Unlikely Miners Would Accept Change to Bitcoin's 21 Million Supply Cap, says Analyst
Summary:
While theoretically Bitcoin’s (BTC) 21 million supply cap could be changed by developers, it's unlikely this alteration would be accepted by miners, according to Bitcoin analyst Josef Tětek. This principle of scarcity is integral to Bitcoin's source code and any proposed modifications would need consensus from node runners, who manage the Bitcoin network. Viewpoints from the Bitcoin mining community suggest resistance towards removing the cap. The discussion follows JPMorgan CEO Jamie Dimon questioning the fixed nature of Bitcoin's supply and criticizing Bitcoin’s alleged illicit uses.
Although the 21 million Bitcoin (BTC) supply limit, a guiding principle of the BTC network aimed at preserving scarcity, could potentially be removed from its source code by developers, one analyst suggests that such a change is unlikely to gain the acceptance of miners. The supply limit, originally embedded into the open source code by Bitcoin's anonymous creator, Satoshi Nakamoto, is not directly stated within the code but can be found within the 'validation.cpp' file, in a section titled 'GetBlockSubsidy'. This section discusses how the miners' subsidy will halve every 210,000 blocks, approximately every four years, leading to an eventual zero subsidy following 33 Bitcoin halvings.
As with all code, modifications can be made - theoretically, the 21 million limit could be altered. But changes would have to be embraced by miners to be effective, says Josef Tětek, a Bitcoin analyst at Trezor, the hardware wallet firm. He says, "Developers have the freedom to incorporate any changes they see fit, but they cannot enforce any changes". Meaning, the deciding power rests in the hands of the node runners - individuals across the globe running Bitcoin full nodes. Tětek referred to the 2017 'Blocksize War', a similar situation where several developers, miners and exchanges aimed to upscale Bitcoin's block from its original size of 1 megabyte, which was rejected by node runners as it would centralise Bitcoin.
Estimates from Buy Bitcoin Worldwide suggest that over a million unique individuals could be mining Bitcoin, many of which echoed sentiments that they would not support the removal of Bitcoin's 21 million supply cap, according to forum discussions on Bitcointalk.
"Participants of the network will simply refuse to run the code and it would lead to a hard fork, which would barely receive any support," stated Bitcointalk user Kakmakr. "Bitcoin operates differently from fiat currency; you cannot just start the money press and elevate the supply. Participants of that network must all agree," he continued.
These discussions came in the wake of JPMorgan CEO Jamie Dimon questioning the irrevocability of the 21 million Bitcoin supply cap and critiquing Bitcoin for alleged usage in criminal activities during a CNBC interview on January 17. Despite Dimon's critical stance on Bitcoin, JPMorgan got involved in crypto, with JPMorgan Securities listed as an authorized participant for BlackRock's Bitcoin-tracking exchange-traded fund on December 29.
Published At
1/22/2024 6:35:54 PM
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