17 Millionth Bitcoin Officially Mined

Bitcoin’s limited supply is about to get a lot more limited. With the 17 millionth Bitcoin mined on April 26, this leaves only 4 million Bitcoin’s left before they reach their cap of 21 million. With the set number of allotted Bitcoin’s, this leaves over 100 years for the remaining 4 million to be mined, which is still significant.

Barring an unforeseen event, the 17 millionth bitcoin is likely to be mined in the coming day, data from Blockchain.info shows, a development that would mark yet another milestone for the world’s first cryptocurrency. That’s because as per bitcoin’s current rules, only 21 million bitcoin can ever be created.

Stepping back, the milestone, the first million-bitcoin marker to be crossed since mid-2016, is perhaps noteworthy as yet another reminder of the technology’s core computer science achievement – digital scarcity created and enabled by shared software.

In short, bitcoin’s code, since cloned and adapted by scores of other upstart cryptocurrencies, ensures that only a set number of new bitcoins are introduced to its economy at intervals. Miners, or those who operate the hardware necessary to track bitcoin’s transaction set, are rewarded with this scarce data every time they add new entries to the official record.

Still, there’s a lot of variability in the process.

Of note is that it can’t be precisely predicted when the 17 millionth bitcoin will be mined or who will mine it, due to the many minute variances that are created in keeping a common software in sync. That said, there’s a relative predictability. Each bitcoin block produces 12.5 new bitcoin, and as bitcoin blocks occur roughly every 10 minutes, about 1,800 new bitcoin are created each day.

As such, it’s perhaps best to view this event as a “psychological barrier,” Tetras Capital founding partner Alex Sunnarborg told CoinDesk, one that is interpreted differently by different communities.

Sunnarborg, for example, sought to stress that another way to interpret the result is that 80 percent of all the bitcoin that will be ever created have now been mined. In other words, only about one-fifth of the eventual supply remains for miners and future buyers.

Others see the milestone as one that’s ripe for appreciation of the technology and its achievements.

“I think it is awesome,” Tim Draper, the venture capitalist who bought millions of dollars worth of bitcoin seized by the U.S. government at auction in 2014, said of the coming milestone.

He told CoinDesk:

“I would bet the founders wouldn’t have imagined how important bitcoin would become in their wildest dreams.”

Way with words

Others sought to suggest the milestone is one that should be considered as an opportunity for education about both the features of bitcoin, and those of cryptocurrencies broadly.

For example, unless all of the humans who operate the computers running the bitcoin software decide to make a change (a perhaps unlikely scenario today), there’s really no way to ever introduce more new bitcoin. This achievement, a technical reality, has played a key role in bitcoin’s association with money, economics and other scarce, naturally occurring assets.

In this way, the goldbugs and readers of Austrian economics who piled into bitcoin early on were quick to realize the value of the feature, perhaps giving rise to the term “cryptocurrency” itself.

Trace Mayer, one of this group’s most vocal members, summed up the philosophy in a recent tweet, in which he argued governments might seek to prevent users from holding bitcoin in the future.

“Increasing money supply is a means to confiscate through inflation which is a form of taxation without representation or due process of law,” he wrote.

Even the new way new bitcoins come into being, called “mining,” is a nod to the gold analogy.

Rather than being issued by a central bank, bitcoin is created by a network through the work of maintaining the blockchain. When a miner finds a valid hash for recent transactions, solving the bitcoin protocol’s puzzle, he or she is rewarded with a “coinbase transaction,” bitcoin credited to her account.

A little bit of cryptocurrency is created and deducted from the final supply.

The bitcoin supply curve

How participants have been rewarded has, of course, changed over time.

When bitcoin’s founder Satoshi Nakamoto mined the first bitcoin block on Jan. 3, 2009, he created the first 50 bitcoins. This reward stayed the same for another 209,999 blocks, when the first “halvening,” or reduction in rewards, took place.

It didn’t come as a surprise. Every 210,000 blocks, according to a hard-coded schedule, the network reduces the block reward by 50 percent. Following the most recent halvening, in July 2016, the reward is 12.5 bitcoin.

That means that while there are only 4 million bitcoin left to mine, the network will not reach its final supply in anything like the nine years it’s taken to get this far. As the halvenings halven, the rate of monetary inflation – supply growth – slows.

BashCo, a pseudonymous moderator on the r/bitcoin subreddit, has plotted the trajectory of bitcoin’s total supply (blue curve) against its rate of monetary inflation (orange line).

Source: BashCo.

Assuming the bitcoin protocol remains the same (a new block is mined every 10 minutes on average and the halving schedule and supply cap are unchanged), the last new bitcoin will not be mined until May 2140.

The next 120 years

With this in mind, the chart hints at another common talking point when acknowledging the milestone – that bitcoin is programmed to run for a very long time.

Jameson Lopp, lead infrastructure engineer at wallet provider Casa, was quick to remind CoinDesk that bitcoins are divisible, and that as such, the smallest parts of each bitcoin can hold seemingly infinite value.

He said:

“While 17 million BTC may sound like a lot, it’s incredibly scarce – there won’t even be enough for every current millionaire to own a whole bitcoin. Thankfully, each bitcoin is divisible into 100 million satoshis, thus there will always be plenty to go around!”

But there are other quirks to the software as well.

For one, bitcoin will never actually reach 21 million units, partly for mathematical reasons, partly because miners have not always claimed the full reward. On May 17, 2011, for example “midnightmagic” claimed a 49.99999999 block reward, rather than an even 50.

Further, to be clear, bitcoin does not stop running when 21 million bitcoin are produced. At that point, the idea is that miners would be compensated purely through the fees, which they already collect. (Though some scientists have sought to project whether such a market would work in practice).

With so many questions left unanswered, if anything, the event serves as yet another reminder of how far bitcoin has come, and just how far it has to go.

In the words of long-time developer Adam Back:

“Another million down four more to go.”

A more detailed explanation of the bitcoin’s supply and digital scarcity can be found here

Bitcoin image via Shutterstock.

Source: https://www.coindesk.com/17-millionth-bitcoin-mined-means-matters/

What is next for Bitcoin Cash software?

The next update in Bitcoin Cash’s software is projected to be more aggressive than the first. With a slated date of May 15, new additions to block size and smart contracts are coming your way. These changes are aiming to help the network handle more transactions and to increase transaction size.

 

Bitcoin cash’s next software upgrade may be even more ambitious than its first – and that’s no small feat given last time it broke off from bitcoin in acrimonious fashion.

In fact, the update, announced in November and slated for May 15, packages together a number of features that all seem about helping the network process more transactions than the original bitcoin (while adding more variety to features). Perhaps most notably, the change will quadruple bitcoin cash’s block size parameter from 8 MB to 32 MB, allowing for vastly more transactions per block.

But while that might sound aggressive given bitcoin’s more limited approach, those who have been following the cryptocurrency might be surprised that such an aggressive shift wasn’t pursued sooner.

After all, last fall, bitcoin cash’s developers chose to ignore the protests of bitcoin’s more seasoned developers, who had long argued that increasing the block size and moving the cryptocurrency forward too fast could jeopardize the more than $157 billion network.

But that contrarian mentality has proved, at least partially, attractive – one bitcoin cash is going for a little less than $1,500 a coin, making it’s market cap more than $24 billion.

Indeed, Joshua Yabut, who contributes to the bitcoin cash protocol’s main software implementation, BitcoinABC, said he doesn’t expect any protest at all when users are finally given the choice to upgrade software.

Yabut told CoinDesk:

“Block size increases are kind of non-controversial at this point, but it’s nice to see on-chain scaling happen.”

Another area where the upcoming bitcoin cash hard fork looks to scale up is through the increase of the “OP_RETURN field,” where users can store added data on the blockchain, from 80 to 220 bytes.

It’s an easy change, but one that bitcoin cash developers say could have positive consequences, as the OP_RETURN function has been traditionally used by services that require time-stamping, asset creation, rights management and other use cases that expand the capabilities of blockchains

Return of the smart contracts

Not only did bitcoin cash developers pack in features, but they’ve also added back some of the old capabilities that bitcoin creator Satoshi Nakamoto stripped from the protocol early on.

The most notable here is the addition of new kinds of smart contracts, or dynamic if-then programming statements that can give added functionality to how bitcoin cash tokens can pass between users.

In this case, the specific smart contracts in question were deactivated after Satoshi Nakamoto realized they could provide an attack vector, but bitcoin cash developers believe they’ve had enough time to seal up the holes.

“Essentially out of an abundance of caution and lack of time to fully explore and fix the edge cases that needed to be addressed, the decision was taken to simply disable any opcodes around which there were doubts or even hints of doubts,” said nChain developer Steve Shadders, in a blog postdescribing the features in bitcoin cash’s hard fork.

It’s notable that bitcoin cash is rolling these out now since bitcoin contributor Johnson Lau proposed re-adding these same smart contracts to bitcoin in February, a context that adds a bit of competition to the mix.

“Seven years have passed and the edge cases around these opcodes are much better understood now. Additionally, the decision to disable them was taken hastily and under duress,” Shadders continues in the blog post. “The [bitcoin cash] community now has had the luxury of time to address these issues thoroughly.”

Yet, since there are still potential vulnerabilities in some of the smart contracts, bitcoin cash will only be unveiling a few of them this time.

Yabut told CoinDesk:

“It’s the first step for enabling smart contracts with the protocol which will allow us to compete with ethereum later on.”

The future of bitcoin cash

But while most of the bitcoin cash community is excited about the change, there has been some pushback – or at least skepticism – from a minority of users.

Much of those concerns stem from the fact that these sweeping changes weren’t put to a community-wide vote before being coded. As such, some worry about the “governance model” of bitcoin cash, a term that denotes how developers and the miners of the cryptocurrency organize around the future upgrades.

Users, this group says, are simply not getting a chance to debate on the merits of specific changes.

Even still, the bundle of code changes doesn’t seem to be so controversial it puts bitcoin cash in any danger from something serious like the network split that created it.

All software implementations of bitcoin cash, including bitcoinABC, bitcoin unlimited and bitcoin classic, have agreed to upgrade. And there hasn’t been a huge uproar from miners, node, exchanges, wallets and other services, which will also need to upgrade to the new software to support the changes.

One of the reasons many feel good about this hard fork is that the developers decided to eliminate several features that were potentially more contentious.

For instance, OP_GROUP, a change aimed at launching features for asset creation on bitcoin cash, was thrown out when it became known that competing proposals for these features might be on the horizon. Yet, if those proposals don’t make it to the protocol relatively quickly, bitcoin cash developers don’t plan on waiting – putting the opcode up for consideration on the cryptocurrency’s next hard fork, slated for October.

Meanwhile, some bitcoin cash users wonder whether the block size parameter needs to be much (much) bigger to make room for an onslaught of data-heavy bitcoin cash projects, such as Memo, a recently launched censorship-resistant social network.

As such, bitcoin cash might continue to display ambition that can’t be slowed down.

Big metal fork image via Shutterstock

 Source: https://www.coindesk.com/bigger-blocks-better-contracts-whats-bitcoin-cashs-next-fork/