A total of 18.4 million Monero XMR coins will be in circulation by May 31, 2022. And the project has already mined more than 90% of it.
According to data available on Monero blockchain explorer MoneroBlocks.info, the privacy-enabled cryptocurrency has issued nearly 16.6 million XMR. As emissions become equal to total supply, the Monero project plans to switch to a new supply program called tail emissions. Previous announcements of the project indicated that miners will be able to earn a consistent mining reward of 0.6 XMR per block, which is likely to maintain the overall security and integrity of the Monero blockchain. Masu.
“Miners need an incentive to mine. Due to dynamic block sizes, competition among miners drives down fees,” Moneropedia explained.
If mining is not profitable due to high costs and low rewards, miners lose their incentive and stop mining, reducing the security of the network.
Similar to Bitcoin's working model, Monero also reduces the supply of XMR tokens that are put into circulation through mining. At the moment, the project offers a reward of 3.41 XMR per block, and is programmed to reduce the reward each time a block is mined until it reaches 0.6 XMR.
Alternative virtual currency?
Monero's tail emission plan seeks to some extent challenge the token supply mechanism of Bitcoin, the world's leading digital currency by adoption and market capitalization. The Bitcoin network will mine a total of 21 million coins during its lifetime. By 2040, his 99.8% of all Bitcoin will be mined, and the remaining his 0.2% will be distributed over the next 100 years.
Therefore, the only way Bitcoin miners can be incentivized is through on-chain transaction fees or dominant guarantee contracts. The Bitcoin network is already implementing an off-chain solution with the Lightning Network, where users do not pay fees to miners to settle all Bitcoin transactions. If this practice continues to exist as a long-term solution to Bitcoin's scalability, miners will have little interest in confirming transactions on the main chain. It's called the tragedy of the commons.
Without miners, the Bitcoin blockchain would be less secure than it is today. After all, it's the miners who have been preventing cheating all this time.
Monero, on the other hand, maintains a consistent supply to incentivize miners over their lifetime. This foresight suggests that privacy cryptocurrencies are poised for the long run, perhaps becoming one of the few cryptocurrencies to replace Bitcoin if innovation fails.
That said, demand should increase further in line with XMR's deflationary model.
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