Of all the rules in bitcoin’s code, few are as revered as the hard limit of bitcoin production.
The code dictates that 21 million coins will be released over the course of bitcoin’s lifecycle. By limiting the total amount of bitcoins that could be created, Satoshi Nakamoto was able to establish a defined amount of available data, a revolutionary accomplishment in and of itself.
The limited production of bitcoins was, in a way, aimed at counteracting the endless printing of paper currencies.
Nakamoto compared it to the discovery and mining of gold in the original Bitcoin white paper , writing: "By convention, the first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them. The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended." But in the actual code, there is actually no “constant of amount of new coin.”
Instead, there are rules in place that dictate how much bitcoin will be released and when and how that supply is reduced overtime, ultimately leading to a time during which there will be no new bitcoins released.
Each time a new block is added to the bitcoin network, freshly minted bitcoins are rewarded to whichever miner discovered the valid block. This reward, initially set to 50 BTC, fell to 25 BTC in late 2012. Sometime next month, this number is expected to fall to 12.5 BTC. This event is known as a "halving". Bitcoin halving in the code
According to the […]
