Daily Archives: February 3, 2009

The limited supply of Bitcoin is a fundamental aspect of the digital currency, as it creates scarcity and gives it value. The total number of Bitcoins that can ever be created is capped at 21 million, which is set in stone by the Bitcoin protocol. This means that no more Bitcoins can be created once this number is reached, unlike traditional fiat currencies which can be printed in infinite quantities by central banks leading to inflation.

The scarcity of Bitcoin is a key driver of its price, as it creates a sense of exclusivity and rarity. As more people adopt and invest in Bitcoin, the demand for it increases, driving the price up. This has led to speculation that the price of Bitcoin will continue to rise as more people become aware of it and invest in it.

Additionally, the mechanism of halving which occurs every 210,000 blocks or roughly every four years, controls the rate at which new Bitcoins are created, further increasing the scarcity and driving the price up. The current block reward is 6.25 Bitcoins and as it continues to decrease, the rate at which new Bitcoins are created will also decrease, increasing the scarcity of the digital currency.

In summary, the limited supply of 21 million Bitcoins is a crucial aspect of the digital currency, as it creates scarcity and gives it value. The scarcity is a key driver of its price and speculation that the price will continue to rise as demand increases. The halving mechanism also plays a role in controlling the rate at which new Bitcoins are created, further increasing the scarcity and driving the price up.

What is to stop the number of 21 million just being edited in the code?

The number 21 million is hard-coded into the Bitcoin protocol and cannot be edited because it is a fundamental aspect of the digital currency’s design. This number was chosen by the creator(s) of Bitcoin, Satoshi Nakamoto, as a way to control the rate of inflation and ensure that the currency remains scarce.

If the number 21 million were to be edited in the code, it would fundamentally change the nature of Bitcoin as a scarce, decentralized currency. It would also lead to a loss of trust in the currency, as users would no longer be able to rely on the set limit of 21 million coins.

Furthermore, the Bitcoin protocol is an open-source software which means that it is publicly accessible and can be audited by anyone. Changing the maximum number of Bitcoins would require a consensus from the entire Bitcoin community which is highly unlikely.

In summary, the number 21 million is hard-coded into the Bitcoin protocol as a way to control the rate of inflation and ensure that the currency remains scarce. Changing this number would fundamentally alter the nature of the currency and would not be accepted by the community.