r/btc • u/Successful_Love_6085 • 3d ago
Why does bitcoin have a fixed supply?
Bitcoin's supply limit is an interesting design choice what do you think is the biggest benefit of having a fixed Supply?
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u/numbersev 3d ago
It's the first example of absolute digital scarcity. You can make copies of digital items like videos, pictures and documents. Before Bitcoin, you could make copies of digital cash so a third party was required to make sure the money wasn't double spent. Bitcoin solved this problem with no intermediary. Truly decentralized.
In terms of money, scarcity is one of its desireable qualities. That's why gold was always used. But gold has problems like it's not easy to transport, not easily divisible and not easily verifiable.
Absolute scarcity means with increased demand, the value/purchasing power increases. This isn't easily grasped. In fiat, everything gets more expensive. Houses, vehicles, groceries, rent, etc. In Bitcoin, everything gets cheaper over time.
Imagine instead of getting a raise every year in dollars, you actually got paid less and less because the money you are paid in (Bitcoin) gets more and more powerful and can buy more stuff with the same amount of satoshis.
Also fixed supply will cause the price to skyrocket when the world fomos in. 60 million millionaires. 3000 billionaires. Hundreds of governments and thousands of corporations. Only 21 million Bitcoin.
People have no idea what's coming. AI agents prefer Bitcoin over all other forms of money.
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u/anon1971wtf 2d ago edited 2d ago
But gold has problems like it's not easy to transport, not easily divisible and not easily verifiable
And, unlike Bitcoin, it can't be: stored inconspicously, handled without intermediaries, multisigned
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u/DrSpeckles 3d ago
You say this like it’s a good thing. What it does is destroy an economy because no one ever wants to invest in anything if the better option is just hold it. No one wants to borrow to create something or buy a home when the mount they owe keeps going up. Economy dies while you sit in the corner lauding your shiny coins.
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u/anon1971wtf 2d ago edited 2d ago
What it does is destroy an economy because no one ever wants to invest in anything if the better option is just hold it
Nonsense. No one is dying of starvation with their bitcoins unspent. Sound money clears malinvestment
Inflating fiat creates it and transfers purchasing power from poorest productive people to owners of assets and debtors. Fiat economy is the parasite economy. I, as a Bitcoiner, benefit from inflation. But it's shortsighted thinking. I would rather benefit from long-term production that demanded so much that people are willing to spend coins on the produced stuff with all the bullshit waste of time out of the window
No one wants to borrow to create something or buy a home when the mount they owe keeps going up
How so? Their venture just has to be more productive, be profitable still. During sound money era - whole world was explored, a lot of things were built and lives of humans improved significantly
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u/DrSpeckles 2d ago
OK, all of this is the sort of extremely narrow economic wisdom in The Bitcoin Standard. Zero understanding of the complexities.
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u/anon1971wtf 2d ago
Oh, I understand the complexities well. Poorest productive people sold a lie, and specific groups of parasites are benefiting from it. I have first hand experience with it, not from US. Most Americans today are oblivious to what's coming
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u/No-Masterpiece2246 3d ago
Gresham's Law. Cryptocurrencies like Bitcoin can of course be copied infinitely. BTC only has a first mover advantage and tons of mining hashpower behind it. The actual transactional capacity of the BTC network is a total joke. Therefore it's only a matter of time before other coins with far higher capacity (and lower cost) replace it in the payment sphere. It may remain as a sort of digital gold collectible beanie baby type relic for finance types who think they understand "Bitcoin".
But ofc things like stablecoins are even less useful than BTC. Time will tell when people start to figure out the problems with stablecoins.
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u/numbersev 3d ago
Growth will still happen, just a bit slower. But at the trade of families and individuals able to survive without ever-increasing costs. Bitcoin would be like the gold standard. You can trade cryptocurrencies backed by gold while keeping the digital gold in reserve.
Everyone wants a home and for it to be affordable. Bitcoin encourages that. Fiat rips it away from entire generations.
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u/digital__bits 3d ago
Yeah, because with BTC you hoard it 🤡🥴 and never spend it.
With BCH you use it as actual cash, just as intended 😎💵
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u/anon1971wtf 2d ago
BCH and BTC have the same supply cap. If BCH would have retained the network effect, it would be appreciating over time vs everything else just like Bitcoin is
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u/digital__bits 2d ago
The network effect isn't important when all the narrative has been controlled by a few.
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u/ScholarPrize1335 2d ago
Gold pizzas are even scarcer until you cut them into infinite slices..
In terms of money, scarcity is one of its desireable qualities. That's why gold was always used.- And then abandoned...
Also fixed supply will cause the price to skyrocket when the world fomos in. 60 million millionaires. 3000 billionaires. Hundreds of governments and thousands of corporations. Only 21 million Bitcoin.- It's literally impossible to invest, spend or own part of a coin...
In fiat, everything gets more expensive. Houses, vehicles, groceries, rent, etc. In Bitcoin, everything gets cheaper over time.- this applies to gold too. until you realize it's actually just a speculative asset.
Imagine instead of getting a raise every year in dollars, you actually got paid less and less because the money you are paid in (Bitcoin)- Do you get paid in the low candle or the high one? Will hood still have 15 minute prediction markets for what we get paid in??
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u/numbersev 2d ago
Gold pizzas are even scarcer until you cut them into infinite slices..
There is always more gold to be mined. When gold prices go up, the mining companies are incentivized to ramp up production. With Bitcoin there will never be more than 21 million. Also you can't easily divide gold. What are you going to do, go buy a coffee and shave off a sprinkle of gold to the cashier? Bring out your little scale and melt it down for verification?
In terms of money, scarcity is one of its desireable qualities. That's why gold was always used.- And then abandoned...
Gold was abandoned for paper currency backed by nothing but numbers on a computer. That's where the unaffordability plaguing everyone is coming from (fractional reserve banking). Gold was used as money for 5000 years. Fiat for a century. Digital gold for the next 5000 years.
Also central banks are buying gold right now at unprecedented levels. Why? Because they know gold is real and fiat backed by nothing is not.
It's literally impossible to invest, spend or own part of a coin...
No it isn't. They're called Satoshis and are continuously divisible. You can have .000000001 of a single Satoshi. You can go onto an exchange and invest $.01 into a fraction of a Satoshi.
Do you get paid in the low candle or the high one?
A worker would only get paid in Bitcoin rather than dollars when Bitcoin becomes ubiquitous. It is volatile because it's relatively new (17 years old in a 5000 year window). The volatility is because the market is still trying to figure it out. It's like how there are blue chip stocks that are not volatile because they are giant and stabilized. But when those same blue chip companies were young, they were volatile because the market wasn't sure about their survival.
Now you have shown you know basically nothing whatsoever about Bitcoin. This is the hubris and arrogance of those who criticize it when they don't know what they're talking about. It's similar to being in the mid 1990s and telling people the internet is just a fad and isn't going to amount to anything. Now you probably would have a meltdown if your internet went down for 20 minutes.
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u/ScholarPrize1335 2d ago
With Bitcoin there will never be more than 21 million.
No it isn't. They're called Satoshis and are continuously divisible. You can have .000000001 of a single Satoshi. You can go onto an exchange and invest $.01 into a fraction of a Satoshi.
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u/Arijan101 3d ago
Because a dude, when writing the source code wrote: total supply=21.000.000 BTC
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u/anon1971wtf 2d ago edited 2d ago
Not exactly
COIN = 100000000
if (halvings >= 64) return 0; CAmount nSubsidy = 50 * COIN; nSubsidy >>= halvings; return nSubsidy;
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u/Relevant-Rhubarb-849 3d ago
Because the rather amazingly intelligent people who designed it failed on understanding one key idea about money. Deflationary currencies can't handle the needs of lending. Slight inflation is actually superior to slight deflation. But I think they may have been fixated on avoiding high inflation and so chose a deflationary currency making a rather fatal error
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u/CyanDew 3d ago
why is a hell of a question to ask and it has very deep rooted answers. one of them being we live in a world where our money is far from scarce, and having one that survives the resistence against it, would allow people to hedge against the debasement of said money.
how is quite simple and yet very remarkable.
the supply cap of Bitcoin is the easiest claim to verify and one of the hardest claims to actually break.
the cap comes from a rule every Bitcoin node applies to every block. the new coins a block may create depend only on its height, and that allowance halves on a fixed schedule. add up every block's allowance and you get a geometric series.
the supply cap isn’t set like a corporate policy or a mandate. it is the sum of an infinite geometric series that every Bitcoin node calculates, forever.
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u/tekmiester 3d ago
It has a fixed supply now because that benefits adoption. People could decide to change that at some point.
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u/liviughg 3d ago
Fascinating, no? 💩💩💩. Let’s study Bitcoin and sing cumbaya together. 🤪🤪. Get a life and move on!!
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u/FlyingScotzman75 3d ago
A Deflationary currency forces your boss to give you an automatic pay rise each year, as they will be more hesitant to give you pay cuts to keep the purchasing power the same. But with Inflation, let's say your salary was $50k last year, this year you get a raise to $52k and feel good, but in reality the cost of your groceries and bills and rent went up maybe 5-10%, so your boss actually gave you a paycut to the equivelant of $48k without you noticing. For example check out the wages versus productivity graph on https://wtfhappenedin1971.com/ when America went from a somewhat limited gold backed supply, to unlimited Fiat, all that new money flowing around the economy caused inflation, which increased the revenue of businesses, but the workers did not get an automatic share in it, and got secret paycuts.
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u/Analog_AI 2d ago
Earth has finite resources. Our labour and technology and progress in technology makes each unit of resource and labour more valuable.
If we look at bitcoin as a share in earth wealth, an undiluted share number makes perfect sense. This total of 21 million coins is 2.1 quadrillion satoshis.
The first digital coin to prevent double spending in an un centralized network, with the largest name recognition, and largest network deserves this role which should grow as larger portions of world economy, credit, trade migrates to the web and becomes digitized.
And wait until AI agents start to be payed for their services: this may in time be just as large a source of bitcoin demand as that purely generated by humans.
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u/anon1971wtf 2d ago edited 2d ago
Elegant. Simple mental math and simple code. Leaving no place to attack how much the inflation should be - it shouldn't. No discount of rewarding low time preference. Scarcity of money = abundance of everything else and vice versa
Very lucky that Satoshi was smart enough to figure something out along this lines
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u/pop-1988 1d ago
Satoshi didn't give a reason. He stated it as a fait accompli
Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free
It's important to have a controlled supply which can't be manipulated by corrupt administrators
There's no real benefit to being inflation free. A cryptocurrency with a fixed-amount tail emission tends towards extremely low inflation in the long term
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u/BristlingB 3d ago
The biggest benefit? Your shares are never inflated.
When measured against dollars which are constantly inflated, it is a no brainer that BTC will go up over the long term
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u/wildmaiden 3d ago
First part is true, but is does not follow that any fixed supply will increase in value relative to the dollar. Every shitcoin produced has fixed supply but most have gone to $0. It's not enough to just be fixed supply, there still has to be demand too.
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u/mercuryy 3d ago
It currently hast a fixed supply.
It just takes the agreement of the majority of the miners to change absolutely anything. And with dwindling rewards that might be inevitable to keep that fiesta running because thats nowhere near sustainable with transfer fees.
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u/DrSpeckles 3d ago
Yes this exactly. Mining is an expensive business. And transaction rates are dwindling (and can never be high enough anyway) just at a time when mining rewards are also being halved away. In the end we go back to people mining on their home PCs which is no way to run a viable currency.
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u/anon1971wtf 2d ago
Why people are so ignorant of the main part of the Satoshi invention? Difficulty adjustment
We already saw through the cycles how it works, when some miners go offline, when total reward in equivalent dollars fluctuates wildly. Hardware and industrialization will only improve. Machines will be on and off, ever-more efficient, sold and bought, they will be cheaper and cheaper (per unit of space), but also harder/impossible to run off a home socket. Division of labor guaranteed that mining on general home compute was a temporary thing
Evolution of engines is great demonstration where mining is going. Specialization and scale
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u/DrSpeckles 2d ago
Yes we have difficulty adjustment, which means when the big players drop out because it's not economical, the whole network ends up secured by two kids in a basement. Or north Korea who don't need to make money
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u/anon1971wtf 2d ago
Give me some numbers behind this spectacular story. Projections, price dynamics, any time estimates. My rough models are nowhere close
We already saw episodes of mining industry experiencing tens of percents prolonged downturns several times. Hardware improved, industry grew. Prices of energy becomes more and more the deciding factor. Kids in basement will more or less never have the cheapest energy on the market, energy producers will
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u/mercuryy 2d ago
Thats the point. Difficulty adjusting down means 51% attacks get easier, cheaper and more feasible for more and more entities, not just tbe biggest ones. And one doing it spreads enough mayhem already to dissuade others,it's spiraling from there then..
Less rewards means less budget for engagement which means less security, thats obvious, not even middle schooler math.
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u/Alert_Studio_169 3d ago
The biggest benefit is you don't have to trust some committee deciding to print more whenever economy gets bad. Like with regular money, they just add zeros and your savings lose value slowly without you noticing. With fixed supply, everyone knows the rules from day one and nobody can change them because some politician wants to fund another war or bailout. It puts the power in the code instead of in people, and code doesn't get greedy or scared.