Here is the question that begins to worry serious participants in the crypto market: what will happen to Bitcoin and its network when the last Bitcoin is mined? It sounds like science fiction, but it’s not far off.

Imagine an economy with a strict money supply — no possibility to print new money. That’s exactly the scenario for Bitcoin. The network is limited to 21 million coins, and we are already close to the finish line. Currently, about 20 million BTC have been mined, with less than 1 million remaining. The halving in April 2024 reduced inflation by another 50% — the fourth time in the network’s history. According to the current trajectory, the last Bitcoin will be mined around 2140. There’s still a century left before that, but the process is already underway.

This creates an interesting paradox for miners. Today, they earn rewards from block subsidies plus transaction fees. After the last Bitcoin is mined, the block reward will drop to zero, and they will rely solely on transaction fees. This means fees will inevitably increase — the only question is how much.

For context: in 2011, people paid 0.01 BTC per transaction; in 2012, the average fee was $0.01; in 2017, it rose to $1. Today, the average fee is about $15 in US dollars. After the halving, the cost of mining a block in the US increased to over $20,000, in the UK up to $50,000. Miners are holding on thanks to the 943% increase in BTC price from January 2020 to April 2024, but that won’t last forever.

However, there’s an interesting point: not all 21 million BTC will be in circulation. Experts estimate that up to 20% are lost forever due to lost keys or owners’ deaths. This makes the actual supply even smaller, reinforcing the deflationary effect.

The Bitcoin network is designed to handle this transition. The difficulty adjustment algorithm ensures a steady rate of block generation despite fluctuations in the number of miners. Plus, a fixed supply with increasing demand should lead to rising prices — basic economics.

But there’s a scalability issue. Bitcoin as a network isn’t very suitable for microtransactions if the fee exceeds the payment amount. This has been a long-standing debate in the community. Bitcoin Cash once forked off, proposing larger block sizes. Bitcoin developers took a different route — second-layer solutions, especially Lightning Network.

Lightning allows for instant off-chain payments, which are periodically “settled” on the blockchain. It’s like a banking system and cash on the street: you move Bitcoin off the main chain for everyday payments, and when needed, you bring it back on-chain. Miners can charge high fees for large on-chain transactions, leaving microtransactions to second-layer solutions.

What will happen in the long term, when the last Bitcoin is mined and the network fully shifts to a fee-based model? Anything is possible. New forks, widespread adoption of Layer 2 solutions, unexpected technological breakthroughs. But one thing is clear: as long as the internet exists, Bitcoin will operate as Satoshi envisioned — a powerful decentralized network that doesn’t need central banks or governments. And that seems to be the main concern for those interested in this space.