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PayPal is bringing Bitcoin to the masses and more and more companies and mutual funds have started the hodln. There will never be more than 21 million BTC. At the time, Satoshi Nakamoto calculated why this is so.
When choosing the number, did Satoshi think that 21 is “the smallest positive natural number for which there are pairs of squares with different positive edge lengths that can be put together to form a square?” Or was the pseudonymous Bitcoin founder aware of the symbolism that esoteric circles of the 21 — among other things as the number of completion — attribute? Or, as is so often the case in life and in the crime scene, did your colleague “chance” have a hand in it?
In fact, there is still no mention of a limit of 21 million in the Bitcoin White Paper. It wasn’t until the email in which Satoshi published the Bitcoin White Paper that the 21 million became official:
The total circulation will be 21,000,000 coins. It will be distributed to network nodes when they form blocks, with the amount halved every four years
every 4 years.
the first 4 years: 10,500,000 coins
the next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
the next 4 years: 1,312,500 coins
When that expires, the system can support transaction fees if needed. It is based on open competition, and there will likely always be nodes willing to process transactions for free.
Satoshi Nakamotor, January 8, 2009
So why 21 million of all people? As you can see from the mail traffic between Satoshi and Mike Hearn, another Bitcoin developer of the first hour, the number does not have a metaphysical, but a pragmatic background:
My choice for the number of coins and the distribution plan was based on an estimate. It was a difficult decision because once the network is up and running it is fixed and we have to come to terms with it. I wanted to choose something where the rates would be similar to existing currencies, but without knowing the future it’s very difficult.
Satoshi Nakamoto an Mike Hearn, 12. April 2009
Satoshi was looking for the golden mean: Regardless of whether Bitcoin should remain a niche or have great success, the limit should allow numbers for both cases that are not too bulky. Sathoshi explains the calculation to Mike Hearn as follows:
If you imagine that [Bitcoin] is only used for a fraction of world trade, then there will only be 21 million coins for the whole world, so one unit would be worth a lot more. The values are 64-bit integers with 8 decimal places, so 1 coin is represented internally as 100000000. There is a lot of granularity when typical courses get small. For example, if 0.001 [Bitcoin] is worth 1 Euro, it might be easier to change the position of the decimal point.
Satoshi Nakamoto an Mike Hearn, 12. April 2009
21 million: of all things
It is also possible that not the 21 million, but the 50 BTC per block — in connection with the targeted block time of 10 minutes — was at the beginning of the considerations. Because the 21 million is also a mathematical consequence. It results from multiplying the number of blocks produced (210,000 per year) by the sum of the halving rewards (50 + 25 + 12.5 +… 0 ≈ 100). The question remains, what came first — the limit or the mining protocol.
When is the last bitcoin halving — and what happens then?
First of all: Despite all the advances in medicine, it is unlikely that the inclined reader will witness the last halving: Because this will — as it was today — take place around the year 2140. A crypto world in which the last bitcoin was “mined” is Terra Incognita. In this scenario, the transaction fees provide the sole source of income for miners. For this reason, there were early considerations to increase the block size in order to be able to accommodate more transactions (and thus more fees) in a block. Bitcoin has been involved in the dispute over block size from the very beginning and already had several spin-offs (Hard Forks) result.
Large investors are increasingly reaching for the rare commodity
Meanwhile, more and more major investors have discovered the value storage quality of Bitcoin and for themselves. After the IT service provider, Microstrategy ennobled Bitcoin as its most important reserve asset, the next Wall Street company followed with Square, which has invested part of its reserves in Bitcoin. The British company Mode Global recently announced a similar move.
Microstrategy now holds 38,250 BTC. That is over 0.18 percent of all Bitcoin units ever available. In addition, there are institutional Bitcoin funds, which in turn are sucking up more and more Bitcoin. The Bitcoin Trust of the US company Grayscale alone holds at least 2.6 percent of the Bitcoin in circulation — and the trend is rising.
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Why will there never be more than 21,000,000 Bitcoin? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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