What Happens When We Hit Peak Bitcoin?

[Seleskya + 50]

I'm not sure I know the answer to this but I'm trying to follow this to its logical conclusion. We have mined 17 million bitcoin already and there can only be 21 million bitcoin because the production limit is coded into it. So that's only 4 million bitcoin left to mine. What happens to price based on that 'fundamental'. I know no one else, knows, either because this is all new territory. But it would seem logical to me that they become more valuable between now and 21 million, but after that .... no more mining, just circulating. That's when the 'real' bitcoin price should emerge, I would suspect. 

[TraderTate + 186]

and how far away are we from mining that remaining 4 million bitcoins? Can't be that soon, can it because the more we mine the more complex the algorithms become, the more energy required to do the computing ... 

[Blockchainbull + 26]

miners will then stop mining for profit and start mining for transactions fees (haha, just like banks and 'service' fees)

[TraderTate + 186]

i see some saying we won't hit the 21 million until around 2032 ...

https://www.reddit.com/r/Bitcoin/comments/5qnw5h/when_will_we_reach_the_21_millions_bitcoin_cap/

[aspoerl + 28]

Correct me if I'm wrong, but if I recall the white paper correctly, the 21 million number is the horizontal asymptote of the limiting function that governs the generation of new bitcoin. Therefore, we will actually never reach the 21 million number. 

[TraderTate + 186]

ok, assuming that's correct, and I only loosely understand it, what happens between now and then?

[TraderTate + 186]

meaning, what happens even if we don't hit 21 million? what happens as more and more bitcoin are mined?

[WaytoPeace + 62]

I suspect that as the algorithm become increasingly complex such that it costs too much to mine a new bitcoin, the excitement propelling bitcoin will fade.  Then, those holding bitcoin will start selling them to raise money to buy other cryptocurrency that will offer more appeal.  As that happens the price of bitcoin will drop at an increasing rate as no one will want to be the last one out of this expensive pyramid scheme.  Then, the same thing will occur with respect to the next hot cryptocurrency, and so on. In the meantime, the international community will eventually impose appropriate regulations to track and tax bitcoin and other crptocurrency exchanges, including past transactions. The end result will be as many losers as winners with one exception:  the winners will be taxes on their winnings, which means an overall net loss.  

[msk + 42]

23 hours ago, TraderTate said:

i see some saying we won't hit the 21 million until around 2032 ...

https://www.reddit.com/r/Bitcoin/comments/5qnw5h/when_will_we_reach_the_21_millions_bitcoin_cap/

Wild - by 2032, only 99% will be mined.....and the last 1% will take another 100 years 0_o

But what happens? By then, miners will receive a transaction fee as they do now, and the idea is that computing powers will soar and energy costs will plummet all while the number of bitcoin transactions increases exponentially.

If, as a miner, you process 100 transactions now, when there is less than 1% adoption, when it becomes a globally used currency compared to say, the dollar or euro, maybe you'd be processing millions of transactions rolled into one lightning network (or whatever the scaling solutions are in 2140) transaction - allowing you to roll all the fees together and collect enough to keep miners happy. 

The big picture is that transaction fees will make it profitable for miners, and because of increased network participation, miners would be collecting large volumes of fees, allowing them to keep the fees low enough to remain viable compared to credit cards/etc

[aspoerl + 28]

Let's back up a bit. So much conversation around bitcoin is predicated on the assumption that it is a viable "currency". But is there any evidence to support that? For a currency to be viable, it must meet 3 criteria: a store of value, a medium of exchange, and a unit of account. Starting from the back, Bitcoin is indeed a unit of account. That's simple enough. Next, as a medium of exchange, only loosely does Bitcoin meet this criteria. Sure a few more businesses accept it now than a year ago, but that was arguably more of a publicity stunt than a legitimate desire to have customers transact with them in Bitcoin. Finally, as a store of value, I'm not sure that really needs any commentary. Glance at any chart of Bitcoin and it's perfectly clear to see that Bitcoin is far too volatile to ever be considered a store of value. So at best, Bitcoin has 1.5 of the 3 criteria. 

It's usually about this time that someone will counter that as more businesses accept it, it will become stabilize and more people will adopt it as a currency. As a theory, that sounds nice, but the direction of causality in that theory is backwards. Businesses aim to produce something of value, and exchange that product or service for something of greater or equal value. No business is genuinely interested in exchanging their created value for something that has the very real potential to be work double or half of what it's worth in a month. So in order to see mass acceptance of Bitcoin as a form of payment, the volatility must come down at least. (As a side note, this is also what many people miss when they discuss the "petroyuan" and the "death of the Dollar in global trade"; there is too much long term uncertainty around the value of the Yuan for starters!) Additionally, history tells us that once currencies "break" (ie. their store of value becomes too unpredictable), they don't come back. They are ultimately "put down", and another currency replaces them. (See the German Mark in the 1920's, the Zimbabwean dollar in 2008, the Venezuelan Bolivar, et al.)

Bitcoin is en vogue primarily because it was "the first". But the first iteration of any game-changing technology is almost never the one that is ultimately adopted. As a revolutionary technology, Bitcoin has that working against it as well. The Proof of Work system that Bitcoin is built on is akin to ARPANET that was the "first internet". The solution that gave us the modern internet from ARPANET wasn't to develop workarounds and "fixes". Ultimately, ARPANET was scrapped and replaced with something that was designed differently from the ground up. Bitcoin brought some revolutionary ideas and technology into the mainstream; that is a good thing. But as history has demonstrated countless times, Bitcoin's likely destination is a reference link in a Wikipedia article that future generations will read when they research the "blockchain revolution". The true, long-term value can be found in what comes next; not in Bitcoin itself.