21 days to the Bitcoin Halving. Reason enough to remember why Satoshi Nakamoto, the mysterious Bitcoin inventor, limited the number of Bitcoin units to 21 million.
When choosing the number, did Satoshi consider that 21 is "the smallest positive natural number for which squares exist in pairs of different positive edge lengths that can be put together to form a square? Or was the pseudonymous Bitcoin founder aware of the symbolic nature of the esoteric circles of 21 - among other things as the number of completion? Or did, as so often in life and at the scene of a crime, colleague "coincidence" have his fingers in the pie?
Indeed, the Bitcoin White Paper does not yet mention a limit of 21 million. Only with the mail in which Satoshi published the Bitcoin White Paper, the 21 million became official:
The total circulation will be 21,000,000 coins. It will be distributed to network nodes as they form blocks, with the amount halved every four years.
the first 4 years: 10,500,000 coins
the next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
the next 4 years: 1,312,500 coins
and so on...When this expires, the system can support transaction fees if required. It is based on open competition, and there will probably always be nodes willing to process transactions for free.
Satoshi Nakamotor, January 8, 2009
So why 21 million? As you can see from the mail traffic between Satoshi and Mike Hearn, another Bitcoin developer from the very beginning, the number has no metaphysical but a pragmatic background:
My choice for the number of coins and the distribution plan was based on an estimate. It was a difficult decision, because once the network is up and running, it is fixed and we have to accept that. I wanted to choose something where the rates are similar to existing currencies, but without knowing the future, it is very difficult.
Satoshi Nakamoto to Mike Hearn, April 12, 2009
Satoshi was looking for the golden mean: Whether Bitcoin should remain a niche or be a big success, the limit should allow for numbers that are not too bulky in both cases. Sathoshi explains the calculation to Mike Hearn like this:
If you imagine that [Bitcoin] is only used for a fraction of world trade, there will only be 21 million coins for the whole world, so one unit would be worth much more. The values are 64-bit integers with 8 decimal places, so 1 coin is internally represented as 100000000. There is a lot of granularity when typical coins become small. For example, if 0.001 [Bitcoin] is worth 1 Coin, it might be easier to change the position of the decimal point.
Satoshi Nakamoto to Mike Hearn, April 12, 2009
Calculated: 21 million
It is also possible that it was not the 21 million but the 50 BTC per block - in conjunction with the target block time of 10 minutes - that was the starting point for the considerations. Because the 21 million is also a mathematical consequence. It is obtained by multiplying the number of blocks produced (210,000 per year) by the sum of the rewards that are halved (50+25+12.5+...0 ≈ 100). The question remains what was there first - the limit or the mining protocol.
What happens after the last Bitcoin Halving?
One thing first: Despite all the progress in medicine, it is unlikely that the inclined reader will witness the last halving: ...as it stands today, will take place around the year 2140. A crypto-world in which the last Bitcoin was "dug" is therefore Terra Incognita. In this scenario, transactios fees provide the only source of income for miners. For this reason, there were early considerations to increase the block size in order to accommodate more transactions (and thus more fees) in one block. The dispute over block size has been with Bitcoin from the beginning and has resulted in several hard forks.
