Nick Szabo insisted that decreased hash power due to lower mining rewards would not have a significant impact on security, but conceded
that “it may require recipients of very-high-value transactions to wait for more blocks before relying on them.”
Cobra Bitcoin took a more combative approach, tweeting
“There will only ever be 21 million bitcoins. If you have a problem with that, get the fuck out of our community because you aren’t welcome.”
To this, Matt Luongo responded:
This stuff has to work … If the stars align and this becomes an issue do you sacrifice a core tenet of the community or the entire security of the chain?
The money supply replacement theory
By limiting its maximum supply, and slowing the rate at which new Bitcoin comes into existence, Satoshi intended each individual Bitcoin unit (known as a satoshi) to appreciate in value over time.
According to an email
purportedly shared between Nakamoto and Bitcoin Core contributor Mike Hearn, Satoshi reasoned that if 21 million coins were to be used by some fraction of the world economy, 0.001 BTC (1 mBTC) could be worth around €1. This prediction came true back in 2013 when Bitcoin first broke through the €1,000 price point.
Although Satoshi compares the price of Bitcoin to the Euro in his email, some simple mathematics indicate that he may have had a much grander vision for Bitcoin — better explaining why the 21 million maximum figure was chosen.
At the time of Bitcoin’s creation, the entire world’s money supply stood at approximately $21 trillion. This figure, known as the M1 money supply, is made up of the total value of all the physical money in the world, including cash, coins, travelers’ checks, and more.
In 2021, the global money supply has almost doubled and reached an estimated $40 trillion, which is significantly more than when Bitcoin was first introduced.
Possible Additional Hard Forks Once Supply Runs Out
While it’s true that only 21,000,000 Bitcoins will ever be created, people love to play up the fixed supply argument and downplay its potential reversal.
With Bitcoin, you don’t need to buy a full one. Instead, you can purchase as little as one Satoshi, which is equivalent to 1 / 100,000,000 (one hundred millionths) of a bitcoin. In other words, we have 2,100,000,000,000,000 Satoshis, or 2,100 trillion units to trade.
Compare that with 5.8 billion ounces of gold in the world, or 1,885 paintings by Picasso and you realize this supply is not so scarce after all.
Additionally, the Bitcoin community can ‘split’ at any point to create a new currency that shares the transaction history with Bitcoin up to a certain time and date but duplicating all future supply. Bitcoin has already encountered several forks in the past.
Given that there was no mention of Bitcoin’s proposed supply in Satoshi’s seminal whitepaper, perhaps the number itself was never particularly significant to him. Whatever the case, 21 million has come to be one of Bitcoin’s defining features, and any future attempts to meddle with the magic number could be disastrous to Bitcoin’s future.
To claim Bitcoin will never see a successful 51% attack, or that its code will never be altered by a hard fork is gullible thinking. The Bitcoin community’s values have definitely shifted drastically over the last decade, and I wouldn’t be surprised if we see more debates about this over the coming years.
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