As a seasoned crypto investor with years of experience navigating the tumultuous waters of digital currencies, I find myself once again grappling with the debate surrounding Bitcoin‘s supply cap. The recent video by BlackRock that hints at the potential changeability of this cap has certainly sparked a lively discussion within the community.
The question of whether the 21 million limit on the supply of Bitcoins is actually immutable has been brought up once again following the release of a three-minute explanatory video by BlackRock, who included a caveat stating that changes to this limit cannot be definitively ruled out.
One key advantage of Bitcoin lies in its limited supply, which makes it an appealing option for long-term storage. If this capped quantity were to be increased, there’s no question that it would alter the way investors perceive and value the digital currency.
In the December 17th video, BlackRock stated that Bitcoin’s total supply is limited to 21 million. They further mentioned that this predetermined rule regulates its supply, stability of purchasing power, and prevents the risk of excessive printing of the currency for potential misuse.
However, it also added a disclaimer that read: “There is no guarantee that bitcoin’s 21 million supply cap will not be changed.”
The video has since been reposted by MicroStrategy chairman and Bitcoin bull Michael Saylor, leading some critics to suggest that Bitcoin (BTC) isn’t theoretically scarce after all.
BlackRock explains #Bitcoin
— Michael Saylor⚡️ (@saylor) December 17, 2024
According to Dashpay’s Marketing and Business Development Director, Joel Valenzuela, he stated that when a rise in supply occurs, it was ‘foreseen as part of the strategy.’
“And today, in 2024, people have the audacity to say Bitcoin wasn’t hijacked.”
Antiprosynthesis, a pseudonymous Ethereum developer, commented that BlackRock has a deeper understanding of Bitcoin compared to its users.
Can Bitcoin’s 21M supply cap be changed?
The question of whether the supply limit for Bitcoin can be altered hinges on the interpretation of what exactly “Bitcoin” is, according to Super Testnet, a key figure in Bitcoin development who works on BitVM and spoke with CryptoMoon.
It’s possible that a change could occur if there is agreement among key community figures, such as node operators, developers, miners, and investors, who collectively decide to implement a hard fork by shifting to a new blockchain.
Before actually modifying the rules within Bitcoin Core, developers are likely to initiate a conversation with the community, sharing their proposed rule changes. This way, they can gauge where the general agreement lies and make adjustments as needed based on the feedback received.
As a researcher, I find myself pondering over the potential consequences of a hard fork. In such a scenario, it falls upon the community members to make a crucial decision: choosing which set of new rules they will adopt moving forward.
If a large number of node operators and miners adopt the new version of Bitcoin (fork), which can be seen through its growth in market share and mining power, they will essentially be functioning within the “new” Bitcoin system, characterized by an unlimited supply.
However, Super Testnet said while this is possible, the resulting new chain won’t be “Bitcoin.”
According to Super Testnet, the limit on inflation is a fundamental aspect of Bitcoin, as it was clearly outlined in Satoshi Nakamoto’s original Bitcoin proposal.
“Eliminate that, and whatever you have isn’t Bitcoin anymore. You might as well ask what it would take to turn Bitcoin into PayPal.”
In other words, an uncapped supply version of “Bitcoin” won’t be Satoshi Nakamoto’s Bitcoin.
Who would want it to change?
Bitcoin’s security model relies on individuals and entities to mine Bitcoin, but they must be economically incentivized to do so.
Miners earn both a block reward (in the form of newly minted Bitcoins) and transaction fees by using their computational power (hashrate) to solve complex mathematical problems and validate transactions, which results in the creation of each new Bitcoin block.
Instead, you could say: Every 210,000 blocks, the block subsidy for mining Bitcoin is cut in half. This implies that either the price of Bitcoin should keep rising, or transaction fees should significantly increase, or perhaps a mix of both scenarios, in order to motivate miners.
At present, miners receive 3.125 Bitcoins (approximately $316,950) for mining a single block. However, this reward will be halved again to approximately 1.625 Bitcoins when the block height reaches around 1,000,050, which is estimated to occur around 2028.
In early 2024, Bitcoin miners experienced significant profit increases due to an escalation in transaction fees during the Bitcoin Ordinals craze. Nevertheless, engagement within Bitcoin’s decentralized finance sector and overall network activity related to it have predominantly followed a pattern of recurring interest.
By mid-year, the Bitcoin mining group, viaBTC, shared with CryptoMoon that it’s crucial for the development of Bitcoin’s application layer to proceed, so that miners are adequately rewarded in the coming decades, since all Bitcoins are expected to be mined somewhere around 2140.
As a researcher, I’ve come to understand that the success of a Bitcoin hard fork cannot solely rely on the efforts of Bitcoin miners, as suggested by Super Testnet’s findings. It seems that a collaborative and well-orchestrated approach involving various stakeholders is crucial for a successful hard fork in the Bitcoin network.
In this system, there’s no central authority to vouch for its reliability. Instead, each user has the ability to validate transactions through their individual nodes, effectively taking responsibility for their own guarantees.
— Pierre Rochard (@BitcoinPierre) December 18, 2024
In the Blocksize War of 2016 and 2017, approximately 95% of Bitcoin miners advocated for increasing the maximum block size to facilitate scalability of Bitcoin.
Yet, the majority of node operators and investors opted against implementing this adjustment, leading developers to swiftly focus on creating additional layer 2 solutions instead.
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2024-12-19 04:55