The maximum number of all Bitcoin (BTC) that will ever exist is set at 21 million in the original code. Investors see this as a bulwark against inflation. But why is it this 21 million Bitcoin and no other number?
When Bitcoin (BTC) was launched in January 2009, establishing the new field of crypto-currencies, it was already clear that no more than 21 million BTC could ever circulate. Inventor Satoshi Nakamoto had set this limit of 21 million Bitcoin in BTC’s code. Coupled with Bitcoin Halving, this upper limit provides protection against inflation – with Bitcoin, no central bank can come up with the idea of reprinting money in times of crisis. Meanwhile, it is not finally clarified why Satoshi set 21 million BTC as the upper limit. In the cryptoscene two attempts at explanation are discussed.
Two theses, why at exactly 21 million Bitcoin the maximum amount is reached
Mathematicians see the maximum 21 million Bitcoin as the logical result of BTC’s concept. Every ten minutes or so a new block is generated in the Bitcoin block chain and every 210,000 blocks a Bitcoin halving occurs, as was last seen in May 2020, where the “magic” number 21 is already present. Extrapolated with the block rewards for Bitcoin miners, which are halved by each halving and should reach zero in 2140, this results in 21 million BTC as the end of production of new Bitcoin.
A second thesis is somewhat more popular. According to this, Satoshi had the M1 money supply in mind for the 21 million Bitcoin, which will circulate globally in 2009. This is used to measure all cash assets, and M1 was around 21 trillion US dollars in 2009, both combined and converted for the whole world. This theory on the upper limit of 21 million BTC is supported by the fact that Satoshi compared BTC with Fiat in an e-mail attributed to him in 2009, albeit at that time with euros. Satoshi argued: “If Bitcoin increases in value through widespread use as intended, it will be easier for consumers to convert BTC if a known quantity is used as a basis. In that case, one would only have to look at decimal places and not make complicated conversions. In 2013, Bitcoin achieved such a correlation for the first time with a rate of 1 Euro per 0.001 BTC at that time. Today, based on this logic, Bitcoin is around 8.25 euros per 0.001 BTC and would be easy to convert again at 10 euros for the time being.
Conclusion: At 21 million Bitcoin, that’s it
Ultimately, it is of little importance for investors to know which of the two assumptions about the reasons for 21 million Bitcoin as a stop sign is correct. For you, the decisive point remains: the maximum amount of BTC fixed forever and ever has proven to be an effective tool against inflation, and experts do not see any danger to the stability of Bitcoin even after this figure has been reached. By the way, a BTC would once be worth 1 million US dollars if you follow the theory with the comparison to the money supply M1. Super optimists do not see this as a fun fact, but as a price target.
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