What is the Maximum Supply of Bitcoin?
Bitcoin, the first decentralized cryptocurrency, has a capped maximum supply of 21 million coins. This limit is hard-coded into the Bitcoin protocol, ensuring that no more than 21 million bitcoins can ever be mined. The rationale behind this cap is to create scarcity, akin to precious metals like gold, which helps to maintain value over time.
The process of Bitcoin mining involves solving complex mathematical problems to validate transactions on the blockchain. As miners successfully solve these problems, they are rewarded with new bitcoins. Initially, the reward for mining a block was 50 bitcoins. However, this reward undergoes a halving event approximately every four years, reducing the new supply of bitcoins generated and thereby approaching the 21 million limit more slowly.
With roughly 19 million bitcoins mined as of now, it is estimated that the last bitcoin will be mined around the year 2140. This gradual reduction in the rate of bitcoin creation impacts supply dynamics and reinforces its position as a deflationary asset. As the reward decreases, it is expected that demand will rise, potentially increasing the value of bitcoin for investors and holding its significance in the cryptocurrency space.