Currently, 16,734,300 bitcoins are in circulation, and on an average every 10 minutes, 12.5 bitcoins are being ‘added’ to the total supply. Bitcoins are generated on a socially accepted contract proposed by its mysterious inventor(s) Satoshi Nakamoto.
But how many bitcoins will there be eventually? The answer is 21 million.
According to the contract which every miner or stakeholder (called nodes) within the bitcoin network agrees to, every block created in a blockchain introduces a certain number of bitcoins which halves every 210,000 blocks.
So, by design, the first 210,000 blocks added 50 bitcoins per block to the network. The next 210,000 blocks added 25 bitcoins, currently, 12.5 bitcoins are being added to the system, and after another 210,000 blocks are created the number will be halved to 6.25 bitcoins.
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It basically creates a geometric series (up to infinity): 50, 25, 12.5, 6.25…. Logically, as the number is getting shorter after every 210,000 blocks, it will eventually reach very close to zero. However, it will never reach zero. So theoretically, the mining (or generation) of bitcoins will never cease.
But, at some point, it will not be practical to mine any more bitcoins as generating a ridiculously low amount of bitcoin will no longer be profitable. By that time, as per calculation (see bottom), (nearly) 21 million bitcoins would have been generated.
As per an estimation, it is taking four years for the creation of 210,000 blocks and the bitcoin generation will reach its saturation level around the year 2140.
Note: The sum (S) of any infinite geometric series is given by the first term divided by the difference of the ‘ratio’ from one. Here first term (a) is 50, ratio i.e. division of any term (except the first) in the series by the previous one (for e.g. 25/50) is ½. Hence, putting in the formulae: S= [a/(1-r)]; we get [50/(1/2)] or 100.
Since every term in the series is repeated 210,000 times (for each block created till the next halving), the sum of the series needs to be multiplied by 210,000. This gets us to the total number of bitcoin which will possibly be generated, 21 million.