What is Bitcoin’s Supply Limit?
Bitcoin, the first and most well-known cryptocurrency, has a finite supply limit of 21 million coins. This cap was established by its pseudonymous creator, Satoshi Nakamoto, to introduce scarcity to the digital currency, similar to precious metals like gold. The reason for this limit is to control inflation and ensure that Bitcoin remains a valuable asset over time.
The issuance of new bitcoins occurs through a process called mining, where miners compete to solve complex mathematical problems and validate transactions on the Bitcoin network. When a miner successfully adds a new block to the blockchain, they are rewarded with newly created bitcoins. This reward started at 50 BTC in 2009 and halves approximately every four years during an event known as the halving.
The halving event reduces the block reward, which is currently 6.25 BTC per block as of 2020. Due to this mechanism, the last bitcoin is projected to be mined around the year 2140. This gradual reduction in the creation of new bitcoins ensures that the total supply will never exceed the predetermined limit of 21 million, making Bitcoin a deflationary asset.
Understanding Bitcoin's supply limit is crucial for investors and users, as it affects the currency's value and its potential as a store of wealth in the financial market.