Why is the total amount of Bitcoin fixed at 21 million?

In the world of digital currency, Bitcoin is an undisputed star. As the first decentralized cryptocurrency, it has not only led the development of the entire industry, but also sparked countless discussions and controversies. Among them, the question of why the total amount of Bitcoin is limited to 21 million has attracted the attention of a large number of investors and technology enthusiasts. This article will explore the reasons behind this setting and the far-reaching impact of this design on the Bitcoin ecosystem.

The total amount of Bitcoin is limited to 21 million, a number that was not set arbitrarily, but based on a number of considerations. First, from an economic perspective, this limited supply is intended to simulate scarcity, similar to precious metals such as gold. The total amount of gold is also limited, which has allowed its value to be maintained throughout history. When designing Bitcoin, Satoshi Nakamoto, the creator of Bitcoin, realized that digital currency needed to have a "scarcity" property to ensure its long-term value.

In the Bitcoin white paper, Satoshi Nakamoto mentioned a mining mechanism that gradually halved. The Bitcoin mining reward is halved every four years. This design gradually reduces the issuance rate of Bitcoin, so that the final total amount is within 21 million. This mechanism not only effectively controls the issuance of currency, but also introduces an interesting economic phenomenon - the slowdown of inflation. As time goes by, the difficulty of mining increases and the reward decreases, which also significantly increases the rate of return for early investors.

From a technical point of view, the design of the Bitcoin network also reflects the necessity of this limit. Bitcoin is based on blockchain technology, and the characteristics of blockchain make transaction records transparent and immutable. In order to ensure the security and decentralization of the network, limiting the total amount can prevent excessive money supply, thereby avoiding value depreciation due to inflation. The total amount of Bitcoin actually provides users with a trust mechanism to ensure that Bitcoin will always maintain its value.

In addition, the total amount of 21 million is closely related to the market mechanism of Bitcoin. Market economics tells us that supply and demand are the key factors affecting prices. The scarcity of Bitcoin makes it more attractive in the market, especially when demand is growing. Many investors regard Bitcoin as "digital gold", and more and more people choose to use it as part of their asset allocation in the context of increasing economic uncertainty. Due to the limited supply of Bitcoin, once there is a surge in demand in the market, the price will rise rapidly, which attracts more investors to participate, forming a virtuous circle.

It is worth mentioning that the total amount of Bitcoin has also caused some controversy. Some critics believe that this limitation may lead to insufficient liquidity in the future use of Bitcoin. For example, if all 21 million Bitcoins are locked in certain wallets, the actual number of Bitcoins that can be circulated will be greatly reduced, thus affecting the trading activity of the market. However, supporters believe that with the advancement of technology, more solutions may emerge in the future, such as sharding technology and second-layer networks (such as the Lightning Network), which can improve the liquidity of Bitcoin.

In the Bitcoin community, the discussion about the total limit has never stopped. Some extreme views even suggest that the total amount of Bitcoin should be increased to cope with possible future demand. However, this proposal has been widely opposed because once the total amount of Bitcoin is changed, it may lead to a collapse of trust and affect the stability of the entire network. Bitcoin users and investors generally believe that maintaining a total of 21 million is the key to maintaining the value and trust of Bitcoin.

Furthermore, the setting of 21 million also provides important guidance for the future development of Bitcoin. As more and more companies and institutions begin to accept Bitcoin as a means of payment, how to effectively manage and use these limited Bitcoins will become an important issue. Bitcoin holders need to think about how to trade and invest without affecting market stability. In addition, financial instruments around Bitcoin (such as futures, options, etc.) are also constantly developing, which provides investors with more options while also increasing the complexity of the market.

In the Bitcoin ecosystem, the power of the community cannot be ignored. Bitcoin holders, developers, and miners together form this decentralized network, and their decisions and behaviors directly affect the direction of Bitcoin. The total amount of 21 million Bitcoins has made every Bitcoin owner feel a sense of "scarcity". This common consciousness has enhanced the cohesion of the community, allowing everyone to better unite and maintain the value of Bitcoin in the face of market fluctuations.

Finally, it is worth noting that the total limit of Bitcoin is not only a technical issue, but also a social and cultural phenomenon. As an emerging form of currency, Bitcoin is changing people's perception of wealth, value and transactions. The setting of 21 million is not only an exploration of digital currency, but also a reflection on the future financial system. In this rapidly changing era, the decentralized concept represented by Bitcoin is gradually affecting our understanding of economic, social and personal wealth.

In the days ahead, the total limit of Bitcoin will continue to attract people's attention and discussion. Whether supporters or opponents, everyone is looking for their own answers in this field full of opportunities and challenges. Bitcoin is not only an investment tool, but also a symbol of thought, inspiring people to continue to explore and innovate. With the advancement of technology and the development of the market, we have reason to believe that Bitcoin will continue to play an important role in the future financial ecology and promote the transformation and progress of the entire society.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

The total number of bitcoins is 21 million. This may be the number that newbies to bitcoin remember most clearly, but also the most confusing. Satoshi Nakamoto did not mention in any public statement why he chose this number, so various speculations and logical inferences have emerged on the Internet.
Let's talk about this number:
How did the 21 million come from?
The real reason for choosing 21 million
How did the 21 million come from?
【1】20999999.97690000
The final number of bitcoins produced is 20,999,999.97690,000 to be exact, a little less than 21 million.
Bitcoin generation timeline:
Let’s analyze this table in a few key points.
【2】50.00000000
The Genesis Block was created at 18:15:05 GMT on January 3, 2009. The Genesis Block is numbered 0. In "Phase 1" starting from the Genesis Block, each block generates 50 new Bitcoins or 5 billion Satoshis.
Genesis Block:
【3】Target altitude 210000
At 15:24:38 GMT on November 28, 2012, the 210,000th block was generated. Starting from this block, in "Phase 2", the number of new bitcoins contained in each block was halved to 25, which was the first halving in history. In the future, the number of bitcoins will be halved every 210,000 blocks. Until the 33rd halving, the 0.0021 new bitcoins generated per block will be directly reduced to 0.
210,000 Blocks:
【4】A promise every four years
The statement that the block is halved every 4 years is not very strict. The actual situation is that Bitcoin generates a block approximately every 10 minutes, and 210,000 10-minute blocks are close to 4 years (4 years equals 210,384 10-minute blocks. This should be the number that Satoshi Nakamoto deliberately chose).
【5】Before 2016, After 2016
The second halving will happen in 2016, but it’s a bit early to discuss this now. I’m going to talk about the issue of 2016 blocks.
The principle of Bitcoin system to adjust mining difficulty is: according to the total time of the first 2016 blocks, the mining difficulty of the next 2016 blocks is adjusted, so that the time to mine these 2016 blocks is 14 days. Because, 6 10 minutes per hour multiplied by 24 hours and then multiplied by 14 days = 2016. Therefore, the so-called 10 minutes is just an average target. Due to the rapid increase in computing power at present, the actual speed of mining 2016 blocks is often less than 14 days.
The topic of difficulty adjustment involves mining, which will be analyzed together later.
The real reason for choosing 21 million
There are many speculations on the Internet, some of which are very reliable, and some are unreliable but very funny.
【Answer 1】
It's the first half of the answer: 42.
Translation: Because 21 is half of the ultimate answer 42.
(Note: In English, 21 million is expressed as: 21 million. So, foreigners usually ask directly: why is it 21?)
Of course, he was joking, but this is my personal favorite, and it's the one that got the most likes on Reddit.
This meme comes from the scene where the ultimate answer is given in the movie "The Hitchhiker's Guide to the Galaxy".
Just watch the video (I looked around and only found the clip on youtube, so I added subtitles):
[Answer 2]
Because we are living in the 21st century!
Translation: Because we live in the 21st century!
Too naive to complain about.
【Answer 3】
He chose a reward scheme and 10 minute blocks. When he did the math, it came
to 21 million. He didn't choose the 21 million, he just accepted the
consequence of the parameters he chose.
Translation: Satoshi Nakamoto set the principle of 10 minutes, 50 coins, and halving every 4 years, and the result came naturally. He did not choose, but accepted this natural result.
This answer is also possible. Many of Satoshi Nakamoto’s choices in Bitcoin were indeed luck, but they were all “luck based on experience.”
【Answer 4】
All gold mined in human history can be fit into a cube roughly 21 meters on
each side.
Satoshi created bitcoin with the idea of being sort of a digital analog of
gold (finite supply, mining, etc), as well as the fact that it built upon Nick
Szabo’s “Bit Gold” proposal, so I think that 21 million was sort of a clever
nod to that.
Translation: If all the gold in the world were melted together, it would form a cube with a side length of about 21 meters. Satoshi Nakamoto used this concept to metaphorically imply that Bitcoin is a kind of virtual gold.
It turns out conspiracy theories aren’t just in China
【Answer 5】
I was going to say: Satoshi likes to play Vegas blackjack.
Translation: I think Satoshi Nakamoto likes to play blackjack.
Does God play dice?
【Answer 6】
Computer double-precision floating point numbers can store numbers with a maximum precision of 2^53. However, the total precision of Bitcoin calculated in the smallest unit is 2^51, which is just enough. (The English version is too long to be posted)
The answer appears in a very good article "The Genius of Satoshi Nakamoto: Bitcoin Dodged Some Cryptographic Bullets in Unexpected Ways"
detailed:
One of the controversial properties of Bitcoin is its fixed supply. Currently, 25 new Bitcoins are created every 10 minutes, and this number halves every 4 years. In total, there will never be more than 21 million Bitcoins in existence. On the other hand, each Bitcoin can be divided into 100 million pieces (each piece is called a "satoshi"), and if one cent is enough to buy a car, it would be difficult to trade with dollars, but even if Bitcoin appreciates to the same level as the dollar in the above assumption, it will not encounter such a problem.
So, in summary, the total number of monetary units that will ever exist is 2,100,000,000,000,000, which is 210 trillion, or 250.899. In choosing this number, Satoshi was much luckier or smarter than most people realize. First, it is much smaller than 264-1, the largest integer that can be stored in a computer as a standard integer, before the number goes back to zero like an odometer.
Second, however, there's an even smaller threshold that the total number of satoshis has to fall below: the largest possible integer that can be represented in a floating-point format. Integers aren't the only kind of numbers that computers can store; to handle decimals, computers use a format called floating-point representation. Floating-point representation is essentially a binary version of scientific notation. For example, here's a value you'll encounter if you're studying physics:
Mass of Earth: 5.972 1024 kg
Mass of the Sun: 1.989 1030 kg
Speed of light: 2.998 108 m/s
One light year: 9.460 1015 m
Mass of a proton: 1.672 10-27 kg
Planck length: 1.616 10-35 m
Notice how scientific notation allows you to represent all of these numbers with reasonable precision, even though they vary wildly in size. Floating point notation is essentially scientific notation in binary; when you store the number 9.625, your computer stores "1.001101".
 1011" (or, it stores 01000000 00100011 01000000 00000000 00000000 00000000
>00000000
00000000, which is the same thing in high-precision serial form). In this high-precision form, the coefficient (that is, the part that is not the exponent) is 52 bits. This means that high-precision (more precisely, "double-precision") floating point numbers are large enough to store numbers up to 253, but not higher, because if you go beyond that, you have to start chopping off the end. Bitcoin's total number of satoshis, expressed in exponential form, is just below this maximum.
If we have integers, why do we still care about floating point values? Because more high-level programming languages (such as Javascript) do not open the low-level "floating point" and "integer representation", but only provide programmers with the concept of "number"
Provided in floating point form, of course. If Satoshi had chosen 210 million instead of 21 million, programming Bitcoin in many languages would be much more difficult than it is now.
Note that Stefan Thomas unfortunately didn’t realize this when he wrote BitcoinJS, so that library uses a special “big number”
number" object instead of a plain number to store the tutorial output; my own fork of BitcoinJS (which also incorporated other improvements) uses plain numbers.
【Answer 7】
That explanation is close but not entirely compelling. IEEE double-precision
floating-point format has 53 bits of significand precision, meaning it can
address up to 253 1 satoshis without any rounding error. Well, that s
9,007,199,254,740,991 satoshis, which is not anywhere close to
2,100,000,000,000,000 satoshis (or even 2,099,999,997,690,000 satoshis, which
is the actual asymptotic limit).
I think a much more compelling explanation is that a signed 32-bit integer can
store values up to 231 1, which is 2,147,483,647. If you assume a fixed-point
format with two decimal digits of fractional precision (which is typical for
money), then a signed 32-bit integer can address up to 21,474,836.47 bitcoins,
which we might as well round off to 21 million. My guess is that Satoshi
derived the 21-million limit from here early in development and then later
realized that this wouldn't be enough currency units and so extended the
number of decimal places from 2 to 8 and changed the variables from 32-bit to
64-bit.
Translation: The explanation in answer 6 is close, but a bit far-fetched. IEEE double-precision floating point numbers are 53 bits, and the maximum number that can be represented is 9,007,199,254,740,991 satoshis, while Bitcoin is 2,099,999,997,690,000 satoshis, which is a big difference.
I think a better explanation is: a signed 32-bit integer can store a maximum number of 2^32-1, which is 2,147,483,647. If Bitcoin has two decimal places, it is 21,474,836.47 Bitcoins. That is 21-million. I guess Satoshi Nakamoto used 32-bit integers when he first developed it, but later found that this precision was not enough for a global currency, so he extended the two decimal places to 8 bits and changed the storage from 32 bits to 64 bits.
This is the most reliable answer I think, because from Satoshi Nakamoto’s past remarks, we can see that he is not a perfectionist, but a pragmatist.
Studying the technical principles of Bitcoin is the best way to gain a deeper understanding of Bitcoin and is also the cornerstone for promoting the development of the Bitcoin industry. I hope that more professional developers and technical experts will enter this field in China. Also, although it is fun to speculate in Bitcoin, staring at the market is harmful to your health. Remember this!