According to the Electroneum white-paper, it’s blockchain software allows for a total of 21 billion Electroneum coins to be created, ever. However, not all of them are in circulation yet, and won’t be for years to come!
To grasp all this, we’ll need to understand how many coins are reserved for special use, and how new coins enter the system through mining.
Let’s dive in…
During September/October 2017, the Electroneum team reserved a number of coins before the Electroneum blockchain ever launched. These were:
- 4.4 Billion ETN reserved for investors
The Electroneum team decided to sell about 6 billion coins during the ICO to early investors. According to the white-paper, these funds are for marketing, translating, and further technical development of the app/blockchain. However, strong interest in the project saw it raise $40 million before the scheduled end date of the ICO. Coin sales were therefore stopped at $40 million, which equated to 4,411,590,293 coins.
- 20 million ETN reserved for bounty payments
During the ICO, a bounty program was run in which users were rewarded for sharing Electroneum, answering questions in forums, and helping with translations of the white-paper and website. 20 million coins were reserved for this.
- 20 million ETN reserved for the Electroneum team
As developers of the product, the Electroneum team (12 members) reserved about 20 million coins for compensation.
Taking all this into account, we can calculate the following.
|21,000,000,000 :||Total ETN coins that will ever exist|
|– 4,411,590,293 :||Sold during ICO|
|– 20,000,000 :||Bounty payments|
|– 20,000,000 :||Team compensation|
|16,628,409,707 :||Total ETN left for mining|
The remaining 16.6 Billion ETN will be given to Electroneum miners over the next few decades. Let’s discuss how ETN enters the system through mining.
How Electroneum Coins Enter Circulation
The Electroneum mining community consist of a network of decentralized computers all over the world that check transactions and keep record of account balances. This requires a lot of computational effort in the form of CPU power, so miners receive Electroneum coins as a reward for their efforts.
Here’s how coins enter the system:
- A miner groups a few thousand transactions into one block and starts to solve a mathematical puzzle linked to that block.
- When he finds a solution, he tells the rest of the mining network and his transaction block is added as the newest block in the blockchain.
- New Electroneum coins are created out of thin air and credited to the miner’s account.
The current reward for “mining” one block of transactions is not yet known. We will probably know that as soon as the blockchain launches on 1 November. However, given that Bitcoin (with a total supply of 21 Million coins) had an initial reward of 50 BTC per block, I’m speculating the Electroneum miners could receive 50,000 ETN initially.
The reward for mining one block halves every few years – programmatically. And if some miner tries to claim more coins than the block reward at the time, their block will be rejected by the rest of the mining network. So this halving every few years makes the block reward less and less. 21 Billion is like an asymptomatic value, meaning that the total number of coins will never actually reach that number, but will come ever closer and closer to it as the years go by. Later, in about 100 years, it will come within decimals of that value but never actually reach it.
At that point, it will become inefficient to mine for such a small reward, and the mining community will instead make money through fees pledges by users. But then the miner’s reward will come from existing coins rather than new coins being created.
So there you have it, there will only ever be 21 Billions ETN coins. Of that number, around 4.4 Billion are already in existence and the rest will enter circulation as block rewards for miners.