What are we talking about today?
In the world of cryptocurrencies, one of the most intriguing aspects of Bitcoin is its limit of 21 million bitcoin units. This limit is not just a number; it is a key design element that differentiates Bitcoin from traditional currencies and encourages thinking about value and sustainability. In today’s blog, we will reveal the secrets behind this number. We will explain why a limit was set on the amount of Bitcoin that will exist in the first place and explore the main theories that try to explain why the number 21 million was chosen. From economic logic to technical limitations, we will explain the basics of this digital currency to understand what this limit means for the future of Bitcoin and the entire crypto world.
Source: cointelegraph
Why is there a limit at all?
When Satoshi Nakamoto created Bitcoin, he didn’t just launch the first cryptocurrency – he laid the foundations for a completely new economic system. Unlike the traditional monetary system where central banks can “print” money without limits, which can lead to inflation, Bitcoin is designed as a currency with a fixed limit. This limit of 21 million Bitcoins represents a vision of money whichem offer cannot be artificially increased and whose value is protected from devaluation through inflation. The limited amount of Bitcoin also reflects the principle scarcity which is present in nature – like gold, whose value is partly derived from its rarity. This digital rarity creates a perception of value among users and investors, much like rare works of art or antiques retain a high price on the market. Additionally, a fixed limit encourages transparency and predictability in the flow of currency, two key elements that have often been lacking in traditional financial systems. Satoshi may have had technical aspects in mind as well – given the limits on block sizes and the time it takes to process transactions, setting a limit helps keep the network efficient and scalable. Ultimately, the 21 million Bitcoin limit symbolizes a new era of monetary policy—one based on mathematical principles and decentralization, rather than the decisions of individuals or institutions. It is an economic experiment that year after year continues to defeat traditional concepts of value for money based on central planning .
Source: cointelegraph
The first theory
The replacement theory of money supply represents the first thinking about limiting Bitcoin to 21 million units. Satoshi Nakamoto , the creator of Bitcoin, intentionally slowed the rate at which new Bitcoins come into existence, with the intention that each individual unit, or satoshi, gains in value over time. This vision is reflected in the supposed communication between Nakamoto and Mike Hearn , where Satoshi expressed the opinion that if a small part of the world economy used Bitcoin, the value of 0.001 BTC (1 mBTC ) could be about 1 euro. This prediction came true in 2013. year, when Bitcoin first exceeded the price of €1,000, and today the value is mBTC– and even bigger. Interestingly, at the time of Bitcoin’s creation, the total world money supply, known as M1, was estimated at approximately $21 trillion. If Bitcoin became the world’s sole currency, replacing all the currencies that make up M1, each BTC would be worth $1 million, making the value of each of satoshi was set to $0.01. This almost perfect correlation between the numbers suggests that the setting of the 21 million limit was not accidental, but deliberate, with the goal of creating a currency whose value is stable and predictable, contrary to the inflationary trends that characterize traditional monetary systems. However, since 2009 M1 money supply has changed, and it is unlikely that Satoshi he could not have predicted this. So it is unlikely that this is the correct theory about dialing the number 21 million.
Source: cointelegraph
An alternative theory
Another, and according to many more likely, theory about the origin of the limit of exactly 21 million bitcoins lies in the very structure of the Bitcoin network. This alternative theory suggests that the 21 million BTC figure is the result of mathematical logic that controls the supply of the currency, rather than random Choice. Parameters set by Satoshi Nakamoto ensure that blocks are mined at regular 10-minute intervals and that block rewards decrease as we approach maximum supply. These parameters inevitably lead to the final figure of 21 million BTC. Each four-year mining cycle has a total of 210,000 blocks, and the block reward is se halves after each cycle. Starting at 50 BTC per block, the reward decreased to 25 BTC, then to 12, 5 BTC, and currently stands at 6 ,25 BTC per block. If this trend continues, the sum of the block rewards for each cycle will be 100, which multiplied by the number of blocks per cycle gives a maximum supply of 21 million BTC. This theory emphasizes the mathematical precision behind Bitcoin, suggesting that the 21 million limit may be less of a philosophical choice and more the result of mathematical rules that shaped Bitcoin’s protocol. Regardless, just Satoshi Nakamoto knows the real reason for choosing this number, and the secret will forever remain undiscovered .
Source: cointelegraph
Conclusion
Throughout this blog, we’ve explored the topic of bitcoin supply limits and the reasons behind the specific number of 21 million. We explained why Satoshi Nakamoto, the creator of Bitcoin, set the limit in the first place, emphasizing his vision of money that cannot be endlessly printed, which stands in stark contrast to the current economic system. Also, we considered two main theories that try to explain why the number 21 million was chosen. The first theory relies on the idea that the limit was put in place to ensure the deflationary nature of Bitcoin, while another theory suggests that the number is the result of mathematical logic built into the Bitcoin protocol. Regardless of which one is the theory true , it is clear that the limit of 21 million bitcoins is crucial for the survival of Bitcoin, because this limit is very likely the most unique characteristic of Bitcoin and distinguishes it from any other asset in the world. We hope you enjoyed the reading today’s blog, if you have any questions or suggestions feel free to contact us on our social networks ( Twitter , Instagram ).
