Digital Conqueror - Logo
Close this search box.

Why Is There A Limited Supply Cap On Bitcoins?

There is a limited supply of bitcoin because we can mine only about 21 million. The rewards which are offered for bitcoin mining are continuously halved. Around 90% of bitcoin has already been discovered. The creators of bitcoin cryptocurrency use the name SANTOSHI NAKAMOTO as the founder of bitcoin, an anonymous identity whose life will always remain a mystery to know how to generate an active income from cryptocurrencies . Satoshi Nakamoto has fixed the bitcoin limit to be ever founded. We can relate if the supply decreases, the demand increases.

It isn’t easy to increase the supply of bitcoin, and its algorithm keeps the supply of bitcoin constant. Shortly, we will run out of the supply of bitcoin, and there will be no bitcoin left behind to be mined. The first halving, in 2009, when a bitcoin block is mined, the block consists of 50 bitcoin, which is vast in numbers as compared to today. In the second halving, in 2016, the bitcoins mined in one block were 12.5. In third halving, the blocks mined now have reduced to 6.25 bitcoins in august 2021, which are created every 10 minutes.

Now bitcoin has become harder to mine, and we can see a rise in the value of bitcoin over a few years. For example, a programmer traded the bitcoin in 2010. First, he traded around 10000 bitcoin for two pizzas, but now the scene has changed to only 0.00027 can buy a pizza. This value shows how much bitcoin has grown in its value and how far it has climbed.

Role of bitcoin HODL

It means that when the giant whales [big investors] entered the market, they kept the bitcoin in the wallet for a long time. As a result, less bitcoin are left behind in the market, and more money is used for trading those bitcoins. Hence, the supply of bitcoin has decreased, and the price of bitcoin has hiked.

The future supply of bitcoin

It will be hard to mine more bitcoin in the coming future because we have already reached the limit of 18.77 million, which is already mined. These are almost 83% of the total bitcoin, which is around 21 million, a hard limit. These 18.77 million bitcoins were found only in the last ten years after the bitcoin came into existence. Therefore, it is expected that around 97% of the total bitcoins will be mined in the coming ten years, the rest of the 3% will take the time of around 110 years, or we can say that around 2140 the rest of the bitcoin is to be mined and can be traded.

If the supply serenity keeps increasing, then the price of one bitcoin will double in the coming ten years and triple in the next 30 years. The same situation can’t work on the rupees and dollar. This continuous increase in value can be exciting and a thing to worry about for our economy.

Is the hard limit of 21 million can be changed?

We don’t think this can be possible shortly to increase the limit of bitcoin production because it needs the majority of bitcoin participants to agree, which can decrease the value of their current bitcoin holdings. So why would anyone agree to such a deal in which they have to bear the losses? Because after the agreement of participants, the supply of bitcoin will get increased by the developer, and this is a common fact that if the supply increases, the prices always fall.

Can bitcoin be stored as an asset?

Due to the limited supply cap of bitcoin, the prices will always rise. The one who wants to make a significant investment can invest in bitcoin or any real estate they like to purchase, but the investment we make is always volatile, and the prices constantly fluctuate. Purchasing a house during the 2009 recession is also not a good idea. Before investing, one should consult with investment experts and invest in the different investment schemes so that if one scheme bears losses, the other covers the loss.

The bitcoin supplies will never touch the figure of 21 million because bitcoin mining uses robust codebase and logarithms. Therefore, after the bitcoin reaches its upper limit, the miners will receive income only from transaction fees.