Cryptocurrency: Tom Brady, Stephen Curry, Shaquille O’Neal, other celebrities facing lawsuit over FTX promotion
Why Bitcoin Can't Exceed the 21 Million Hard Cap?
Will Bitcoin ever exceed the 21 million hard cap? Find out why this digital asset cannot exceed the 21 million hard cap.
Most people question why this digital asset has a hard limit, which benefits Bitcoin users. When Satoshi Nakamoto created this virtual asset, he designed it essentially as digital gold and capped its supply to 21 million, mimicking the finite supply of physical gold.
After mining, new Bitcoins go to the block every ten minutes, the average time it takes to create a new block on the blockchain. When Satoshi created this virtual asset, the number of blocks added after mining was fifty, but the number dropped to around 6.25. However, the reward reduces by half after miners produce 210,000 Bitcoins every four years. Ultimately, miners will generate the last Bitcoin in 2140.
No new Bitcoins will be issued when miners attain the maximum number of Bitcoins. Nonetheless, Bitcoin transactions will continue. Moreover, these virtual asset miners will continue to receive rewards, but with transaction processing fees.
This virtual asset's hard cap limit makes this digital asset completely valuable since the limited supply increases demand. While demand increases, the value of this digital currency increases since investors want a piece of this virtual asset. Below is a guide on why the hard limit of 21 million Bitcoins will never change.
People speculate that the hard cap limit of this digital currency would change due to their more profound understanding of this electronic money as a distributed and consensus-based network. On the contrary, many versions of this virtual asset source node exist. Furthermore, each node on this electronic asset network will run independent software rejecting invalid blocks.
More so, many nodes continue to run the latest version of this digital asset core, but a considerable number of nodes run the older versions of this virtual asset core. Eventually, while stakeholders can change this digital money source code trivially, it is difficult to convince many of these nodes to accept and adopt those changes.
In addition, these digital asset miners do not control the Bitcoin network or its rules. However, miners produce new blocks and validate transactions. So, when a miner submits a new block to the network after mining, tons of nodes verify this block, ensuring that it produces an appropriate amount of new Bitcoins. On the other hand, nodes will reject any block that does not follow the rules but instead violates the laws.
These virtual asset miners are the only Bitcoin actor who might have the strongest motivation to change this digital asset hard cap. More so, changing this virtual asset's hard limit may temporarily increase miners' revenue. On the other hand, changing this digital asset's hard cap will change its core investment purpose, scarcity. Perhaps you can invest in Bitcoin via an exchange such as BitIQ and earn profits due to the limited supply of this digital asset.
Moreover, mining this digital currency is quite expensive since it requires costly equipment and consumes a lot of energy. As a result, miners pay for energy bills and equipment costs using fiat money. Eventually, they are more concerned about their traditional revenue than their Bitcoin-dominated revenue. Furthermore, if the price of Bitcoin crashes, miners end up losing.
The Bottom Line
While individuals and businesses may continue using this virtual currency even after miners produce 21 million Bitcoins, no new coins will be released. However, hitting the hard limit will likely significantly impact Bitcoin miners and crypto holders because the supply limit will increase demand and value.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.