When Bitcoin was created by Satoshi Nakamoto, it was built so that there would be a limit of 21,000,000 total Bitcoin. This is known as a “hard cap” and is within the source code of Bitcoin and is enforced by the nodes on the network. Critics and haters of Bitcoin claim that the rules or total Bitcoin can be changed. This is not true. Bitcoin governance is set by the nodes, not the source code.
The fact that Bitcoin is truly scarce with a total of 21,000,000 is a key reason why Bitcoin is valuable. Bitcoin was created in a way where the incentives align with not changing the network and protecting the network. You will learn why, and how others have failed when trying to change in the past. Read more…
Bitcoin Miners
Entities who mine Bitcoin are incentivized to protect the network and to protect Bitcoin’s value proposition which is it’s predictable and fixed supply. Miners who try to change the hard cap could in the short term make more revenue, but this in turn would eliminate the true value proposition Bitcoin has. Miners invest a tremendous amount of capital into equipment, time finding the lowest cost energy, and building a staff and team to manage their mining business. If Bitcoin’s price crashed, miners could no longer run their operations and they would have to shut down. FAIL!
Miners produce blocks, and validate transactions for the Bitcoin network. The supply being produced by miners is determined algorithmically on a geometrically declining supply function. (If you are thinking wtf, read this simple break down about the halving). When miners submit new blocks to the Bitcoin network, this allows nodes, which are globally distributed, to verify the blocks and make sure the correct amount of bitcoin are produced by the Bitcoin Proof of work (PoW) function. If any transactions are not valid, the nodes reject the block which go against the rules of the Bitcoin protocol. This validates the fact that miners have no control over the rules of Bitcoin.
Bitcoin Nodes
People who believe that Bitcoin’s hard cap can be changed are delusional. Bitcoin is a decentralized and distributed, consensus network. There are many different variations of the Bitcoin source code, and all nodes run on their own iteration of the software that will reject invalid or false blocks. Bitcoin source code can be changed, but it is near impossible to get all nodes to adopt any new code change that does not serve the network or greater good. This is near impossible.
The only way the supply could be changed
In order for the supply to change developers would have to propose code, which is then approved by the overall community and then integrated into the Bitcoin Core software. This would lead to what is called a “hard fork” which would require all nodes on the network to accept and adopt the new changes, or in turn be forced off the network. Miners and nodes alike would signal support for this change. Anyone who did not signal for support would continue with the original Bitcoin network.
Hard Fork – failures, they can’t do it! 🙂
This actually did happen in 2017. 95% of miners agreed to raise block size to speed up Bitcoin, at an attempt to scale it. Nodes refused the change and forced miners to adopt a different solution. This hard fork was Bitcoin Cash. If you look at the chart. It is a shitcoin that absolutely no one wants to own or believe in. By attempting to scale and increase speed you sacrifice security on the base layer and introduce tremendous amounts of risk.
I hope this was helpful and you learned something fun today!
If you want to learn more on Why to Buy Bitcoin? You should pick up this easy read by Andy Edstrom, Why Buy Bitcoin? Find it here on Amazon.