The Reasoning Behind Bitcoin’s Supply Limit [and what to expect] 


Bitcoin was introduced to the public in 2009 as the world’s first decentralized digital currency. Since then, crypto has been on a rollercoaster ride, with prices rising and falling unexpectedly, influenced by many factors, but steadily climbing the ladder to become the most well-known and valuable asset in its class. 

Given its volatility and unpredictability, Bitcoin is a highly speculative investment, so there’s a lot of guessing and uncertainty around it, giving rise to all sorts of predictions and conflicting opinions regarding Bitcoin investments and evolution.

As a result, it’s virtually impossible to accurately predict what the future will look like for Bitcoin or any other cryptocurrency, for that matter. However, we know some things for sure, and one of them is that Bitcoin has a fixed supply of 21 million coins. 

While there are other cryptocurrencies that, just like Bitcoin, come with a cap on the maximum number of coins to be issued, that’s not the rule in the crypto market. For example, Ethereum, the second-largest digital currency by market cap, has no limit on the total amount of coins that can be mined.

Therefore, many people wonder why Bitcoin has this feature and how it may influence the evolution of crypto in the long term. 

Why Does Bitcoin Have A Supply Limit?  

Bitcoin’s elusive creator Satoshi Nakamoto designed the cryptocurrency with a limited supply in mind from the beginning. That limit was set at 21 million coins, after which all mining would cease, and no other coins would exist.

Although no one has ever discussed directly with Bitcoin’s inventors to find out what prompted them to make this decision, and there has been no official statement from them in this respect, experts believe there are several reasons for this approach.

First of all, Satoshi wanted to create a digital currency that would serve as a medium of exchange, just like fiat currencies, but without the implication of a third party like a bank or government to oversee the tractions. If the mining process wasn’t controlled and too many coins would emerge on the market, that would lead to inflation, so the best way to avoid this issue was to set a fixed upper limit that would keep price fluctuations in check.

This doesn’t mean that Bitcoin is not subject to price swings, as can be seen by analyzing the Bitcoin price chart, but scarcity allows for a certain level of control over its value.  

Another incentive for creating a limited coin supply was the desire to mimic the most sought-after metal on the planet – gold. One of the reasons why gold is such a valuable commodity is because it has a finite supply. The process of extracting gold is challenging and complex, and there’s only so much gold you can mine from a site until the resources run out.

That’s precisely the model that Bitcoin follows, thus earning the name of digital gold. 

Bitcoin’s creators had a clear vision for the digital asset but had to find a solution to put their idea into practice. And so they came up with a strategy that would allow them to gradually release only small amounts of coins and avoid overcrowding the market with the full supply.

New coins emerge when a new Bitcoin block is created roughly every 10 minutes. The duration is established by the difficulty of the algorithms used in the process. The level of difficulty changes after approximately 2000 blocks to keep mining in balance. 

To further control the timing and the number of coins that enter the market, Bitcoin also introduced the notion of halving. Therefore, the number of coins that make up a Bitcoin block is reduced to half every three years and nine months (or after every 210,000 blocks). 

Bitcoin’s Supply In Figures 

If Bitcoin continues to rely on the mining and halving strategies it has employed so far, it is estimated that 21 million coins will be reached by 2078. After that point, there will be no coins left to be mined.

However, there’s no consensus on when this might happen due to the changing nature of the crypto environment and the many variables that may influence the process. Some sources maintain that the limit could be reached by 2040. 

What we do know is that at the moment, there are little over 19 million coins in circulation. That means there are less than 2 million Bitcoins left to be mined, so we’re getting closer to the end every day. But one crucial aspect that needs to be mentioned is that out of the total 19 million coins that have been mined to this day, approximately 20% are being kept in inaccessible wallets, amounting to a value of almost $140 billion.

So, there’s a difference between the total number of coins that have been mined and the number of coins in circulation. 

What Will Happen When The Limit Is Reached? 

At this point, one question on everyone’s minds is what will happen when the total Bitcoin limit is reached? Unfortunately, as we’ve already mentioned, providing exact predictions about what will happen with Bitcoin in the near or distant future is not a realistic expectation. Yet that doesn’t stop experts and analysts from speculating on the matter.

Some assume mining will no longer be profitable as block rewards will decrease. The only solution to the problem would be an increase in Bitcoin price that may or may not happen. After the entire supply is mined, miners can earn a profit by continuing to validate transactions and earning the associated fees. 

A rise in Bitcoin price is also expected as we inch closer to the supply limit. It’s likely that investors and HODLers will amass Bitcoins and keep them in their wallets, leading to an increase in Bitcoin value.  

Only time can tell if these theories and predictions will ever turn into a reality, so for now, the best thing anyone can do is keep a close eye on the market.