewarded by block rewards, which comprise block subsidy and transactions fees. The block subsidy accounts for the major share in the block rewards.

Transactions fees are fees paid by the transactor. The amount of the fees can fluctuate due to how busy a blockchain network is. The major goal of the fees is to prevent users from overloading the network.

Block subsidy is a form of reward which a miner gets for solving a cryptographic hashing problem when they successfully verify a block. It entails the total number of coins allocated to a miner by the blockchain protocol. This creates an incentive for miners to add hashpower to the network. Bitcoin block subsidy is halved every 210,000 blocks made, or roughly every four years, and this process is referred to as bitcoin halving.

Halving of Bitcoin

Bitcoin Halving is a programmable event for miners, in which their reward for mining new blocks is halved. It means the block subsidy rewards given to miners for verifying a transaction is reduced by half. When bitcoin was first launched, the reward was 50 bitcoins. In 2012, it halved to 25 bitcoins. In 2016, it halved again to 12.5 bitcoins. On May 11 2020, the reward halved again to 6.25 bitcoins.

This will keep happening until the total supply of Bitcoin is completely mined. The last halving occured in May 2020, which puts miners’ rewards at 6.25 bitcoins per confirming block. The projected year that the final bitcoin is likely to be mined is not until around the year 2140. 

Will Bitcoin Mining be Profitable for Miners after all Bitcoins have been mined?

Bitcoin mining is a process which involves adding transaction data into the Bitcoin’s Public Ledger in order to confirm and verify the transaction. The recorded transactions are collected into blocks and are added to the Bitcoin Blockchain. 

It is very tedious and it requires a lot of resources, such as supercomputers, which is needed to protect the network from the possibility of altering past data by making all attempts in changing blocks inefficient for an intruder or hacker.

It is based on a consensus verification algorithm called the Proof of Work. Proof of Work is an algorithm that is used to confirm transactions and produce new blocks in the Bitcoin Blockchain. This involves the miners competing with each other to get rewarded. 

Without the miners, the network would be attacked and dysfunctional. Whenever transactions are made by users, all network nodes receive them and verify their validity. Then, the miner nodes gather the data from the memory pool and begin assembling them into an individual block. 

After the 21 million bitcoins have been mined, there will no more block subsidy rewards for the miners, since there are no more bitcoins to be generated. Miners will be rewarded solely by transaction fees as they continue to actively participate and validate new transactions.

Transactions fees are minute, compared to block subsidy rewards. However,  transaction fees could potentially rise to a huge amount of money, especially as the number of transactions increase on the blockchain.

Impact on Bitcoin Miners and its Network

This might be considered a piece of good news for miners, as transaction fees will increase as the price of Bitcoin increases. Currently, there are less than 2.5 million bitcoins left to be mined. After all these have been mined, bitcoin will be scarce in the marketplaces, which would eventually lead to an increase in the price of Bitcoin. 

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Bitcoin.org gets hacked, scammers run BTC giveaway scam

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Earlier today, Bitcoin.org, the oldest cryptocurrency website registered by the founder of Bitcoin, Satoshi Nakamoto, recently got hacked. Scammers ran a BTC giveaway scam with a promise to return double the amount users send to the named address. In the end, the scammers were reported to have collected $17,764 before the website was taken down. The website was inaccessible for a few hours after the incident, but normal service has been resumed.

To bring users’ attention to the hack, a pseudo-anonymous Twitter account with the name Cobra took to Twitter to reveal the news and claimed that the website may be offline for some days. He also clarified through his tweets that Bitcoin.org has never been hacked and that the breach must have been due to a lapse on the part of Cloudflare- the web provider that the website is hosted on.

“Bitcoin.org hasn’t been hacked, ever. We move to Cloudflare, and two months later we get hacked. Can you explain where you were routing my traffic too? Because my actual server didn’t get any traffic during the hack” he tweeted.

The scam on the website was perpetrated through a giveaway. Visitors on the website were greeted with a popup, asking them to send crypto to a Bitcoin wallet via a QR code and receive double the amount in return. The fake message showed that the Bitcoin Foundation was giving back to the community and that the giveaway will be limited to the first 10,000 people. This was made to draw more people into the scam.   According to an analysis on the scam address done by Reddit Sleuth, it was presumed that a chunk of the 0.4BTC came from the scammers themselves to add an element of credibility to the claim. At the time of writing this report, Bitcoin.org is once again, back to life.

How popular is the Bitcoin giveaway scam?

Bitcoin giveaway scam is quite popular among hackers as it allows them to make fast money without tampering with anyone’s wallet. In 2020, Twitter handles of top crypto celebrities, politicians and influencers were hacked to run Bitcoin giveaways. While the scammers were apprehended, the value of Bitcoin was not affected.

Today’s scam on Bitcoin.org did not affect the price of the coin either. Despite the Evergrande debt crisis and the fluctuations bedevilling the crypto market within the week, Bitcoin increased by 2.05% within the last 24 hours, thereby moving from $42,789 to $44,378.

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El Salvador’s Bitcoin adoption – What you need to know

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El Salvador made history (and headlines) after becoming the first nation to endorse and approve the world’s most popular cryptocurrency, Bitcoin, as a legal tender. The move makes Bitcoin acceptable for transactions within the Central American country alongside the U.S dollar, which has been serving as the paper currency since 2001. This comes after the so-called “Bitcoin Law” came into force after passing legislation in June of 2021. El Salvador’s government announced that it had purchased 400 Bitcoin in 2 tranches of 200 each and plans to get more in the future.

The move to adopt Bitcoin has been justified by the government’s need to boost financial inclusion in the country. It is estimated that 70% of El Salvadorans do not have access to financial services and the government believes that Bitcoin can help close the gap. The Bank of America has outlined a few benefits that they believe will result from El Salvador’s bitcoin adoption. These include promotion of financial digitization, streamlining remittances as well as opening the country to digital currency miners. However, not all agree that the move is a step in the right direction.

Amongst the detractors of the scheme are the International Monetary Fund and the World Bank, each having warned El Salvador about the risks of Bitcoin’s use as legal tender. The World Bank has been irked by what it described as “environmental and transparency shortcomings” with bitcoin, while the IMF cited “economic and legal concerns” in relation to the move.

Other than the push back from these international bodies, there has been some internal opposition to the adoption of Bitcoin. Citizens had held protests over Bitcoin’s adoption in August and about 67.9% of respondents in a poll said they disagreed with the government’s decision to adopt crypto. The results of the poll showed that 8 in 10 people had little confidence in the use of bitcoin as the currency.

In spite of the criticism, El Salvador’s government is moving forward and has reportedly installed 200 Bitcoin ATMs across the country. And in response to the World Bank’s environmental concerns, El Salvador’s president, Nayib Bukele, has said the country plans to power mining activities using renewable energy from the country’s volcanoes. In order to incentivize the use of Bitcoin in the country, any citizen who signs up for the country’s “Chivo” wallet will get 30$ worth of bitcoin.

All in all, the adoption of a cryptocurrency by a sovereign nation is seen as a testing ground for many, as this is a use case Bitcoin has never experienced in its 12-year history. Countries such as Brazil and Panama seem to be watching the move to draw insights on whether to follow suit.

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Is Bitcoin Still a Good Investment?

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Source: Decentralize Africa; Bitcoin Investment

The above question is being asked a lot due to the surge and drop of bitcoin over the past months – so aspiring investors are curious about whether the coin remains a lucrative investment. Bitcoin is the world’s most treasured and appreciated digital currency in terms of its worth in the open market and this fascinates a vast scale of investors. While there have been ups and downs, Bitcoin still poses to be a good investment. 

When compared to various cryptocurrencies, Bitcoin has been proven to have innumerable benefits; 

Diversification

Diversifying your crypto portfolio is very important and investing in bitcoin, amongst others, can help you do just that. Several foundations and pension funds have added bitcoin to their portfolio over the years. Investment strategists have gone on to say that adding bitcoin to your portfolio may improve returns without notably increasing volatility. 

Working Capital and Cash Flow 

Bitcoin has shown to be a financial strong suit in terms of liquidity. At inexpensive prices, you can quickly swap Bitcoin for fiat currency or gold. The level of cash flow is often dependent on how many users, or in this case investors, a platform has. The liquidity of cryptocurrencies is likely to skyrocket if adoption rises and more people invest in Bitcoin as a viable means of exchange. 

Basic Trading And Operations 

More often than not, investing in stocks or company shares would require a license for the former and a visit to a broker for the latter. However, with Bitcoin, trading is made easy. Buying and selling Bitcoin is made easy and you can store them in your wallet with little to no hassle. Trading in Bitcoin is also instantaneous. 

Digitalized Storage And Repository

Due to the upgrade of technology, cryptocurrencies are not subject to the traditional form of investment and storage like banks. Instead, the data is stored in a peer-to-peer network of nodes and duplicated across the world. 

Digital Gold 

Owing to its limited accessibility, Bitcoin is referred to, by many, as the “digital gold”. Like with gold, which has to be extracted from the earth, Bitcoin has to be “mined” through the use of computer software and thus, cannot be produced at the snap of fingers. Bitcoin has been said to have features akin to gold, silver and the likes. 

Brand New Opportunities 

The fact that Bitcoin is still current in the world of cryptocurrencies brings room for fresh opportunities. Its newness poses a high price alteration and volatility, which may lead to vast profits if invested properly. 

Bitcoin has always been a smart expenditure. The rate at which individuals adopt the coin is proof that it is still a good investment. Bitcoins will help in diversifying your portfolio, it will help in simple and stress-free trading, it will help in electronic and digital storage, amongst many others. Bitcoin as a long-term investment is feasible because the supply is fixed. It goes without saying that Bitcoin has the potential to become a global currency.

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