What will happen to Bitcoin after all 21 million are mined?

There are 21 million Bitcoin. That’s it. Once they’re all mined, which should occur in around 2140, no new Bitcoin will enter circulation.

The Bitcoin blockchain was designed around the principle of controlled supply, which means only a fixed number of newly minted Bitcoin can be mined each year until a total of 21 million coins have been minted.

Once all 21 million BTC have been mined, the network will largely operate the same as it does now, but with one crucial difference for miners.

When will the last Bitcoin be mined?

Approximately every ten minutes, Bitcoin miners ‘discover’ a new block, solving a cryptographic puzzle that allows the successful miner to add the newly discovered block to the blockchain. This block is filled with transactions that were previously waiting in the Bitcoin memory pool, usually chosen based on the size of the transaction fee they provide to miners.

In return for discovering a block, the miner receives a fixed Bitcoin block reward. When Bitcoin first launched, the reward was set at 50 BTC—but it halves periodically, after 210,000 new blocks have been discovered. That happens roughly every four years, reducing the reward to 25 BTC, 12.5 BTC, 6.25 BTC, and so on. Three halvings have been completed so far; the most recent Bitcoin halving occurred on May 11, cutting the block reward to 6.25 BTC.

Bitcoin miners will be able to continue earning block rewards until a total of 21 million BTC has been minted, after which no new Bitcoin will enter circulation. Currently, around 18.4 million BTC has been produced, equivalent to minting 87.6% of the maximum supply in just over a decade. But it will take another 120 years before the last Bitcoin ever is minted, due to the gradual reduction that occurs every four years as a result of the halving process.

What will miners do when all the Bitcoin has been minted?

Once all 21 million Bitcoin have been minted, Bitcoin miners will still be able to participate in the block discovery process, but they won’t be incentivized in the form of a Bitcoin block reward. That’s not to say they won’t be rewarded at all, though.

As well as block rewards, Bitcoin miners also receive all the fees spent on the transactions included in each newly discovered block. Currently, transaction fees make up a small proportion of a miner’s revenues, since miners currently mint around 900 BTC (~$8.5 million) a day, but earn between 30 to 50 BTC ($285,000 to $475,000) in transaction fees each day. That means transaction fees currently make up as little as 3.3% of a miner’s revenue—but in 2140, that’ll shoot up to 100%.

Losing the block reward won’t disincentivize miners, according to Simon Kim, CEO of VC fund #Hashed. “Changes to the Bitcoin ecosystem and its place as a key currency in the virtual world could drive significant changes in miner adoption even after the block rewards stop,” Kim told Decrypt.

Transaction fees peaked during 2017

It’s true that switching to a pure transaction fee-based rewards would almost certainly decimate the mining network now, since few Bitcoin miners would be able to profitably mine Bitcoin if they received just 3.3% of their typical rewards. However, if the network were to explode in usage, then competition for…

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As Bitcoin Struggles, This New Crypto Has Soared 250% To A Massive $2 Billion Valuation

Bitcoin and cryptocurrency investors, feeling bullish amid a broad post-coronavirus crash rally, are seeing massive gains from some smaller cryptocurrencies.

The bitcoin price, under pressure since its latest attempt to breach the $10,000 per bitcoin level last week failed, is stuck on a downward trend—but other digital assets are soaring.

Following its launch just this week, decentralized finance protocol Compound’s comp token has surged around 250%, giving it a market value of around $2 billion, according to some calculations.

Users of the Compound lending platform began earning comp tokens this week, with the cryptocurrency getting a boost from major U.S. bitcoin and cryptocurrency exchange Coinbase announcing it will begin listing the token.

“Once sufficient supply of comp is established on the platform, trading on our comp-U.S. dollar and comp-bitcoin order books will start in phases, beginning with post-only mode and proceeding to full trading should our metrics for a healthy market be met,” Coinbase said in a blog post.

Comp has this week become the 25th most valuable cryptocurrency, according to CoinMarketCap data, with its price surging to over $200 per token, up from around $60 at the beginning of the week.

Some early calculations, which are inconsistent due to comp’s immaturity, have put the total value of comp’s combined tokens in circulation at a little over $2 billion.

Others, that count fewer comp tokens in circulating supply, put the cryptocurrency’s value at around $500 million—in comparison bitcoin’s market capitalization is just over $170 billion.

Comp, a so-called governance token that allows holders to influence the Compound protocol, are awarded every day to users of the decentralized finance platform.

Comp is currently only listed on a handful of smaller cryptocurrency exchanges, prompting some bitcoin and crypto market watchers to warn the sudden price surge could be short-lived.

“Most of comp’s price fluctuations are a function of the tiny float. I wouldn’t read too much into the current price,” Haseeb Qureshi, managing partner of Dragonfly Capital, told bitcoin and crypto industry news outlet Coindesk this week.

Decentralized finance, often known as DeFi, has emerged as a popular growth area for bitcoin’s blockchain technology, sparking a frenzy of speculation that echos the 2017 cryptocurrency and initial coin offering bubble.

DeFi platforms, blockchain-enabled systems that are often based on the ethereum network, allow for…

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Is It a Good Time to Buy Bitcoin?

According to a popular metric dubbed, Bitcoin has dropped back in a “buy zone.” Historically, it has been an attractive point for investors to accumulate as a price surge has followed on most occasions.

Bitcoin’s PM Indicator Drops To 0.5

The Puell Multiple is a metric calculated by dividing the daily issuance value of bitcoins in USD by the 365-day moving average of the daily issuance value. Daily issuance is the number of freshly minted coins added to the ecosystem by miners after receiving them as block rewards.

Naturally, the daily issuance has altered significantly after the third halving on May 11th, 2020.

The cryptocurrency analytics company Glassnode evaluates the Puell Multiple in a ranking system. It starts from a low of 0.1, indicating an undervalued state, and it goes to a high of 10 – meaning the asset is overvalued.

Glassnode recently outlined Bitcoin’s current undervalued status as the metric has now dipped below the 0.5 line. The company tweeted that “Puell Multiple has dropped back into the green “buy” zone after almost three weeks.”

Bitcoin's Price And The Puell Multiple. Source: Glassnode
Bitcoin’s Price And The Puell Multiple. Source: Glassnode

Puell Multiple Says Buy Bitcoin

Historically, Bitcoin hasn’t been below 0.5 too often since 2014. The first significant drop came in January 2015. At the time, BTC’s price plunged by more than 50% in a month from a high of $320 to a low of about $150.

The indicator stayed there for a few months, while the primary cryptocurrency was consolidating. When Bitcoin started ascending in price, the Puell Multiple followed.

The second clearly visible plunge came in late 2018, early 2019. This was in the months following the parabolic price increase, and Bitcoin was on its way down. In November 2018 alone, the asset price plunged from $6,400 to $3,500.

It took BTC a few months, but it finally began recovering in April and May 2019, before reaching the yearly high of nearly $14,000 in June. Somewhat expectedly, the Puell Multiple surged as well.

The metric arrived in the green zone earlier this year again after the entire market experienced the panic-selling effects of the COVID-19 pandemic. When BTC lost over 50% of its value in days and dipped below $4,000, the Puell Multiple went into the so-called “buy zone.”

In most previous cases, when the indicator has been in the green zone, Bitcoin’s price indeed spiked in the upcoming months. As such, Glassnode concluded that “for investors with long-term horizons these levels below the 0.5 line have historically marked excellent entry points into BTC.”

It’s also worth noting that Bitcoin has found itself twice in the “overvalued” state – the first time it happened following a monthly surge in late 2013 from $200 to nearly $1,200. The second time – during the mentioned above parabolic price increase when the asset reached its all-time high of almost $20k. After each such occasion, there was a severe rejection, and the price tumbled.

The post Is It a Good Time to Buy Bitcoin? At Least Judging by This Technical Indicator appeared first on CryptoPotato.

 

Source: Crypto Potato

Trump Told Treasury Secretary to ‘Go After’ Bitcoin, Bolton Book Reportedly Claims

In a terse exchange about imposing sanctions and tariffs with China, Trump reportedly told Mnuchin: “Don’t be a trade negotiator,” ordering him instead to: “Go after bitcoin [for fraud].”

“If you don’t want me on trade, fine, your economic team will execute whatever you want,” Mnuchin retorted. The exchange comes from an excerpt from Bolton’s new book, obtained by the Washington Examiner.

The conversation is said to have happened in May 2018, around the time investors were cheering bitcoin on after it rose 33% against the dollar. It’s unclear from the excerpt what specifically led Trump to order Mnuchin to crack down on bitcoin and whether the two men had been talking about cryptocurrencies beforehand.

At the time, there had also been a lot of speculation about what U.S. regulators were going to do about crypto. At CoinDesk’s Consensus event that year, industry figures were calling for greater clarity from regulators. Representatives from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) said they wanted to avoid “hindering” innovation.

Trump made his own thoughts on bitcoin abundantly clear last summer.

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he tweeted. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”

But Mnuchin, one of the longest-serving members of the Trump administration, has taken a more measured approach. He may have no plans to buy bitcoin but does not have a problem with digital asset initiatives, such as the Libra project, as long as they adhere to U.S. regulations.

Bolton’s book, “The Room Where It Happened, is scheduled for release on…

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Bitcoin To $1,000,000 Might Sound Crazy, But Is It?

I have come to the conclusion that bitcoin is going to $1,000,000. This number, which you will see tossed out into the crypto narrative, comes from the idea that there are 100 million subunits of bitcoin and if each was worth the quantum unit of 1 U.S. cent, then a bitcoin would be worth $1 million. This is a non sequitur argument as there is no causal link why this should be so. In fact, you can fractionalize a bitcoin satoshi in to as many sub-satoshis as you like. It does have plenty of sizzle as an idea and while it has seemed extremely unlikely to me until now I suddenly see that mirage as being a possibility.

I now believe this is a possibility not because the value of bitcoin will go up, though I believe it will, but because the value of money is about to fall heavily and quite possibly into the depths of monetary hell.

This is why a bitcoin could be worth a million dollars or more.

If there is not a startling recovery in the global economy this year, then government budgets will collapse and those governments will be forced to print cash and monetize bonds. You might say this is QE, but QE isn’t the same thing at all, because it doesn’t print new money and hand it out. It prints new money and swaps it for not so acceptable assets that are a step or two and a haircut or two away from being swapped by others for lovely cash. QE is a generous swap with a kindly pawnshop that is happy to take a view on the creditworthiness of a lot of dodgy assets. Handing out to the general public money still almost wet from the presses because they might get sad and uppity or simply because they need money to pay their mobile bill to keep the phone company solvent to keep their employees working to pay taxes to the government, is another thing entirely. Printing money to spend in that state’s economy is straight South American-style inflationary fiat creation.

If tax budgets crater, this is exactly what is going to happen, because “austerity” on the scale necessary to claw back broken budgets is not going to happen and perhaps even shouldn’t. Like it or not, the lockdown has made everyone poorer, in what are highly leveraged economies. The trouble with leverage—as anyone with a nice life style, a pile of debt and sudden unemployment knows—is that leverage is great on the upswing but awful on the downswing. Any trader will tell you, leverage kills and like any leveraged trader caught with the markets in reverse, we must hope for a sudden semi-miraculous reversal in direction to save us from being irreversibly crushed by the mathematics.

Right now, there are plenty of firebrands wanting to smash the capitalist system or what passes for one in these mixed economic times. It may be proven ironic that it has already been smashed. Who owns the aftermath is yet to be established and we can hope the outcome will not be worthy of a record in the history books. Either way the outcome of sovereign budget collapses is not going to be resolved by deflation and the only solution to such a situation will be to print and to flush the system with money at every level without recourse to caring about inflation.

So I can imagine a scenario where recovery comes quite quickly and governments print hard but not so hard as to hit the sort of inflation made famous in Argentina, Turkey or even in history Japan, Hungary and Germany. A strong recovery means rebasing currencies by 100% over say 6 or 7 years, which would do the trick of crawling back to a new normal. You would see inflation around 7%-9% a year and the rest of the dilution would be magicked away with statistical tweaks to help the optics of it all. That would be a  fine accomplishment by those holding the bag of the next few excremental years. It would be like a plane crash where there were only concussions and broken limbs. But this “soft landing” is by no means a certainty.

The second virus wave is already apparently shaping up and countries are unlocking at a pace that might go on into the autumn and perhaps will take even a year or two to revert to a status where economic activity can fully recover, the damage is still building. Is the timetable for a return to normal levels of economic activity going to allow state expenditures to continue at anywhere near old levels?

It’s hard to imagine it will while it is easy to imagine a biblical outcome.

Doling out millions of new money is the classic answer to such chronic straits so bitcoin to $1,000,000 could happen in short order in such circumstances and in real terms that might be only a few multiples higher in purchasing power.

Right now there are only about 18 million bitcoins (with a maximum of 21 million) and if any major economy or group of minor countries melted down into hyperinflation that alone would drive crypto into orbit in dollars.

So while the halvening chips away towards high prices for bitcoin, there is an inflation bomb ticking away that in short months will quickly resolve its probabilities.

So what is an investor to do? Simply…

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$930M in Bitcoin Options Expire Next Friday — Time to Worry?

Much attention has been paid to the Bitcoin options and futures market and each week crypto media reports on new record open interest figures being achieved. As the date of another futures and options expiry approaches, traders are becoming anxious due to the fact that the Bitcoin (BTC) price has consistently failed to surpass the $10,000 mark.

To date, more than 100,000 Bitcoin options totaling $930 million are set to expire on June 26. This figure represents nearly 70% of Bitcoin’s entire open interest. On June 15, the Bitcoin price pulled back to $8,900, leading investors to question whether professional traders have turned bearish as the June 26 expiry date approaches.

Although open interest doesn’t allow one to predict a market trend, it is possible to gain more insight by analyzing additional data such as the put/call ratio. This indicator provides a clear picture of investors’ sentiment as call options are mostly used for bullish strategies.

Total BTC options open interest

Total BTC options open interest. Source: Skew

Data from Skew shows that open interest reached $1.3 billion — a 100% increase over the last two months. Currently, Panama-based derivatives exchange Deribit accounts for 77% of the options market, although regulated venues such as CME and LedgerX are consistently gaining relevance.

CME options are mostly underwater

June CME Bitcoin options open interest by strike

June CME Bitcoin options open interest by strike. Source: CME

The June 26 expiry for the current CME contract consists almost entirely of call options, hence bullish positions. Seventy-five percent of such open interest is now sitting at the unlikely scenario of $11,000 and higher-level expiries.

This leaves $67 million worth of call options potentially impacting the market, which, when compared to the $300 million average daily volume traded on CME futures, is unlikely to have any meaningful impact. Also, investors should keep in mind each CME contract entitles 5 BTC.

Deribit options dominate, but are currently market neutral

June Deribit Bitcoin options open interest by strike

June Deribit Bitcoin options open interest by strike. Source: Deribit

Deribit holds 50% of the 100,000 BTC options set to expire on June 26, and unlike CME, Deribit offers contracts starting from 0.10 BTC. Institutional investors are also able to access Deribit’s over-the-counter block trading solutions.

The above chart tells a slightly different story from CME, as strikes with a higher probability are more balanced between call and put options.

There is roughly 9.5K BTC open interest on both calls and puts. This amounts to a $180 million notional set to expire, although it does not indicate which side has a more substantial vested interest.

Futures markets sentiment is still slightly bullish

BTC futures markets provide an in-depth view of professional investors’ sentiment. Contracts that mature in three months should trade at a premium to the current spot levels in a situation known as contango. A steep contango indicates that sellers are demanding even more money in the future.

BTC futures 3-month contracts premium

BTC futures 3-month contracts premium. Source: Skew

As shown above, the current 1.8% average premium for the September expiry sounds reasonable and is slightly bullish. The present scenario is the opposite of mid-May, when futures have faced backwardation as futures traded below spot price.

Bull market scenario

If Bitcoin somehow manages to trade above $11,000 at expiry, this would activate another 14,900 BTC in unaccounted option contracts. Every $100 above that level would bring call option buyers another $1.5 million in profits.

One should keep in mind that…

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JPMorgan Completes Surprise Bitcoin Flip—And Calls A Price Floor

JPMorgan, one of Wall Street’s biggest banks and up until recently an outspoken bitcoin critic, has changed its tune on the world’s number one cryptocurrency.

The bitcoin price, now hovering just under $10,000 per bitcoin, has added around 30% since the beginning of the year despite the coronavirus crash and bitcoin’s closely-watched third supply squeeze.

Now, JPMorgan, whose chief executive once branded bitcoin a “fraud,” has said bitcoin is looking “mostly positive” and cryptocurrencies more broadly have “longevity as an asset class.”

“Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March,” said JPMorgan analysts in a report led by head of U.S. interest rate derivatives strategy Joshua Younger and cross asset research analyst Nikolaos Panigirtzoglou.

Bitcoin briefly crashed to under $4,000 per bitcoin in March, losing over half of its value in under month as the spreading coronavirus pandemic sent panic through global markets.

Bitcoin bounced back quicker than most other assets, however, recovering almost all of its corona-crash losses by the end of April.

Equity markets have also now almost entirely returned to pre-coronavirus highs, boosted by unprecedented central bank stimulus led by multi-trillion dollar measures from the U.S. Federal Reserve.

While JPMorgan found the bitcoin price has recently begun to trade inline with riskier assets like equities, bitcoin has consistently maintained a price above its production costs.

Others have previously named the cost of creating new bitcoin, a process known as mining, as a potential bitcoin price floor.

However, the net cost of bitcoin mining has changed recently, with the number of bitcoin rewarded to those that maintain the bitcoin network cut by half in May—dropping from 12.5 bitcoin to 6.25.

Ahead of the May halving, the cost of mining one bitcoin was put at around $7,000 by crypto-focused research firm TradeBlock.

The bitcoin price has climbed since its third halving though it’s failed to hold onto gains above $10,000 despite repeatedly moving above the psychological line.

Elsewhere, the report found “there is little evidence of run dynamics, or even material quality tiering among cryptocurrencies, even during the throws of the crisis in March,” suggesting bitcoin weathered its “first stress test” well.

JPMorgan also said…

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4 Reasons Why Bitcoin is The Best Hedge Against Uncertainty

Bitcoin Strategist at Kraken Pierre Rochard believes Bitcoin to be the perfect hedge against uncertainty, despite its high volatility.

In an interview with Cointelegraph, Rochard pointed out the dichotomy of uncertainty and risk. While the former is quantifiable, the latter applies to situations where the odds can’t be calculated.

Due to its volatility, Bitcoin is a high-risk asset. However Bitcoin’s volatility can be hedged against using derivative contracts.

“You can insure yourself against volatility by buying puts or selling futures”, he points out.

As pointed out by Rochard, the quantifiable risks in life are far smaller than the amount of unquantifiable uncertainty. The latter can be effectively hedged against by Bitcoin, due to four major properties.

The first property is its high degree of accessibility, which allows anyone to send and receive Bitcoin in a permissionless way. Conversely, fiat currency is subjected to a high degree of uncertainty, as it relies on third party custodials,

The second property is seizure-resistance, which makes Bitcoin harder to confiscate than other assets.

“If you look at the expected cost of seizing bitcoin, it’s just greater than the expected cost of seizing gold or physical cash, especially a bank account”.

The third is censorship – resistance, which is provided by way transactions are broadcasted to the network and then recorded on the blockchain.

As pointed out by Rochard, transactions are unlikely to be hijacked given the economic incentives given to miners for mining blocks.

Finally, the fixed hard cap of Bitcoin supply minimises the uncertainty affecting all currencies that depend on central banks’ monetary policies.

By exerting the power to…

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3 Crucial Factors Why Bitcoin Price Plunged From $10,160 To $9,000 In 28 Hours

The price of Bitcoin plunged from $10,160 to $9,012 on BitMEX within less than 28 hours, dropping by 11.3%. It coincided with a staggering 5.6% drop of the Dow Jones Industrial Average (DJIA).

Three key factors contributed to the sudden downtrend of Bitcoin: liquidation of $78 million worth of longs, correlation with the stock market since March 2020, and the strength of the $10,500 multi-year resistance zone.

On March 13, the price of Bitcoin plummeted to as low as $3,600 on BitMEX.

The move liquidated over a billion dollars in futures positions. The downtrend was so strong that BTC technically could have hit zero.

Sam Bankman-Fried, the CEO of major cryptocurrency derivatives exchange FTX, said after BTC dropped below $4,000:

“R was huge today. There were endless liquidations, and the BitMEX orderbook was basically nonexistent… It means BTC might go to 0. But it didn’t.”

Since then, data from Skew shows Bitcoin has been correlated to some extent with the U.S. stock market.

On June 11, right before the price of Bitcoin dropped to as low as $9,012, pre-market data of the Dow Jones indicated a 900-point drop.

Before the U.S. stock market opened, the Dow dropped by around 3% during an after hours trading session.

As equities dropped, the price of Bitcoin followed. The stock market correction did not necessarily cause BTC to decline. Rather…

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Donald Trump Said Bitcoin Is Based On “Thin Air,” But Wall Street Is Buying En Masse

U.S. President Donald Trump said the value of Bitcoin and cryptocurrencies are based on “thin air.” Yet, Wall Street is increasingly investing in Bitcoin.

Grayscale, an investment firm that enables institutions to invest in Bitcoin through a publicly-traded vehicle, saw 88% of its investments come from institutional investors in the first quarter of 2020.

Fidelity, which manages $2.46 trillion in assets, found in a survey that about one third of institutions in U.S. and Europe are invested in cryptocurrencies.

Following the lead of billionaire investor Paul Tudor Jones, data shows that institutions are beginning to perceive Bitcoin as a store of value.

In July 2019, President Trump criticized Bitcoin and crypto assets. He said their value is highly volatile and are not considered as money.

President Trump wrote:

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”

But, in the same statement, President Trump emphasized that the U.S. dollar is the most dominant currency in the world and it will stay that way.

The need to mention the dominance of the dollar along with Bitcoin and cryptocurrencies by the President showed that mainstream awareness of the emerging asset class was growing.

“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” President Trump noted.

As the world encounters heightened geopolitical risks, global uncertainty, and an economic slump, institutional investors are portraying their willingness to take a risk in investing in a relatively new asset that could be a hedge against inflation in the long run.

In a famous essay, Xapo CEO Wences Casares laid out his investment thesis for Bitcoin and why he thinks BTC could reach $1 million.

Casares said Bitcoin is not an asset nor does it have intrinsic value. But, it is money and it transfers value effectively in a decentralized manner.

The same can be said about gold. By nature, gold does not have intrinsic value. Over time, because people considered gold to have value for thousands of years, it is perceived as a store of value.

As Tudor Jones said, Bitcoin will…

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