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Author Topic: 21 million cap  (Read 10866 times)
mndrix
Michael Hendricks
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February 12, 2011, 03:37:11 AM
 #21

I still think 21 million was an odd choice, though.

I suspect that Satoshi started with an initial per-block reward of 50 BTC which cuts in half every 4 years (210,000 blocks).  The consequence was 21 million coins over time.  As mentioned above, the top limit doesn't really matter, but using psychologically convenient numbers when the system bootstraps probably does.
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February 12, 2011, 04:38:18 AM
 #22

Yes, really.  We're not normal, we're geeks.  Like everyone else reading this.
I swear that everyone in school learned this stuff!
I learned a lot of crap in school and retained it only to the next test.  Ask your mother if she knows what scientific notation is.

Exactly. It may be on the school curriculum, but most people have no interest in, or a need to use, scientific notation. Or any numbers outside of what they have to deal with in their daily life. And what you don't use, you lose.

If bitcoin wants to be taken seriously by a wider audience, it will need to address this. It is (or will be) one more hurdle to acceptance, and there are more than enough hurdles for an idea like bitcoin to deal with in the first place.

Americans used to describe their currency in cents. Then as it inflated, people came to refer to dollars, Benjamins, and grands. Same thing with Bitcoin, except the trends will follow deflation.

The rate of this change is fairly key to the discussion. If the change from bitcoins to milli-bitcoins happens over a couple of generations, fine. If it happens in the space of 10 years, that's a problem.

People need to be able to compare prices over time to be able to make useful decisions about purchases now compared to the past, and their relative value. Large-scale deflation raises the same problems with this, and with menu costs, as large-scale inflation does.

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February 12, 2011, 05:15:44 AM
 #23

No, I meant exactly 0.001 USD. And it is not a problem because you can sell 10 pieces for 1 cent.

0.001 USD is called a mill.  It did find some use early on in the history of America, and it still can be found in American gasoline refilling stations (where the gasoline price shows an additional 9 mills per gallon).  It also applies to taxes where sometimes taxation rates are set in terms of a number of mills per thousand dollars of value.

Considering that the penny is now threatened with extinction due to inflation, it is obviously a seldom used denomination.  If the dollar ever went deflationary again over a prolonged period of time it might be used again, but that wouldn't happen as long as the Federal Reserve Bank is in charge of monetary policy in relation to the U.S. Dollar.

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February 12, 2011, 04:27:40 PM
 #24

The rate of this change is fairly key to the discussion. If the change from bitcoins to milli-bitcoins happens over a couple of generations, fine. If it happens in the space of 10 years, that's a problem.
The rate of Bitcoin adoption is pretty key, too. I suspect that the rate of deflation will decrease with the rate of newcomers over time.

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February 12, 2011, 05:12:21 PM
 #25

I suspect that Satoshi started with an initial per-block reward of 50 BTC which cuts in half every 4 years (210,000 blocks).  The consequence was 21 million coins over time.

210,000 is an equally strange number, other than being exactly 1% of 21 million.
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February 12, 2011, 05:41:28 PM
 #26

I suspect that Satoshi started with an initial per-block reward of 50 BTC which cuts in half every 4 years (210,000 blocks).  The consequence was 21 million coins over time.

210,000 is an equally strange number, other than being exactly 1% of 21 million.


210,000 comes from 10 minutes, 4 years, and 50BTC/block. Those are a little less strange imo. Only the block award is arbitrary, but 50 feels nice to me.

edit: arbitrary is the wrong word. I mean that 10 minutes can be chosen for a reason and so can 4 years.
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February 12, 2011, 05:41:47 PM
 #27

I suspect that Satoshi started with an initial per-block reward of 50 BTC which cuts in half every 4 years (210,000 blocks).  The consequence was 21 million coins over time.

210,000 is an equally strange number, other than being exactly 1% of 21 million.


No.  The number comes from the combinations of the initial block reward (50 coins), the target blocks per hour (6) and the halving period (4 years).  There will be 10.5 million created in the first four year period, and then the reward will be halved while all other metrics remain the same.  As the reward continues to half again with each four year period, the total number of coins issued will trend toward the mathmatical limit (as in a logrithmic) of 21 million.  The numbers that define the outcomes are the initial reward, the target block interval, and the halving term.  All of these were design decisions that resulted in the outcome of 21 million, not the other way around.  The interval could have been 9 minutes, or 12, or anything; same with the halving period or the initial reward.  The interval needs to occur quick enough to verify transactions within a rational amount of time, and be long enough for a huge future bitcoin network to propagate transactions and blocks without significant latency issues; but why 10 minutes and not 6 or 15?  Mostly it was an arbitrary design decision, and 6 or 15 or 525 seconds or anything else would have worked.  The same is true for the initial block reward, why a round decimal and not a round binary, such as 64 or 128?  Why 50 and not 100?  Why an even four years and not 3, 5 or a moving term?  (i.e. why half only the reward?  why not two-thirds of the reward and two-thirds of the halving term?  too complex?)  In the end, someone had to make decisions before this all began, and their merits are arguable, but in the end they are still arbitrary.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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February 12, 2011, 07:31:20 PM
 #28

The end total was probably also given some consideration. If an exact number of blocks for 4 years was used, the result would be some odd number:
http://blockexplorer.com/q/changeparams?interval=204480&precision=8&subsidy=50
You'd have to say that the amount of BTC will never go beyond 20.5 million in that case, which doesn't have the same ring to it.

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February 12, 2011, 08:23:55 PM
 #29

The number comes from the combinations of the initial block reward (50 coins), the target blocks per hour (6) and the halving period (4 years).

Ah, that makes more sense now.
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May 20, 2011, 12:44:54 AM
 #30

The number comes from the combinations of the initial block reward (50 coins), the target blocks per hour (6) and the halving period (4 years).

Ah, that makes more sense now.
And here I thought it was because when you divide the starting number of coins generated by the number of blocks before the coins halve and then multiply by the current recommended transaction fee you get the answer to life, the universe, and everything:

(210,000 / 50) * 0.01 = 42
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May 20, 2011, 12:49:05 AM
 #31

The number comes from the combinations of the initial block reward (50 coins), the target blocks per hour (6) and the halving period (4 years).

Ah, that makes more sense now.
And here I thought it was because when you divide the starting number of coins generated by the number of blocks before the coins halve and then multiply by the current recommended transaction fee you get the answer to life, the universe, and everything:

(210,000 / 50) * 0.01 = 42

May you be touched by his noodlely appendage.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 20, 2011, 02:36:05 AM
 #32

May you be touched by his noodlely appendage.

Ramen, brother.

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May 20, 2011, 04:34:03 AM
 #33


And here I thought it was because when you divide the starting number of coins generated by the number of blocks before the coins halve and then multiply by the current recommended transaction fee you get the answer to life, the universe, and everything:

(210,000 / 50) * 0.01 = 42

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