Bitcoin is a deflationary currency. The money supply, i. e. the number of all bitcoins, is limited. The computer code, which is executed decentrally on the computers of all participants, stipulates that there will never be more than 21 million bitcoins. Many praise this conservative monetary policy, but what happens when the last bitcoin is mined?
Satoshi Nakamoto modeled the distribution of bitcoin on the precious metal gold. Initially, when all the gold is still in the ground, you often find it. The more it is brought to the surface, the less it remains in the ground. Because gold is a finite resource in the world, the gold reserves in the soil are constantly decreasing. Eventually all gold will be in the hands of mankind and no new gold will be found.
Satoshi applied this principle to bitcoin and programmed it into the bitcoin code. When the Genesis block was mined in January 2009, the reward was 50 BTC. Satoshi specified that the so-called coinbase would halve itself every 210,000 blocks (210,000 blocks correspond to about four years). In the meantime, in 2018, we have already experienced two halves and the coinbase is "only" 12. 5 BTC.
The reward for the miners
The coinbase is only part of Miner's reward. The other part is the transaction costs of the broadcasters. Validating a transaction in a block costs the Miner energy. That's why you have to pay the miners for their services. Each transaction is therefore accompanied by a fee, which the miner who processes the transaction in a block can claim for himself. Because space in a block is finite, all stations are in competition with each other and a market for transaction fees is establishing itself. The higher the fee attached to a transaction, the higher the incentive for a miner to validate that transaction.
While the coinbase continues to decline, it is therefore possible that transaction fees will increase.
The purchasing power of a unit
The number of bitcoins emitted by the coinbase has nothing to do with the value of the purchasing power of a bitcoin. While 50 BTC per block were distributed in 2009, nothing could be bought at that time. Today's 12. 5 BTC are worth almost 100,000 Euros (at a bitcoin price of about 7,300 Euros). This means that it may well be that the 6. 25 BTC in 2020 are worth more (have a higher purchasing power) than the 12. 5 BTC today.
The coinbase is primarily intended for the liquidity and fair distribution of the monetary unit. While in many ICOs all tokens have existed since the first hour and are only distributed, in Bitcoin there is a fair distribution of coins. This also favours decentralisation and brings new money into circulation evenly and predictably.
The money supply does not play a major role for the economy unless it can be changed arbitrarily. Considering the money supply as a constant brings a great advantage: purchasing power increases.
Transaction costs as a reward
Bitcoin's "End Game" is that the coinbase is completely eliminated and only the transaction costs remain as a reward for the miners. How high the transaction costs will then be is impossible to determine. However, some assumptions can be made.
On the one hand, market forces are establishing a price for inclusion in the blockchain. On the other hand, the energy costs for the production of blocks represent a lower limit. If the purchasing power of the block reward falls below the cost of energy, some miners will shut down their computers and create a lower difficulty in creating new blocks. The Bitcoin system maintains itself and adjusts the variables accordingly. Only the money supply is constant, namely 21 million BTC, and the block size of currently one megabyte.
In the initial phase of Bitcoin (which we are still in) energy costs are the most important, whereas transaction costs are negligible. Over time, the importance of the coinbase in favor of transaction fees will continue to decline. Bitcoin will continue to work.
Source: https://www.btc-echo.de/was-passiert-wenn-der-letzte-bitcoin-gemined-ist/