Analysts Question the 21 Million Bitcoin (BTC) Supply, Can It Really Be Changed?

Bittime – One of the basic principles of Bitcoin is its limited supply which is limited to 21 million coins. However, is this limit really immutable?

Bitcoin Source Code and Supply Limits

Bitcoin's supply limits are contained in open source code created by Satoshi Nakamoto, Bitcoin's anonymous founder. Although not explicitly stated, this limit can be found in the "GetBlockSubsidy" section of the "validation.cpp" file.

The code provides for Bitcoin miners' rewards to be reduced every 210,000 blocks, or about once every four years. This process, known as “halving,” will continue until miner rewards reach zero, which is expected to occur after 33 halvings.

Possible Changes in Supply Limits

Although supply limits have become an integral part of Bitcoin, theoretically, the source code can be changed. However, these changes will not take effect without the consent of Bitcoin miners and nodes around the world.

Josef Tetek, a Bitcoin analyst from Trezor, explained that developers have the ability to change the code, but cannot force those changes. The final decision is in the hands of the node managers running the Bitcoin network.

History has recorded similar events, such as the “block war” in 2017, where there were proposals to increase Bitcoin's block size. However, this proposal was rejected by node managers because it had the potential to increase network centralization.

Read Also: Does Bitcoin Rainbow Chart Show a Big Rise in August?

Community Reaction

Many members of the Bitcoin community believe that a change in supply limits will not happen. They argue that this would undermine the basic principle of Bitcoin as a finite digital currency.

JPMorgan CEO Jamie Dimon's statement casting doubt on Bitcoin's supply limits has sparked further discussion on the topic. Dimon also criticized Bitcoin for its negative uses, such as money laundering and illegal trading.

Past Security Incidents

Although Bitcoin's supply limit has never changed, history records the existence of security gaps that allow large amounts of Bitcoin to be created.

In 2010, an error occurred in the code that allowed the creation of more than 184 billion Bitcoins. However, this error was quickly discovered and corrected, preventing a larger impact.

This incident shows that Bitcoin is not completely immune to technical errors, even though the system has been designed with security as a top priority.

Potential Impact of Bitcoin Supply Limit Changes

One of the main attractions of Bitcoin is its limited nature, with a maximum number of 21 million coins. These limitations create shortages, which in turn can push prices up as demand increases.

If Supply Limits Are Removed

If hypothetically Bitcoin supply limits were removed, the impact could be huge:

1. Impairment in Value

One of the main reasons Bitcoin has value is because of its scarcity. Removing supply limits would reduce this shortage, which could lead to significant price drops.

2. Loss of Trust

Many investors are attracted to Bitcoin because of its finite nature. Changing these basic rules could undermine investor confidence and lead to a decline in interest in Bitcoin.

3. Market Instability

Drastic changes in currency supply usually lead to market instability. The removal of Bitcoin supply limits could create high volatility.

4. Threat of Decentralization

Bitcoin was designed as a decentralized system. Big changes like this could potentially increase the power of certain parties, threatening the basic principles of Bitcoin.

Read Also: What is Bitcoin Mining and How Does It Work?

Conclusion

While it is theoretically possible to change Bitcoin's supply limit, this is highly unlikely as it would change the fundamentals of the network. Consent from the majority of miners and node managers is required for such a large change.

Belief in Bitcoin's limited supply is an important factor in maintaining its value and appeal as a digital asset. However, it is important to remain alert to potential changes and security risks that may occur in the future.

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