Just like any other cryptocurrency is designed, Bitcoins are also designed with a limit. That said, there is a set limit that determines the number of bitcoins that will be mined, and resources say that almost 90% of them are already mined. It means that there will be a finite supply of Bitcoins and only that amount will come into existence.
The upper limit of Bitcoin mining was set by its founder itself, Satoshi Nakamoto and he announced that they will be mining only 21 million bitcoins. However, the cap is set only for bitcoins, and it may vary based on the other cryptos. The cap can be as low as 18 million and for some, it may go up to 100 million.
The limited supply of Bitcoin is a major benefit for the investors and the sphere as well. Visit this site to know more about it in detail. This further helps in keeping the currency scarce and at the same time, it is ensured that the value of the bitcoins remains steady over a long period. For this very reason, Bitcoins are also known as digital gold, since even gold exists in limited quantities only, just as the same as Bitcoins.
Hard Cap of Bitcoins
The main purpose of limiting the availability of Bitcoins was to make people appreciate the value of Bitcoins over time. Hence, the rate of Bitcoins slowed down and the maximum supply was limited. The hard cap of these coins has a value proposition that is central to the currency. Just like real estate and gold, it is very difficult to increase the value of bitcoins available in the market.
Can the hard cap of Bitcoin be changed?
There have been rumours by bitcoin critics that because it is just software, one can choose to change the rules of this network. They believe that similar to the subsidy of a block, the amount of the minted bitcoins of every block reduces every four years. That said, the miners who spend the resources to mine fresh coins will try to defend the revenue system that they maintain and as a result, the cap of 21 million will be increased.
This proves that the miners have the ability of mining new coins and they can also change the supply cap. However, the change in supply cap is not expected to happen shortly.
Why Will There Be No Bitcoins Over 21 Million
The hard cap of these coins cannot change because it is protected by the incentive system it has, and also by the governance model. It is because of the Bitcoin architecture, that the entities controlling the bitcoin rules have robust incentives so that a change in its hard cap can be resisted. Moreover, whoever plans to change the cap doesn’t enjoy any ability to control the network.
With sheer hard work and luck, miners may be able to change the hard cap of Bitcoins. This change may bring temporary happiness for miners, since the revenue may increase for some time. However, if it starts getting mined as per necessity and desire, then its core thesis will not be retained, which is that it will not be scarce anymore. Many investors invest in bitcoins only because the supply is predictable and fixed.
Removal of the fundamental driver behind the value proposition of bitcoins is not in the interest of miners. This change may increase the revenue for miners in terms of bitcoins, but they may lose their faith in the Bitcoin network and this may further lead to a price collapse.
Governance of Bitcoins
The rumour that the hard cap of bitcoin can be changed is generally rooted in two major misunderstandings regarding bitcoins. The first one is that there are several dozen versions when it comes to bitcoin source codes. People believe that each node in the network runs on independent software and that it may reject all invalid blocks.
The second one being that the network and its rules are not controlled by the miner. New blocks are produced by miners and they validate the transactions. When a block is submitted by the miner to the network, several nodes independently identify the block released, to ensure that it produces an appropriate amount of new bitcoins. The blocks violating the rules are simply rejected, which means that miners don’t have any control over the ruleset of Bitcoins.
The Possibilities of Changing Hard Cap of Bitcoins
We just discussed that it is next to impossible to change the hard cap of bitcoins, but theoretically, changing it is possible.
The first step that developers will have to take, is to propose the changes and then write relevant code so that the change can be implemented. Community discussion will be carried out, where the idea may face controversies. If everyone in the community agrees to carry out the change, then it will be integrated in the Bitcoin core.
The community will then also have to agree on the activation path to make sure that the network gets transitioned to a completely new set of rules. A hard fork is necessary to change the supply of the hard cap of bitcoins. It means that every node present on the network will have to adapt to the changes and the ones that don’t adopt the changes will be forced off the network.
The nodes and the miners will have to depict that they support the changes, since they are a part of the activation path. As soon as a dominant part of the network signals that they support the changes, the changes will then be integrated. If there are some miners and forks who do not agree with the change, then they will operate as a minority fork and will preserve the bitcoin network.
There is a hard cap on the supply of Bitcoins, however, under rare circumstances the hard cap can change. Bitcoin has a famous stipulation that it will lure investors only if the supply of bitcoins is limited and finite. For this reason, it is said that no bitcoins will be produced over 21 million.