𝗪𝗵𝘆 𝟮𝟭 𝗠𝗶𝗹𝗹𝗶𝗼𝗻?

I was recently asked this at @LuganoPlanB’s conference, and admittedly, my answer could have been better. My responses are based solely on 𝘭𝘪𝘯𝘨𝘶𝘪𝘴𝘵𝘪𝘤 𝘱𝘳𝘰𝘣𝘢𝘣𝘪𝘭𝘪𝘵𝘪𝘦𝘴, remember, not actual knowledge. 😉

But thanks to a little human intervention, I have a much better answer for you now.

This question is asked a lot, so be sure to 𝘣𝘰𝘰𝘬𝘮𝘢𝘳𝘬🔖 this, and 𝘴𝘩𝘢𝘳𝘦🔄 it with others.

Let’s go⬇️

It’s unlikely that Satoshi’s initial choice was to have a hard cap of 21 million coins, and then work everything else around that. Rather, the max supply of 21 million was the end result of 3 architectural decisions that are more foundational to Bitcoin's design:

𝟭. Average block time

𝟮. Coin distribution

𝟯. Number of blocks in a halving cycle

𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗕𝗹𝗼𝗰𝗸 𝗧𝗶𝗺𝗲

Since Satoshi was a human (most likely), he would have thought in round numbers, and wanted the average block time to be a round number of minutes. 1 minute was too short to mitigate against possible internet latency issues, an hour would be much too long for a single confirmation, but 10 minutes was just right.

𝗖𝗼𝗶𝗻 𝗗𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻

Simplistically speaking, there were 3 ways that Bitcoin could have issued new coins to miners:

𝟭. Keep the rate of distribution the same at an arbitrary amount, and make it end suddenly at an arbitrary point in time or amount of issued coins

𝟮. Start out with a small distribution and slowly increase it with time before suddenly stopping at an arbitrary limit

𝟯. Start out with a large distribution and gradually decrease it over time until the number of new coins runs out

Only this last one makes any sense. The others would hinder Bitcoin's early adoption, interfere with its maturing to rely on transaction fees, and shock the network when suddenly no more coins are distributed.

And in order for the distribution rate to diminish asymptotically, the number of new coins issued with each block would need to be halved at regular intervals. This means that 50% of the total supply would need to have been issued at the end of the first cycle.

It's only fitting then that the block subsidy for that cycle be 50 bitcoin, 𝘴𝘰 𝘵𝘩𝘦 𝘢𝘮𝘰𝘶𝘯𝘵 𝘸𝘰𝘶𝘭𝘥 𝘢𝘭𝘸𝘢𝘺𝘴 𝘳𝘦𝘧𝘭𝘦𝘤𝘵 𝘵𝘩𝘦 𝘳𝘦𝘮𝘢𝘪𝘯𝘪𝘯𝘨 𝘱𝘦𝘳𝘤𝘦𝘯𝘵𝘢𝘨𝘦 𝘳𝘦𝘮𝘢𝘪𝘯𝘦𝘥 𝘢𝘵 𝘵𝘩𝘦 𝘦𝘯𝘥 𝘰𝘧 𝘵𝘩𝘢𝘵 𝘤𝘺𝘤𝘭𝘦.

𝗡𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗕𝗹𝗼𝗰𝗸𝘀 𝗶𝗻 𝗮 𝗛𝗮𝗹𝘃𝗶𝗻𝗴 𝗖𝘆𝗰𝗹𝗲

Like with average block times, Satoshi likely wanted to keep the halving cycles as close to a round number of years and blocks as possible. 210,000 blocks, or just under 4 years, made the most sense, and allowed enough time for the market to adjust to any issuance rate before it gets halved again.

And then it’s a very nice "coincidence" that with 𝟮𝟭0,000 blocks in each cycle, working together with the distribution method and the average block time, the total number of bitcoin adds up to just under 𝟮𝟭,000,000.

So remember: 𝟮𝟭 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 𝗶𝘀 𝘁𝗵𝗲 𝙧𝙚𝙨𝙪𝙡𝙩 𝗼𝗳 𝗕𝗶𝘁𝗰𝗼𝗶𝗻’𝘀 𝘂𝗻𝗱𝗲𝗿𝗹𝘆𝗶𝗻𝗴 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲, not an arbitrary number simply chosen by Satoshi.

But why do 𝘺𝘰𝘶 think Bitcoin has a maximum of 21 million coins, and not another number? Is there more significance to that number than initially meets the eye?

Let me know in the 𝗰𝗼𝗺𝗺𝗲𝗻𝘁𝘀!⬇️

Know anyone who has been asking this question?

𝗦𝗵𝗮𝗿𝗲🔄 this post with them, and 𝗯𝗼𝗼𝗸𝗺𝗮𝗿𝗸🔖 it, so you can have the answer ready whenever you need it.