Why can there only be 21 million bitcoins

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All kinds of different things were tried as money - coconuts, cattle, barley, salt, beads, shells - before gold and silver became established as the most effective. Imagine the problems we'd face if salt remained the dominant form of money. Gold ticks the scarcity box and most of the other five, though its weakness is the difficulty in transporting it. Programmable Scarcity If you think about the most familiar digital assets - jpegs, google docs, mp3s - they can all be copied fairly easily.

Read this article to learn more about how Bitcoin works. If you control a bitcoin address, you can spend the bitcoin UTXO associated with it. So Bitcoin as a monetary system is the aggregate of all the spendable bitcoin known as the UTXO set , in other words the total supply of bitcoin. So the next logical question is how are these spendable records created? Surely whoever controls that can create as much bitcoin as they want? True, if that was controlled by a single person that would be the temptation, in fact that is how existing money works aka Fiat Money.

It is simply a question of key strokes as it just exists as an entry on a centralised ledger. When the government increase money supply it can create inflation, which is a decrease in the purchasing power of money. Without doing anything, everyone who currently holds that money instantly becomes a little poorer. This is one of things Satoshi set out to fix with Bitcoin. Read this article on how money printing works. How bitcoin are created One of the most magical parts of the Bitcoin monetary system is the way in which new bitcoin are created, through a process called Mining.

Every node in the Bitcoin network runs independent software that will reject any invalid blocks. While many nodes run the latest version of Bitcoin Core, a significant number of nodes continue to run older versions and different implementations. Secondly, miners do not control the network or its rules. Miners produce new blocks and validate transactions. When miners submit a new block to the network, tens of thousands of nodes each independently verify this block, making sure it produces an appropriate amount of new bitcoin, includes a valid Proof-of-Work , and all transactions within the block are valid.

Nodes and users however, refused this change and successfully forced miners to adopt an alternative scaling solution. In order to change the supply cap of Bitcoin, several groups would have to collaborate. First, developers would have to propose and then write the code to implement this change. There would be community discussion, which would likely be controversial. If these changes were agreed upon by developers, the changes would be integrated into Bitcoin Core.

Next, the community would have to agree to an activation path, in order to ensure that the network transitioned to the new ruleset collectively. Changing the supply cap would necessitate a hard fork , which means that all nodes on the network would have to adopt the changes or be forced off the network. As part of the activation path, both miners and nodes would signal their support for the change, and once a dominant portion of the network signalled support, the change would be activated.

Nodes and miners who refused the change would now operate a minority fork, preserving the original Bitcoin network, and the two networks would compete for market share and hash rate.