Why is there only 21 million Bitcoin? - Photo 1.

Why is there only 21 million Bitcoin?


When Satoshi Nakamoto built Bitcoin, this mysterious creator designed to limit the maximum number of crypto coins to just around 21 million dong.

The limited amount of fixed supply gives Bitcoin unique anti-inflation properties. But why is the amount of bitcoin limited to 21 million? It seems that the explanation for this is hidden in personal emails communicating between Nakamoto and software developer Mike Hearn.

According to an email shared by Mike Hearn, Nakamoto originally estimated that the Bitcoin unit would be worth the same as traditional currencies, for example, estimating that every 0.001 BTC would be worth the equivalent of 1 Euro.

"I want to choose a landmark so I can convert this price to existing currencies, but I do not know the future, this is very difficult. Finally I chose to do it in the middle"Nakamoto said via email.

"If Bitcoin is not popular, its unit value will be less than the existing currencies. If you imagine that it will be used for part of the world trade, only 21 million of these coins are circulated around the world, will make each unit more valuable.. "They added.

But it turned out that Nakamoto was mistaken a little about his prediction. Currently 0.001 BTC is priced at 10.62 Euro, nearly 11 times his initial estimate.

But why is 21 million Bitcoin?

Nakamoto explained why they designed to limit Bitcoin's supply to just 21 million dong, but never really showed how it was.

A solid hypothesis regarding this is in analyzing Bitcoin's distribution model (as indicated in Hearn's email). This hypothesis is posted in the Bitcoin section on the StackExchange forum, a popular forum for software developers.

Why is there only 21 million Bitcoin? - Photo 2.

Based on two important rules in Bitcoin mining: This cryptographic currency will add a new block to your blockchain chain on average every 10 minutes, and rewards paid to operators (starting at 50 BTC) is divided in half after every 4 years.

Try to calculate the number of blocks created every 4 years:

We have an average of 10 minutes to create 1 block, so 6 blocks per hour. With 24 hours a day, 365 days a year, after 4 years, we will have 210,240 blocks – approximately 210,000 blocks every 4 years.

Then try to calculate the total amount of bonuses by Bitcoin for the operators, we have the sum of the convergence series: 50 + 25 + 12.5 + 6.25 + … = 100.

Multiplying both numbers together, we will get 210,000 x 100 = 21 million Bitcoin coins.

But another said that this arithmetic calculation only yielded the maximum number of Bitcoin coins that could exist, and that number was determined by the parameters Nakamoto created – so why did Nakamoto set it? setting up these parameters – Again, this is still a mystery like Satoshi Nakatomo's existence.

Refer to The Next Web



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