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Author Topic: Should bitcoin be limited to 21 million?  (Read 738 times)
jackg
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March 19, 2019, 04:29:31 PM
 #1

I have mixed views on this because most currencies stay stable with some sort of inflation. Quite frankly you shouldn't be inflating by 2% per month as thst a huge market but I don't think anyone would be against an increase for this to be accepted as a currency.

The alternative view is that this is what altcoins are for and most of the people won't see the last block with the initial rewards being taken up but at a point where we're at a low number of bitcoins per block it may come in handy to increase inflation slightly although if it becomes unprofitable to mine it'll be the node owners doing the mining which wouldn't be a bad thing (each node miner with a few chips to mine with like the gekkos side hack makes - id be into that).

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March 19, 2019, 04:55:12 PM
Last edit: March 19, 2019, 05:22:38 PM by hosseinamin
 #2

Inflation in national currencies help governments maintain their economy. Inflation in bitcoin may result in increase or Its security or more profit for miners.
I don't know What's good for bitcoin. But I think bitcoin being deflationary will not make much difference to world economy.

Maybe the right question is. How much security is needed?

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March 19, 2019, 05:01:09 PM
 #3

Bitcoin is less of a currency and more of an asset class. Finite supply is a fundamental feature of Bitcoin. No compromise on it will be accepted.

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March 19, 2019, 05:07:11 PM
 #4

I would say keep it at 21 millions for the sake of experimentation. Never before has existed anything like this, even gold suffers from small yearly inflation.
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March 19, 2019, 05:12:09 PM
Merited by dbshck (2), ETFbitcoin (1), slashz9 (1), darosior (1)
 #5

The 21 million is a lie.

We know that's the total of bitcoins but don't forget about the zeros after the point... 8 zeros have the trick. We don't need to fork the chain to add more bitcoins, if we change the transaction fees to 1 satoshi, and let the price goes to the moon (10sat=$1dllr), then those 21 million would look like an enormous number.

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March 19, 2019, 05:12:40 PM
Merited by dbshck (4)
 #6

While i don't like deflation (especially on long run) and big inflation, few things such as 21 million coin supply is one of Principles of Bitcoin that shouldn't be changed and will be disagreed by majority of Bitcoin community.

--snip--
although if it becomes unprofitable to mine it'll be the node owners doing the mining which wouldn't be a bad thing (each node miner with a few chips to mine with like the gekkos side hack makes - id be into that).

It won't happen as bitcoin mining difficulty simply decreased and miners with most efficient ASIC and low operational cost still can mining with profit.

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March 19, 2019, 05:16:47 PM
Merited by dbshck (4), Welsh (3), fronti (1), vapourminer (1), ETFbitcoin (1)
 #7

While i don't like deflation (especially on long run) and big inflation, few things such as 21 million coin supply is one of Principles of Bitcoin that shouldn't be changed and will be disagreed by majority of Bitcoin community.

--snip--
although if it becomes unprofitable to mine it'll be the node owners doing the mining which wouldn't be a bad thing (each node miner with a few chips to mine with like the gekkos side hack makes - id be into that).

It won't happen as bitcoin mining difficulty simply decreased and miners with most efficient ASIC and low operational cost still can mining with profit.
It is now a principle, but it was not until 2014. The finite monetary supply was added through bip42 : https://github.com/bitcoin/bips/blob/master/bip-0042.mediawiki .

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March 19, 2019, 05:32:26 PM
 #8

It is now a principle, but it was not until 2014. The finite monetary supply was added through bip42 : https://github.com/bitcoin/bips/blob/master/bip-0042.mediawiki .

Thanks for the information, i didn't know that. Nevertheless, it doesn't change the fact such change will be accepted, at least without culture change or serious commitment from some Bitcoiner to make this change.

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March 19, 2019, 06:37:39 PM
Merited by dbshck (4)
 #9

It is now a principle, but it was not until 2014. The finite monetary supply was added through bip42 : https://github.com/bitcoin/bips/blob/master/bip-0042.mediawiki .

Thanks for the information, i didn't know that. Nevertheless, it doesn't change the fact such change will be accepted, at least without culture change or serious commitment from some Bitcoiner to make this change.

BIP42 is a fix to an accidental bug that made the money supply larger than anticipated.  I think it is pretty clear that Satoshi did intend to make the money supply capped at 21 million right from the start.

IMHO this is actually the most important principle of bitcoin that there is (besides perhaps decentralisation), so any proposal to increase the supply will likely be strongly rejected.

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March 20, 2019, 01:11:46 AM
 #10

If the problem is mining incentives, I think miners will likely accept higher fees when that time comes, and people will use 2nd layer to avoid spending too much fees on on-chain transactions. We also don't know what's the price of 1 sat at that point so it is still tricky. My best guess is that if no inflation really cause people to stop mining, hash rate will decrease and maybe the price too, but it will reach an equilibrium where cost and profits stays more or less stable.

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March 20, 2019, 06:47:16 AM
Merited by vapourminer (1)
 #11

It is now a principle, but it was not until 2014. The finite monetary supply was added through bip42 : https://github.com/bitcoin/bips/blob/master/bip-0042.mediawiki .
Though the 21 million supply was never mentioned in the code of the bitcoin, calculating the block rewards certainly yields the number nearing 21 million.
But as far as we know, satoshi in his announcement of the version 0.0.1 has said that the circulation would be always 21 millions and when this runs out the nodes will mine the blocks for the transaction fees.

Total circulation will be 21,000,000 coins.  It'll be distributed
to network nodes when they make blocks, with the amount cut in half
every 4 years.

first 4 years: 10,500,000 coins
next 4 years: 5,250,000 coins
next 4 years: 2,625,000 coins
next 4 years: 1,312,500 coins
etc...

When that runs out, the system can support transaction fees if
needed.  It's based on open market competition, and there will
probably always be nodes willing to process transactions for free.

Also, as seoincorporation pointed out, the price wouldn't be stable for the miners to mine the coins at a loss along with the difficulty. The difficulty adjusts every now and then with miners not able to profitably mine the coin leaving the market and new ones entering. Never think of the total supply as just 21 million. If each satoshi is worth more or less of a dollar, then total bitcoins value is insanely very high. I have read somewhere that, satoshi designed the system keeping in mind the inflation rates. The fiat money is infinite and hence if more numbers are required they can be printed and the price wouldn't change. Bitcoin is inversely proportional to it. The more demand rises, the price of the coin rises simultaneously since no other extra coins would be created.

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March 20, 2019, 08:46:36 AM
 #12

I Don't Think So
Because It Would Make The Network More Vulnerable To Attack (Near The End)
It won't happen as bitcoin mining difficulty simply decreased and miners with most efficient ASIC and low operational cost still can mining with profit.
Less Difficulty = Less Miner = Less Secure

BTW At That Time, There Is A High Chance People Will Switch To Another Blockchain/Payment Method

Quote from: Bitcoin Wiki
If someone physically overpowers you then no technology on Earth can save your bitcoins.
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March 20, 2019, 08:53:54 AM
 #13

BIP42 is a fix to an accidental bug that made the money supply larger than anticipated.  I think it is pretty clear that Satoshi did intend to make the money supply capped at 21 million right from the start.

I agree, but IMO with BIP 42, we confidently can say that 21 million coin supply is part of Bitcoin principle and prevent troll/FUD by showing buggy code.

Less Difficulty = Less Miner = Less Secure

Fair point, but there are many factors besides mining reward and total fees on a block :
1. Bitcoin price (higher)
2. ASIC efficiency (more efficient/faster)
3. Cheaper price (cheaper)
4. Transaction count (more transaction count)
5. Transaction fees (higher transaction fees)

If some of mentioned possibility happen, bitcoin network wouldn't be less secure in distant future

BTW At That Time, Maybe People Will Switch To Another Blockchain/Payment Method

It's possible

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March 20, 2019, 10:22:26 AM
 #14

Viewing bitcoin as an investment asset gives investors the impression bitcoin has 21 million supply (technically it does) but when you consider bitcoin as more of a currency then you'll realize the 21million total supply isn't a limitation since it can be divided by 0.00000001 sat that means there are possiblity of 1 satoshi equaling $1 at 1 Bitcoin  equivalent to $100,000,000. I don't see the 21million total supply as a limitation but a preventive measure put in place to prevent inflation. We need to start thinking in satoshi if we want bitcoin to achieve it's initial purpose of creation which is to be used as a currency.

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March 20, 2019, 11:10:04 AM
 #15

Viewing bitcoin as an investment asset gives investors the impression bitcoin has 21 million supply (technically it does) but when you consider bitcoin as more of a currency then you'll realize the 21million total supply isn't a limitation since it can be divided by 0.00000001 sat [...]

We know that's the total of bitcoins but don't forget about the zeros after the point... 8 zeros have the trick. [...]

Bitcoin's fungibility changes nothing about its deflationary nature. Fungibility allows for practical usage despite deflation.

---

As far as fiat currencies are concerned I've come to appreciate their inflationary nature (within measures, obviously) as our current economic system would be unsustainable without an inflationary money. Inflation allows for credit and thus growth and progress, without it mankind would stagnate. Needless to say inflation has its downsides, but all in all it appears to be indispensable for the way our economies work.

That being said, I don't believe Bitcoin necessarily needs to be inflationary to be useful and stable in the long run. An economy where Bitcoin would be the one and only money around would suffocate but that is not and likely never will be the case. However as long as Bitcoin lives side-by-side with inflationary currencies (regardless of them being alts or government issued fiat currencies) I believe a mutually beneficial equilibrium can be achieved.

As far as miners are concerned I agree that things may become tricky. High variability caused by the majority of mining income being provided by transaction fees rather than a stable block reward could lead to some challenges. I don't think that this problem is unsolvable though. At any rate we should have plenty of time to consider our options, considering that the block reward will be reduced gradually over a very long timeframe, allowing for an ongoing observation of how miners behave and what security issues we might face.

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March 20, 2019, 02:55:25 PM
Merited by dbshck (4), vapourminer (1), bones261 (1)
 #16

From version 0.1.5
I think with the lost coins and other factors it will be under 21 million coins total somewhere around the 20.5 million coins is a good estimate.


Code:
int64 CBlock::GetBlockValue(int64 nFees) const
{
    int64 nSubsidy = 50 * COIN;

    // Subsidy is cut in half every 4 years
    nSubsidy >>= (nBestHeight / 210000);

    return nSubsidy + nFees;
}

unsigned int GetNextWorkRequired(const CBlockIndex* pindexLast)
{
    const unsigned int nTargetTimespan = 14 * 24 * 60 * 60; // two weeks
    const unsigned int nTargetSpacing = 10 * 60;
    const unsigned int nInterval = nTargetTimespan / nTargetSpacing;

Some of the things that in bitcoin that should not be changed unless there is full consent and I would agree that there MAX_MONEY for bitcoin should not be increased if the supply is inflated we become nothing more than the central banks printing press and it would have a negative impact on bitcoin.

Some of the principals and fundamentals in bitcoin should always be.

1. Increase of the total number of bitcoin issued above and beyond the 21 million.  While precision may be increased the proportions must stay the same.

2. Rules that add any requires or explicit centralization like changes that would require that transactions or blocks be signed by any central organization.

3. Deletion or revocation "and or I believe" Redistribution of coins that are deemed to be either lost or unused.

The Fundamentals

    21 million coins TOTAL.
    No censorship = Nobody should be able to prevent valid tx's from being confirmed on the network.
    Open-Source = Bitcoin source code should always be open for anyone to read, modify, copy, share.
    Permissionless = No gatekeepers should ever prevent anybody from being part of the network
    Pseudonymous = No ID should be required to own or use Bitcoin.
    Fungible = All coins are equal and should be equally spendable.
    Irreversible Transactions = Confirmed blocks should be set in stone. Blockchain History should be immutable.

If we lose the above we're going to have a "Bad Time"

 Smiley
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March 20, 2019, 09:15:14 PM
 #17

I have mixed views on this because most currencies stay stable with some sort of inflation.

False

1. Currencies with inflating supply do not stay stable. Name one, you'll be wrong (again)
2. Bitcoin's supply inflates

Vires in numeris
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March 20, 2019, 11:57:51 PM
 #18

Bitcoin (or any other coin) being capped is a strategic mistake for two important reasons:

1- It leaves network insecure because of the lack of incentive. I'm aware of arguments about hypothetical very high prices and fee system that is supposed to compensate for mining costs. They are simply wrong because either fees have to skyrocket or the block size, neither is good for the ecosystem.

2- Every single year a portion of coins are lost. People lose access to their keys, make mistakes in using the system sending bitcoin to a nonredeemable address, generate dusts in wallets, ... it is unavoidable and through centuries the total circulating coins will reach to absolute zero, it is just a matter of time.

As of 21M being a principle, it is not! A minor improvement doesn't heart and once the community has found a way out of its governance crisis, it would be absolutely possible to set a floor for inflation to resolve both issues.
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March 21, 2019, 02:14:38 AM
 #19

I see this question more as political than technological one. There are powerful groups interested in preserving their money emission monopoly. By removing the cap you are offering them ammunition that will be used against yourself.
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March 21, 2019, 03:25:44 AM
 #20

I see this question more as political than technological one. There are powerful groups interested in preserving their money emission monopoly. By removing the cap you are offering them ammunition that will be used against yourself.
If they're given more incentives then Bitcoin will remain secure but I think it's unlikely that the majority would agree on increasing Bitcoin's max supply because we're not sure about the future price of Bitcoin.

For me let it stay limited, it might be too early to discuss about this since we don't know what would Bitcoin look like once we're near towards the last blocks.

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