Why will there never be more than 21,000,000 Bitcoin?

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PayPal brings Bitcoin to the masses and more and more companies and investment funds have started to hodln. There will never be more than 21 million BTC. Why that is so, Satoshi Nakamoto himself calculated at that time.

When choosing the number, did Satoshi consider that 21 is „the smallest positive natural number for which squares exist in pairs of different positive edge lengths that can be put together to form a square? Or was the pseudonymous Bitcoin founder aware of the symbolic nature of the esoteric circles of 21 – among other things as the number of completion? Or did, as so often in life and at the scene of a crime, colleague „coincidence“ have his fingers in the pie?

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Indeed, the Bitcoin White Paper does not yet mention a limit of 21 million. Only with the mail in which Satoshi published the Bitcoin White Paper did the 21 million become official:

The total circulation will be 21,000,000 coins. It will be distributed to network nodes as 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
  • etc…

When this expires, the system can support transaction fees if needed. It is based on open competition, and there will probably always be nodes willing to process transactions for free.

So why 21 million? As you can see from the mail traffic between Satoshi and Mike Hearn, another early Bitcoin developer, the number has a pragmatic rather than a metaphysical 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 accept that. I wanted to choose something where the exchange rates are similar to existing currencies, but without knowing the future, it is very difficult.

Satoshi was looking for the golden mean: whether Bitcoin should remain a niche or be a big success, the limit should allow for numbers that are not too bulky in either case. Sathoshi explains the calculation to Mike Hearn like this:

If you imagine that [Bitcoin] is only used for a fraction of world trade, there will only be 21 million coins for the whole world, so one unit would be worth much more. The values are 64-bit integers with 8 decimal places, so 1 coin is internally represented as 100000000. There is a lot of granularity when typical courses become small. For example, if 0.001 [Bitcoin] is worth 1 Coin, it might be easier to change the position of the decimal point.

21 million: of all things.

Perhaps it was not the 21 million BTC per block, but the 50 BTC per block – in conjunction with the target block time of 10 minutes – that was at the beginning of the considerations. The 21 million is also a mathematical consequence. It is obtained by 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 was there first – the limit or the mining protocol.

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