What is the Maximum Supply of Bitcoin?
Bitcoin, often referred to as the first and most popular cryptocurrency, has a capped maximum supply of 21 million coins. This limit is embedded in its underlying code, ensuring that no more than this amount will ever be generated. The decision to set a finite supply is a fundamental aspect of Bitcoin's design, aimed at imitating the scarcity of precious metals like gold.
The issuance of new Bitcoins occurs through a process known as mining. Miners compete to validate transactions and, in return, are rewarded with newly minted Bitcoins. However, this reward halves approximately every four years during an event known as the "halving." Initially, the reward was 50 Bitcoins per block, which has reduced through three halvings to the current reward of 6.25 Bitcoins per block as of 2020.
The final Bitcoin is expected to be mined around the year 2140, due to the diminishing rewards structure. As the supply approaches its limit, the economics of Bitcoin may shift, potentially leading to increased demand and, and consequently, higher prices. This capped supply is regarded as a defining feature of Bitcoin, distinguishing it from traditional fiat currencies which can be printed at will by governments.
Understanding Bitcoin's maximum supply is crucial for investors and enthusiasts alike, as it contributes to the asset’s value proposition as a hedge against inflation and a store of wealth.