What’s the maximum amount of bitcoins that can exist?

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Having said all that, there are some psychological advantages to having a low limit like 21 million. It was inevitable that people would see Bitcoin as being “more valuable”. Ensuring this “high exchange rate” but making the coins highly divisible was probably a conscious design decision. The total amount of bitcoins to ever exist will be 21 million. In fact, it’s 20,999. No one has ever explained why that number was chosen. Was it completely random? Or was there something else, that influenced that decision?

First Reason, we should go from the assumption that we are designing a deflationary currency, thus the number of bitcoins should be limited. As soon as this is set, you start thinking about how much should eventually be issued. To you it doesn’t really matter personally, since you’ll be able to mine as much as you want before anyone else has a chance. But, since it would be safe to assume prices are going to be quoted per 1BTC in the future, it means that psychologically, it is unwise to choose a very big number for the total amount: a price growth from $0.0001/BTC to $0.01/BTC is not as impressive as from $1 to $100 – not from an investor’s point of view, but from the general public’s point of view. Thus, theoretically, the more coins you have, the slower the price rise and, as a result, the slower the infrastructure growth. There’s even a danger that due to a slow growth rate Bitcoin might never catch up in the first place. Thus, the incentive is to make less coins, not more.

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Here’s Second reason- a mathematical explanation:

Calculate the number of blocks per 4 year cycle:

6 blocks per hour
* 24 hours per day
* 365 days per year
* 4 years per cycle
= 210,240
~= 210,000

Sum all the block reward sizes:

50 + 25 + 12.5 + 6.25 + 3.125 + ... = 100

Multiply the two:

210,000 * 100 = 21 million.

Economically, because the currency is effectively infinitely divisible, then the precise amount doesn’t matter, as long as the limit remains fixed.

do block average mining period and block reward have anything to do with it at all? My answer is that block mining period is irrelevant to the theory above. If it was set to 20 instead of 10 minutes (for, say technical reasons), we could still adjust block reward to meet our demands.

If my theory is correct, it should be possible to prove it with data. The only variable we don’t know is what were Satoshi’s expectations for the Bitcoin advancement. But frankly, I find it very hard to believe that the number 21 million is random.

 You also read my article-Will the Bitcoin price go up? How high will Bitcoin go?

 

If you are interested in exploring more about Bitcoin/Cryptocurrency, that is easy to read, then please do check out my kindle book (,$3.50)  

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