Why is Bitcoin fixed at 21 million (Why does Bitcoin only have 21 million)?

08/17/2023 11:51 • Tech Ticker • 102 views

Why is Bitcoin fixed at 21 million? Why does Bitcoin only have 21 million? After the first block reward halving on January 3, 2009, Satoshi Nakamoto invented the first mining algorithm: the difficulty bomb. This mechanism allows each Bitcoin network to remain stable. However, this mechanism is disrupted when the price starts to rise.

In order to maintain this timeframe, Nakamoto transferred Bitcoin from one “one-way” to another address. Because the number of Bitcoin transactions is limited and there is no centralized entity to control it, it can prevent security vulnerabilities such as 51% attacks and malicious software. Therefore, if you want to hold more Bitcoin, you must treat it as a currency and not as a demand or required asset like other cryptocurrencies. As Bitcoin evolves, more and more developers are building new protocols to achieve the purpose of storing its value.

Why increase the block size? First, it is necessary to ensure that new coins are generated every 10 minutes, which would cause the memory pool capacity of the entire system to be too large and affect the efficiency of network usage. Secondly, it is necessary to ensure that the network can interact with the main chain and use the same network resources. The third reason is that the number of nodes in the network is increasing. The fourth reason may be that most blockchain technologies rely on proof-of-work consensus mechanisms, randomness, and computational power, all of which are problems solved by mathematical models. (Cointelegraph)

Of course, there are still some issues, but we can still explain them through data analysis. For example, the current Bitcoin network processes approximately 100 to 200 transactions per day; Bitcoin consumes an average of $150 worth of energy per day. This is because the Bitcoin network can only process 20 to 25 transactions per second, and the speed is very fast. Although many people believe that the system needs to reach a certain level before it can continue to operate, in some cases, the network may not be able to execute any functions to support the emergence of these functions. The Bitcoin network cannot accommodate more complex functions, or at least, partially based on cryptographic solutions.

In addition, Bitcoin’s fee revenue has been steadily increasing in the past few months. According to BTC.com’s data, fee income has grown by more than 500% since 2011. At the end of 2017, Bitcoin payments to institutional investors accounted for only 1% of total expenditure. At the beginning of 2018, fees skyrocketed, with the highest price exceeding $10 million at the time of writing. So what contributes to Bitcoin’s high inflation? (Bitcointreasuries)

Why does Bitcoin only have 21 million

According to cryptovest, the value of Bitcoin has been falling for the past three years. Since December 2017, its price has been consistently below $10,000, only recovering to around $1,000 in early 2019. However, with the development and adoption of the market, the situation is different: 10% of the Bitcoin supply is still generated through mining (meaning only 21 million coins), while 1% of Ethereum is generated by miners. This means that most users cannot buy or use these coins. Therefore, many cryptocurrency enthusiasts believe that Bitcoin is currently just a bubble.

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Why is Bitcoin fixed at 21 million (Why does Bitcoin only have 21 million)?

Why does Bitcoin only have 21 million

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