The supply of Bitcoin is limited to 21 million BTC. This makes it the only absolutely limited asset out there.
Why it was 21 million BTC, of all things, one can only speculate. One possible explanation is meme number 42 (from Douglas Adams, “The Hitchhiker’s Guide to the Galaxy,” of course), whose half is 21. But it could also have been sheer arbitrariness that persuaded the anonymous father of Bitcoin, Satoshi Nakamoto, to limit your digital capacity. peer-to-peer cash system of 21 million units.
Although they have led to some speculation, the reasons are ultimately irrelevant. The only important thing is that there is this upper limit of 21 million BTC. Because with Bitcoin, humanity has an asset at hand for the first time, the supply of which is finite.
It can be said so clearly: the invention of digital scarcity is nothing less than a millennial innovation. There are goods that are also in short supply. Naturally limited commodities, such as gold or oil, are examples of this. But if you expand your perspective beyond the limits of planet earth, suddenly the yellow precious metal is no longer rare. So there can only be an absolute scarcity in the digital space. But creating an absolute digital scarcity is not an easy undertaking. Otherwise.
Bitcoin is only limited to 21 million coins because network participants agree. Satoshi’s original code sets the limit. But the code can be changed. Therefore, in the end, it is not the code that is decisive for Bitcoin, but the social consensus on which the system is based. Because 21 million Bitcoin is ultimately just the rules of the game that Bitcoiners have agreed to. It would not be a problem to create a coin, for example, through a hard fork, the supply of which is limited to 20 million or less. However, this does not make this coin more auto-tuned in the true sense of the word, as there are no players.
Therefore, the chess game analogy is popular with Bitcoiners. You can change the rules of the chess game, but what is missing are the players. Chess is a game that has matured socially for centuries; its cultural significance is unique. No one would think of implementing a new set of rules.
The analogy is also good because it shows how long it takes to build a social consensus. Chess, for example, has been established in Europe since the early 13th century; its tradition is probably much older in Asia and Persia.
Compared to that, Bitcoin is still in its infancy. Digital gold is only eleven years old and has come surprisingly far by that time.
As mentioned, the upper limit limitation is only worth as much as the social class that imposes it. And this aspect is crucial.
Bitcoiners can use a full node to actively decide which protocol rules they want to follow. Hence the saying “Don’t trust, check! “. There are 21 million BTC precisely because Bitcoiners decided to install exactly the software that provides the cap. With money, in particular, this aspect of decentralized control is crucial. After all, history has shown that the monopoly of money creation has always led to profit-taking and inflation. Controlling the cash tap is too tempting a tool to leave intact.
It is precisely this layer of social protection that Bitcoiners form around their favorite money that is repeatedly described as “toxic maximalism” on social media. Full node operation and defense of BTC content is exactly what gives digital gold value. Michael Saylor sees it in a similar way:
I don’t want to hear that you want to bother with transaction fees and introduce smart contracts and change everything. […] I want to hear that you will defend the network to the death against someone who wants to break it or endanger it in some way,
Saylor was quoted as saying in an interview with Pomp.
And that’s exactly it: Bitcoin is limited to 21 million coins because there are a critical number of Bitcoiners who want that and express their will through full nodes. It is this aspect of decentralization that makes Bitcoin perhaps the best store of value in human history.
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