Why Satoshi Selected 21 Million as the Maximum Cap Supply of Bitcoin: A Timely Explanation

Satoshi Nakamoto, a pseudonym for the creator of Bitcoin, decided there will only be 21 million BTC coins ever to be mined. In an email published on Satoshi Nakamoto Institute addressed to Mike Hearn on why Satoshi selected 21 million as the cap, the unknown figure said the number is “an educated guess”. However, a number of investors and researchers have come forward to find a logical explanation as to why Satoshi chose that specific number.

The 21 million BTC Capped Supply

Bitcoin (BTC) capped supply at 21 million is both symbolic and calculated as explained by Sasha Fleyshman, a traders and analyst at Arca Traders, in a thread of tweets sent out on Aug 31. Well, as is with most research, there are general assumptions made in the theory proposed by Fleyshman.

Note: The average production time of a block is 10 minutes, but the difficulty adjustment, which happens every 2016 blocks (or 14 days) causes a deviation each side of the block producing time average.

A Timely Calculation

Bitcoin is math. Sasha calculates the 21 million cap as a factor of the blocks produced every hour, the halving effects on BTC rewards and the number of blocks each halving period.

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Source: Sasha Fleyshman

As seen in the image above, the summation of the halving rewards till 2140 –the expected mining end date – that started off at 50BTC reward, then 25, then 12.5 etc. sums up to 100 (well tending to 100). Taking this number and multiplying it by the number of Bitcoin blocks mined before the halving of the BTC rewards – 210,000 BTC – you get 21 million BTC.

Sasha urges the Bitcoin community to continue learning more about Satoshi’s ideas on why he selected the number. He wrote on Twitter,

“Now, pulling on this string opens up a new line of questioning, of which I have no answer (as of yet); just theories. I think it is very important to question what you do not understand with #Bitcoin – the answer is not as important as the thought process.”

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Author: Lujan Odera

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