A dollar bill on white background

As cryptocurrencies like bitcoin evolve, governments are finally waking up and taking notice. Some are even creating their own cryptocurrencies. A change is coming, but will cryptocurrencies replace fiat currency? Tony Nyarunda explores.

Money is dynamic; evolving from the primitive days of salt, seashells, gold to fiat currency and now, the cryptographic bits called cryptocurrencies.

Cryptocurrencies have introduced the concept of frictionless money, without the need for third-party trust in banks or governments.

Cryptos, with no intrinsic value, are threatening to make fiat money (traditional currency like dollars or euros) obsolete.

Cryptos Could Supplant 25% of Fiat by 2030

Venture capitalist and investor Tim Draper of Draper Associates knows about money. He entered the crypto game after purchasing 30,000 bitcoins (BTC) during a government auction in 2014. He paid $20 million but they are now worth $190 million. He said:

“In five years, if you try to use fiat currency they will laugh at you… bitcoin and other cryptocurrencies will be so relevant… there will be no reason to have the fiat currencies.”

Draper represents many opinion leaders who believe the fiat system is on the verge of being replaced by cryptocurrencies like bitcoin, dash, and others.

Author Thomas Frey shares a similar sentiment, saying cryptos will supplant at least 25% of national currencies by 2030.

“They’re just much more efficient, the way they run,” he said.

bitcoin wallet on a samsung smartphone

Governments See Cryptos as a Disruptive Influence

Governments around the world are all too aware of this shift.

The European Parliament released a report in July on the state of cryptocurrencies, dubbed Competition Issues in the Area of Financial Technology (FinTech).

The task force explored the challenges presented by digital currencies concluding that blockchain was a highly disruptive influence on the financial ecosystem. It added that the development of bank-backed cryptocurrencies would “reshape the current competition level.”

The report reads in part:

“In this environment, new agents, particularly tech start-ups, are generally able to offer financial services for lower costs and at a higher efficiency […] they can offer better user experiences, which poses significant challenges to other agents, especially traditional financial service providers.”

In other words, cryptocurrencies and blockchain are a threat to the traditional banking system, and the European Parliament knows it.

five flags on a white sky background

Governments Are Creating Their Own Cryptocurrency to Replace Fiat

In Venezuela, cryptocurrencies are already replacing fiat.

Here’s why. Fiat currencies, like the dollar, suffer from a huge problem: inflation.

Inflation occurs because governments have the unlimited power to “print money.” By creating money out of thin air, they can push down the value or purchasing power of fiat currency.

Sometimes we get hyperinflation, like in Venezuela. Venezuela’s national currency is on track for 1 million percent inflation by the end of the year, effectively making it worthless.

In response, the government created a cryptocurrency: the petro. The petro is “stable” in that its value is tied to the price of an oil barrel. Venezuela has ordered its banks and major companies to begin using the petro cryptocurrency.

Having said that, Venezuela’s citizens are flocking to bitcoin and dash instead.

Whichever way you look at it, Venezuela is switching fiat for cryptocurrency, fast.

venezuela petro

A Cashless Future

We are already headed towards a cashless future where banknotes and coins become obsolete. One country has already shown that we can become a cashless society: Sweden.

People in Sweden no longer use cash. Only about 1% of payments are made using notes or coins. This should sound alarm bells for central banks around the world; Sweden is leading the pack towards a cashless society.

Citizens of the Nordic country are mostly positive about their no-cash payment policy saying it is risk-free as they just have to swipe their cards and move on.

Sweden is laying the groundwork for an entirely digital financial system. The leap to cryptocurrency isn’t so much further.

A Future without Fiat

A future where all currency is crypto is bright. It’s a future where a currency’s value isn’t open to manipulation as easily as fiat currency. A future where the transaction for goods and services are handled digitally and prices are affordable since cryptocurrencies eliminate intermediaries who take a cut.

That future will disrupt the current global economy as cash will become obsolete; the losing party diminishes in value with nothing else to do.

Governments would be hardest hit as they lose control over currency and the ability to print more money in response to financial crises since cryptocurrencies are mined. Flipping from fiat to crypto is a real prospect in our time, and could “disrupt” the way we spend and save.

woman with bitcoins over her eyes

The Future of Cryptocurrency

Just like the internet was in the 1990s, digital currencies are still in their infancy, but as the technology develops, cryptos could follow a similar path to mass adoption.

There is abundant speculation that cryptocurrencies are in a bubble, and that the prospective threat of cryptocurrencies taking over the financial world is laughable.

It’s true, cryptocurrencies are still volatile, but that may change as governments slowly begin to regulate bitcoin and other cryptocurrencies.

As blockchain technology improves and new use cases are discovered, things could easily change in a microsecond. So prophets of doom can’t be too sure yet.

Conclusion

Cryptocurrency has a place, it is not yet taking control, but it’s headed there. The response of many countries is still erratic, so the effect is still different around the world, at least for now.

HiveEx.com founder and CEO Fred Schebesta, a renowned cryptocurrency enthusiast, summarizes it for us:

“Adoption isn’t wide enough for cryptocurrency to overtake fiat currencies just yet, but we will start to see incredible growth […] a lot of people don’t want to carry cash around and want to go from one country to another without changing money. Once we see more ways people can access and use cryptocurrency, adoption will be fast.”

We’re not there yet, but a future when cryptocurrency replaces fiat is coming.

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  • A hard fork occurs when one cryptocurrency (like bitcoin) breaks off to form a new currency (like bitcoin cash).
  • Hard forks take place when the community wants to make a significant upgrade or disagrees on how to move forward.
  • Examples include bitcoin cash, ethereum classic, and bitcoin gold.

Cryptocurrency Hard Forks: Explained

A hard fork is when one cryptocurrency spins off to create another. Think of it like a train track splitting in two. The new coin (and its blockchain) takes a new direction from the old, but they share the same history. It’s a simple fork in the road.

bitcoin hard fork diagram

Let’s take the example of Bitcoin Cash, which is a hard fork of Bitcoin.

In 2017, the Bitcoin community disagreed on how to make improvements to the network. One group wanted to stay true to the old rules and “protocol.” Another group wanted to make drastic changes to how transactions were processed.

Unable to reach an agreement, the second group “forked” off to create a new blockchain. Bitcoin Cash was born.

Bitcoin Cash shares the same blockchain as Bitcoin right up until the moment it forked. From that point onwards, Bitcoin Cash took its own path with its own rules.

bitcoin cash hard fork
Image credit

Bitcoin has forked countless times as the community seeks to improve the technology or disagrees on how to move forward. These forks are not always successful.

How Hard Forks Work

Every blockchain enterprise has its own rules. Those rules dictate how the system works. How large is each block? What rewards do miners get? How are fees calculated? And so forth. One day, the community disagrees on some tidbit, such as whether new code should be introduced or whether participating miners should receive a bonus.

A successful fork is where most of your users agree, collectively make the changes, and move over to the new blockchain. A contentious or experimental fork is where your users split. Some might stick with the present blockchain, some may migrate to the new blockchain, and some use both. Soon you have two versions of your cryptocurrency with different rules.

A failed fork occurs when too few users leap to the new blockchain. That new cryptocurrency quickly becomes worthless.

Hard forks also happen in the following cases:

  • To fix important security risks found in older versions – It took the dollar more than 300 variations to become today’s counterfeit-resilient currency. Blockchain developers aim to make their blockchains 100% breach-free.
  • To add new functionality – Windows 10 is enormously different from its very first version. Blockchain developers upgrade their versions from year to year, adding functions for improvement.
  • To reverse transactions – If website developers suspected a security breach, they could block the previous fork, declaring all previous transactions non-existent. Their new fork would herald a new start.

Hard Forks Can Mean Free Money

The new blockchain is a replica of the old, so all transactions barreling through blockchain A are replicated on blockchain B. If you’ve joined blockchain B, you receive those coins as well as new ones that are mined on your blockchain. Those new coins are known as an airdrop.

crypto airdrops falling

Image credit

When Bitcoin Cash forked, everyone holding bitcoin received the same number of bitcoin cash tokens, essentially for free.

There is a catch, though. You’ll want a secure, private wallet that supports the airdropped coins on the new fork. If you keep your cryptocurrency on an exchange like Coinbase or Binance, the exchange may keep them.

You’ll also want to check whether the forked coin has a future. The unfortunate truth is that most coins fail. Look at the reputation of the fork developers; what are their reviews? Also, see whether credible blockchain services have inspected and credited the open source code of this new coin.

Are Hard Forks a Good Thing?

Some people in the crypto community oppose forks fearing that the new coin will devalue their old. However, a successful fork usually means good news for traders.

When a new fork is announced, we often see a flurry of traders rushing to buy the coin hoping to get free airdrops. That naturally increases the price.

It’s true that the forked coins often become worthless, but some are successful and ultimately valuable, such as bitcoin cash. You’ll often see a profit from a successful airdrop.

Sometimes the hard fork is widely opposed by the majority of people. When that happens, it can strengthen support for the original coin, sending the price up.

Hard Fork Example: Bitcoin Cash

bitcoin cash logo

In August 2017, a group of Bitcoin stakeholders including investors, entrepreneurs, developers, and China-based miners quarreled over the size of the Bitcoin block. Some wanted to keep the one megabyte (MB) limit coded into Bitcoin by Satoshi Nakamoto himself. Others wanted to increase the size to two MB while other stakeholders fretted it should exceed 9,000!

The team eventually split. Bitcoin loyalists adhered to the old protocol, while critics created a new coin called bitcoin cash.

Bitcoin cash never became as popular as the original bitcoin. In December 2017, bitcoin cash was worth $4,355.62. August, 2018, bitcoin cash sold for $519.12. The research firm Chainanalysis noted that in May 2018, the 17 largest payment processing services processed bitcoin cash payments worth US$3.7 million, down from US$10.5 million two months before

To date, Bitcoin’s hard fork iterations include the following:

  • Bitcoin Platinum (BTP). December 1, 2017. A scam, invented by a South Korean teenager in an attempt to kill the price of bitcoin and profit by betting against it.
  • Super Bitcoin (SBTC). December 15, 2017. Among other changes, Super Bitcoin included smart contract functionality, taking a leaf out of the Ethereum blockchain.
  • Bitcoin God (GOD). December 25 2017. Chandler Guo proclaimed Bitcoin God a Christmas gift to bitcoin holders. Most called it bizarre
  • Bitcoin Uranium (BUM). December 31, 2017. BUM was an attempt to democratize Bitcoin, which critics said had become dominated by a small group of entities over-exerting their power over miners. BUM was created as Satoshi’s original vision. It bummed.
  • Bitcoin Cash Plus (BCP). January 2, 2018. Promised “low fees and reliable confirmations”. It flunked almost from the start.

Bitcoin also spawned Bitcoin Diamond (BCD), Bitcoin Gold (BTG), Bitcoin Atom (BCA), Bitcoin Core (BTX), Bitcoin Private (BTCP or ZCL) and Segwit, among others.

Segwit was a soft fork which is quite a different creature.

What is a Soft Fork?

Hard forks are unique in that the changes are incompatible with the previous protocol. Soft forks are different because the software or protocol changes are compatible with the previous versions.

Think of a hard fork being the difference between PlayStation 3 and PlayStation 4. You can’t play PS3 games on PS4 and you can’t play PS4 games on PS3.

A soft fork, on the other hand, is more like Microsoft Excel. You can use MS Excel 2015, even with MS Excel 2005 running in the background. The upgraded version is compatible with the old. At the same time, the updates in the newer version don’t appear in the old. MS Excel 2015 shows features that don’t appear in MS Excel 2005. The new soft fork has additional – or different – features to its older version.

In other words, soft forks have backward compatibility. The new chain contains the previous rules with additions, while the previous blockchain continues unchanged.

segwit soft fork diagram

Image credit: Reddit user u/k06a

As you can see in the diagram, the SegWit fork of Bitcoin is a “soft fork.” It doesn’t create its own blockchain. It simply upgrades and continues the previous chain. In contrast, the hard forks, like Bitcoin Cash and Bitcoin Gold actively split off.

With a hard fork, you need 90 to 95% of the stakeholders, or nodes, to accept your changes for the system to succeed. For a soft fork, you only need a majority of miners to upgrade and agree on the new version.

Soft Fork Example: The SegWit Solution

One of Bitcoin’s greatest frustrations is its slowness. Ten transactions take about a second to slip through compared to Visa’s 5,000-8,000 transactions per second. This is called the “scalability” problem.

In October 2016, Pieter Wuille, a Bitcoin Core developer, tried to treat this problem by modifying the appearance of the Bitcoin block.

Bitcoin blocks have two sections:

  1. The header with its cryptographic data.
  2. The body with transactions and sender/receiver data.

The bulkier the block, the slower traffic.

Wuille divided transactions from sender and receiver data. He gave each their own blocks, creating, in effect, a freeway where bitcoin transactions zoomed through, while so-called witness boxes (SegWit, short for Segregated Witnesses) with scripts and signatures used the parallel lane.

SegWit is called a “soft fork” since it was compatible with Bitcoin’s old code. All Bitcoin needed was 95% of its miners to accept the changes, which happened in less than a year. The platform didn’t need a separate blockchain and currency to make alterations work.

Update:

Critics complained that Segwit fell short of solving Bitcoin’s congestion problems and that the platform needed major changes to decongest its platform. Dissension led to the string of hard forks like the previously mentioned Bitcoin Cash (BCH). In 2017, Bitcoin developers also promoted hard fork SegWit 2x to magnify blocks from 1 MB to 2 MB. That fork died a week before it was scheduled to occur.

Bottom Line

A hard fork:

  • Results in two new blockchains, both of which share the same past.
  • Changes a fundamental aspect of the blockchain or the rules that govern it.
  • Is not compatible with previous versions.

A soft fork:

  • Does not create a new coin or split the blockchain.
  • Upgrades the system with new features that are compatible with the old version.

It’s as simple as that.

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woman holding lots of gold bitcoin units

With one bitcoin currently worth more than $6,000, we need smaller bitcoin units and denominations to make it work as a day-to-day currency. We explain the units, from one bitcoin down to one “satoshi” (or 1 hundred millionth of a bitcoin).

Let’s picture a future where you walk into Starbucks and buy a coffee with bitcoin. You can’t exactly pay with one full bitcoin. It would be like paying with a $10,000 note or handing over a gold bar.

For bitcoin to become a viable cash system, we need to break it down into smaller units and denominations.

Those denominations already exist, but they’re not yet widely used. Here’s how it breaks down, at a glance:

Bitcoin – 1 BTC
DeciBit – 0.1 BTC
CentiBit – 0.01 BTC
MilliBit – 0.001 BTC
MicroBit – 0.000001 BTC
“Finney” – 0.0000001 BTC
“Satoshi” – 0.00000001 BTC

A “Satoshi” is 1 Hundred Millionth of a Bitcoin

The smallest bitcoin unit is called a Satoshi (or a “Sat,” for short). It’s named after Bitcoin’s mysterious founder, Satoshi Nakamoto. At the time of writing, 160 satoshis are worth about one cent.

But why would such a tiny denomination exist?

Well, it gives you a sense of how big the bitcoin community expects the cryptocurrency to grow. One satoshi is expected to be a usable form of currency one day, perhaps similar to a penny.

Only 21 Million Bitcoins Will Ever Exist

We also need to break bitcoins into tiny units because there will only ever be 21 million of them.

Compare that to the 10 trillion dollars in existence and you start to see why bitcoin needs many denominations.

There simply aren’t enough full bitcoins for each person to own 1 BTC. (In fact, there are more people living in Shanghai than there are bitcoins).

In other words, if bitcoin becomes a true global currency, only a very small group of people will own a full bitcoin. The rest will own and spend much smaller units and denominations.

The “Finney” is a Nod to Hal Finney

Hal Finney was one of the first people to work on Bitcoin besides Satoshi Nakamoto. In fact, many have claimed that Hal Finney is Satoshi Nakamoto, but he has always denied the claim.

Although the finney is not an official denomination, it’s often used by the community as a nod to his work on the project.

Should We Stop Using the Term Bitcoin?

Some have argued that “one bitcoin” is an intimidating way to introduce new people to the cryptocurrency.

Buying one bitcoin at more than $6,000 sounds pretty overwhelming to most people.

At the same time, pricing a coffee at 0.001 BTC (roughly the cost right now) is ridiculous. Instead, you might say that one coffee costs a milliBit, or colloquially an “emBit”.

Or you might feel more comfortable investing in a deciBit (about $600) or even a centiBit ($60).

How Much is Each Bitcoin Unit Worth?

At today’s price, the denominations are worth the following:

Bitcoin – $6,340
DeciBit – $634
CentiBit – $63.40
MilliBit – $6.34
MicroBit – $0.06
“Finney”  ~ half a penny
“Satoshi” ~ 160 satoshis to a penny.

Prices correct at September 19th, 2018.

bitcoin ethereum and ripple coins on a black background

The flippening is a hypothetical moment in the future when ethereum, ripple, or another cryptocurrency overtakes bitcoin.

Bitcoin is currently the largest cryptocurrency on the planet, but it’s not impossible to imagine ethereum or ripple catching up.

At the start of 2017, bitcoin had a true monopoly in the world of digital currency. It accounted for 87% of the total crypto market value. By January 2018, that figure had fallen to 33% with ethereum, ripple and others eating into bitcoin’s market share.

Some predict that one of these altcoins (alternative cryptocurrencies to bitcoin) will overtake bitcoin entirely. That future moment is the flippening.

The Rise of Altcoins

While bitcoin dominated the blockchain space for eight years, new cryptocurrency projects were stirring under the surface.

Vitalik Buterin launched Ethereum – a “world computer” which took the concept of blockchain way beyond money transfers. Ethereum became a platform for companies and developers to build anything on the blockchain.

Ripple emerged to revolutionize the way we transfer money between banks and across borders. Ripple’s native cryptocurrency XRP was the fastest growing token in 2017, briefly overtaking ethereum.

These altcoins gained huge media attention through 2017 and rose more than 1,000% in value. The momentum lead many to predict that ethereum and XRP could surpass bitcoin in the coming years.

The Flippening: A Measure of Market Capitalization

It’s worth pointing out that the flippening refers to market capitalization (or market cap), not the price per coin.

For example, XRP is worth just 27c per coin, compared to ethereum’s $195 and bitcoin’s $6,332.

Bitcoin is by far the most expensive coin because there are only 17 million in existence (there are 100 billion XRP tokens and more than 100 million ethers).

Bitcoin, Ethereum and Ripple: Where Do They Stand?

At the time of writing, the top three by market dominance looks like this:

1. Bitcoin – 56%
2. Ethereum -10%
3. Ripple – 6%

chart depicting bitcoin, etheruem and ripple market capitalization
Chart: CoinMarketCap

Through the course of 2018, “the flippening” has moved further away. Bitcoin has re-established its dominance, while altcoins like ethereum and ripple have fallen. This is perhaps because bitcoin is seen as a “safer” haven during the long market downturn.

Could the Flippening Really Happen?

Theoretically, yes. Bitcoin has a number of practical issues that hold it back, not least its transaction speed when compared to other blockchains. There are faster, more efficient projects out there that could, ultimately, become more valuable than bitcoin.

However, bitcoin has one major advantage: reputation. 71% of Americans have heard of it. Could the same be said for XRP?

For most people, bitcoin is the first cryptocurrency they buy. On many of the major exchanges, you have to purchase bitcoin before you can buy an altcoin like ethereum or ripple.

Not only that, but Wall Street is slowly embracing bitcoin. We’ll soon have a bitcoin exchange-traded fund (ETF) and institutional money pouring into the market. That money will go to bitcoin first.

In other words, it’s very difficult to knock bitcoin off the throne, because it’s engrained as the world’s first and largest cryptocurrency.

Ethereum or Ripple?

Let’s say the flippening did happen. Which coin is the most likely to overtake bitcoin?

Ethereum has tremendous practical application. The likes of JP Morgan, MasterCard and Microsoft are all experimenting with the Ethereum system. Others are building dapps, smart contracts and new cryptocurrencies. These projects each require ether as a payment token. As Ethereum grows and develops, the demand for (and the price of) ether may rise higher than bitcoin.

Ripple also has a practical application. Ripple aims to deploy its cryptocurrency, XRP, as a “bridge currency” for banks to transfer money abroad without fees or delays. If the world’s banks opt to use the XRP token, the market cap could soar beyond bitcoin’s. It’s worth pointing out, however, that no bank is yet using XRP beyond a pilot scheme.

Ultimately, Ethereum remains the best candidate if the flipping were to happen, simply because it is easier to buy than ripple. Only a handful of exchanges allow you to purchase ripple with fiat currency (like USD). You can’t buy ripple on Coinbase, for example. Instead, you would have to purchase bitcoin or ethereum before transferring it to another exchange to buy ripple.

The difficulty in buying it means it’s unlikely to overtake bitcoin anytime soon.

Does It Matter?

Ultimately, bitcoin, ethereum and ripple each exist for very different reasons. They are not direct competitors, so comparing them as such doesn’t get us very far.

However, it’s still an important (hypothetical) moment. If another coin overtook bitcoin, it means that particualr coin was being used in a meainstream, day-to-day, practical way. And that’s an exciting prospect for blockchain technology.

There are 17.3 million bitcoins in circulation right now. Only 21 million bitcoins will ever exist which means there are just 3.7 million bitcoins left to be created, or “mined”. However, the question of how many bitcoins are there is much more complicated. Millions have been lost or stolen, making it difficult to pinpoint how many bitcoins are left.

21 million: maximum number of bitcoins that will ever exist

17.3 million: number of bitcoins currently in circulation

3.7 million: number of bitcoins left to be “mined.”

4 Million Bitcoins Are Lost Forever

Theoretically, 17 million bitcoins are out there already, but almost a quarter are gone forever. In the early days of bitcoin, millions were accidentally lost. They were forgotten on hard drives or lost on paper wallets. One man threw away 7,500 bitcoins on an old hard-drive. (People were much less careful about storing cryptocurrencies when they were only worth a few cents each).

infographic depicting the number of bitcoins lost

It’s estimated that up to 3.79 million bitcoins are gone forever (almost a quarter of those currently in circulation). That’s $23.9 billion worth based on today’s price.

5 Million Bitcoins Are Held by a Handful of “Whale” Investors

Then there are the enormous hoards of bitcoin stashed away by early investors. According to Chainalysis, five million bitcoins belong to just 1,600 wealthy people. They’re known as “whales” because they own enough bitcoin to make a splash on the market when they buy or sell.

Among these whales, we know that Bitcoin’s founder, Satoshi Nakamoto is estimated to have nearly 1 million bitcoins in his digital wallet. And the Winklevoss twins own 1% of all bitcoin in circulation.

So if we take into account 4 million “lost” bitcoins and 5 million “whale” bitcoins, that only leaves about 8 million bitcoins left on the open market.

1 Million Bitcoins Are Stolen

But wait, what about stolen bitcoins? 850,000 bitcoins were stolen in the infamous Mt. Gox hack and at least 150,000 were taken in 2016 from the Bitfinex exchange. Many thousands more have been stolen in smaller heists.

While these coins are not lost, they are probably held by thieves and not circulating on the open market.

That leaves around 7 million available bitcoins. To put that into perspective, there aren’t enough freely available bitcoins for each person in New York.

Only 21 Million Bitcoins Will Ever Exist

One of the key features of bitcoin is that only 21 million can ever exist. This number is hard-coded into the system. We are scheduled to hit this hard-cap in the year 2140.

How does it work?

In simple terms, bitcoin is created by a process called “mining.” Without getting too technical, miners are responsible for processing transactions. They are rewarded with bitcoins for doing so.

Miners produce a “block” of transactions every 10 minutes. In return, they get 12.5 bitcoins.

This is how bitcoins enter circulation.

1,800 Bitcoins Are Created Every Day (For Now…)

If a block takes 10 minutes to process and miners get 12.5 BTC per block, that means 1,800 bitcoins enter circulation every day.

However, that number is set to get smaller and smaller over the next century due to a process called “halving.”

Bitcoin Creation Is Halved Every Four Years

When bitcoin was first created, miners were rewarded 50 bitcoins (BTC) for every block,

That reward is halved roughly every four years (after every 210,000 blocks mined).

It was first halved in 2012 (to 25 BTC) and then again in 2016 (to 12.5 BTC).

In other words, the supply of bitcoins will become increasingly limited.

After 64 halvings, we’ll hit the 21 million BTC cap. At this point, no more bitcoins will be created.

bitcoin supply and halving chart
Chart source: bitcoin.it/wiki

81% of Bitcoins Already Exist

Because of the halving system, the vast majority of bitcoins have already been created.

There are only 3.7 million bitcoins left to be mined, but it will take over 100 years to get create them.

What Happens When All Bitcoins Are Mined?

When we hit the 21 million cap, miners will no longer be rewarded directly for processing the blocks. Instead, they’ll be paid a transaction fee for each block they process.

In other words, miners will still receive a payment or incentive to maintain the blockchain.

How Does Bitcoin Supply Compare to Ethereum and Ripple (XRP)?

Coin creation and supply is one thing that separates bitcoin from other cryptocurrencies like ethereum and ripple XRP.

While the bitcoin supply is capped at 21 million, ethereum has no cap. There are already more than 100 million ethereum tokens in circulation. Having said, ether supply is capped at 18 million per year.

Ripple XRP, the third largest cryptocurrency, does have a hard cap of 100 billion, but they already exist. Every XRP token was created at once at inception, so they aren’t mined like bitcoin.

Conclusion: Bitcoin Supply Is Incredibly Limited

Bitcoin is scarce. Only 21 million will ever exist – a considerably smaller number than rival coins. Not only that, but millions are already lost, stolen, or hodled away by early investors.

Couple that with an ever-diminishing supply and there is simply not that much bitcoin left on the open market.