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Monero building on its non-traditional mining reward system

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It is estimated that by the end of May 2022, there will be a total of 18.4 million Monero’s (XMR) out which 90% are already mined.

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As per the data available from MoneroBlocks.info, a platform for Monero blockchain explorer, the privacy-focused cryptocurrency has around 16.6 million XMR in circulation. As XMR’s emission touches the bar of total supply, the Monero project will switch itself to a new supply programme, known as tail emission.

An earlier announcement from the project suggests that miners will get a consistent reward of 0.6 XMR per block which is to maintain the integrity and security of its blockchain.

Moneropedia says explaining, “miners need an incentive to mine. Because of the dynamic blocksize, competition between miners will cause fees to decrease.”

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It tends to happen if the dynamics of mining becomes a high cost and low reward, miners start to leave the network.

Following the Bitcoin’s model of functioning, XMR plans to reduce their mining reward which is currently standing around 3.41 XMR per block to reach 0.6 XMR as it moves forward.

Many see the tail emission plan of Monero as a contrast to the supply mechanism of bitcoin, as we know this leading cryptocurrency has a total supply of 21 million. Out of this limit by 2040, 99.8% will be mined and remaining rest will take the next 100 years to mine.

As it implies, the only way here for a miner to earn any incentive is by on-chain transactions fees or by dominant assurance contracts. Already the bitcoin network is practicing an off-chain solution for transactions such as Lightning Network, where the user doesn’t require to pay any fee. If it continues, in the long-run miners will opt out of confirming a transaction on its main chain, this phenomenon is known as Tragedy of the Commons.

Here another issue arises, as so happens it is miners who keep the transactions over the blockchain safe and in their absence security of blockchain will come under the threat.

These are some key issue against which XMR is planning to incentivize the miners for a lifetime. This reflects the long-term goal of it to content strongly to re[place bitcoin.

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