Over 90% of Monero’s Block Reward Has Been Mined
There will be a total of 18.4 million Monero’s XMR coins in circulation by May 31, 2022. And the project has already mined more than 90% of it.
Per data available at MoneroBlocks.info, a Monero blockchain explorer, the privacy-enabled cryptocurrency have emitted close 16.6 million XMR. As the emission forms parity with the total supply, the Monero project will switch to a new supply program, dubbed as tail emission. The project’s earlier announcements indicate that miners will obtain a consistent mining reward of 0.6 XMR per block that would likely maintain the overall security and integrity of Monero blockchain.
“Miners need an incentive to mine. Because of the dynamic blocksize, competition between miners will cause fees to decrease,” Moneropedia explained.
If mining is not profitable due to a high cost and low reward, miners lose their incentive and will stop mining, reducing the security of the network.
Similar to Bitcoin’s working model, Monero also reduces the supply of its XMR tokens that are thrown into circulation through mining. As of now, the project offers the reward of 3.41 XMR per block, and it is programmed to go lower with each block mined until it reaches 0.6 XMR.
A Replacement Cryptocurrency?
Monero’s tail emission plan somewhat attempts to challenge the token supply mechanism of bitcoin, the world’s leading digital currency by adoption and market capitalization. Bitcoin network will mine a total of 21 million coins in its lifetime. By 2040, it would have drilled 99.8% of all bitcoins, while the remaining 0.2% will spread out across the next 100 years.
So, the only way bitcoin miners will be earning any incentives is by on-chain transaction fees or through dominant assurance contracts. Bitcoin network is already practicing an off-chain solution in Lightning Network, where users don’t pay commissions to miners for settling every bitcoin transaction. If the practice continues to exist as a long-term solution to bitcoin’s scalability, then miners would be least interested in confirming transactions on its main chain. It’s called the Tragedy of the Commons.
In the absence of miners, the bitcoin blockchain would be less secure than it is today. After all, it is the miners that have kept it cheat-proof all this time.
Monero, on the other hand, will keep its supply consistent to incentivize miners all its lifetime. The foresightedness hints that the privacy cryptocurrency is preparing itself for a long game, perhaps to be among the few cryptocurrencies that would replace bitcoin if it fails to innovate.
That said, the demand for XMR should be higher to suit its deflationary model.
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