Why IS the bitcoin limited to 21 million?

finnthecelt

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Quote from: flailing Junk on June 28, 2011, 03:49:36 PM

Quote from: finnthecelt on June 28, 2011, 02:59:59 PM

2,000,000,000,000,000/21,000,000 = 95,238,095 per BTC.

2,000 trillion? That's high I think. USD M3 estimates are like 15 trillion IIRC.

I'm just playing with numbers but if you took all outstanding derivatives (1.4 quadrillion) and all money and debt instruments and collapsed them into BTC 2,000 trillion would be conservative.

nazgulnarsil

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eh, I think a market cap somewhere between 100 billion to 1 trillion is possible. Not holding my breath of course.

It would mean the bitcoin economy was somewhere between morocco and south korea yearly GDP. (of course that's not how calculations of GDP and market caps work, but it's fun to be lazy)

flailing Junk

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Quote from: finnthecelt on June 28, 2011, 02:59:59 PM

2,000,000,000,000,000/21,000,000 = 95,238,095 per BTC.

2,000 trillion? That's high I think. USD M3 estimates are like 15 trillion IIRC.

finnthecelt

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Quote from: Desu on June 28, 2011, 01:51:04 PM

Well, at the current market rate of 17.0397 the full amount of bitcoin equals to :$357,833,700
If certain ideals are correct that they will be worth 1,000 then:21,000,000,000.
That seems like a good number.

If BTC became the new world reserve currency, try: 2,000,000,000,000,000

2,000,000,000,000,000/21,000,000 = 95,238,095 per BTC.

Desu

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Well, at the current market rate of 17.0397 the full amount of bitcoin equals to :$357,833,700
If certain ideals are correct that they will be worth 1,000 then:21,000,000,000.
That seems like a good number.

TraderTimm

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I would've gone with '42', in tribute to Douglas Adams

Mousepotato

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This got me to thinking... given the total pool of money in the world, if everybody suddenly ditched their currency (dollars, yen, euro, whatever) and adopted BTC, how much would 1 BTC be worth in your native currency?

finnthecelt

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It's easy, all you have to do is google it....

Search Results

Immigration increases Australian population - 21,000,000

DamienBlack

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Quote from: luxgladius on June 28, 2011, 08:40:51 AM

Quote from: phatsphere on June 28, 2011, 08:25:54 AM

21M is not a hard limit where the supply will suddenly stop. it's a limit process and the 21M will never actually be reached! therefore, this is somehow mathematically equivalent to an infinite supply ... thank's to the number of decimal digits, it's also no problem at all.

Not quite accurate. The 50 BTC reward figure divides by two every 210,000 blocks (about four years, depending on network growth). Let's see, 50 BTC = 5*10*10^8 satoshi = 5^10 * 2^9. The division is performed by bitshifting, so the 5s are really identical to 4s or 2^2 for these purposes, so all together 2^29. So the fee will entirely disappear in 30 cycles of 210,000 blocks, or about 120 years.[/nitpick]

In 120 years (assuming bitcoins are still around) it is possible that the system has been extended to include more decimals. In that case it might make sense to continue the rewards at increasingly small values.

spruce

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Why Satoshi chose 21? Dunno. Could be as explained above. But this is interesting: http://www.ridingthebeast.com/numbers/nu21.php

Includes things like

Number of the perfection by excellence, 3 x 7, according to the Bible.
Symbol representing the unknown superiors or the great spiritual Masters of the humanity.

luxgladius

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Quote from: phatsphere on June 28, 2011, 08:25:54 AM

21M is not a hard limit where the supply will suddenly stop. it's a limit process and the 21M will never actually be reached! therefore, this is somehow mathematically equivalent to an infinite supply ... thank's to the number of decimal digits, it's also no problem at all.

Not quite accurate. The 50 BTC reward figure divides by two every 210,000 blocks (about four years, depending on network growth). Let's see, 50 BTC = 5*10*10^8 satoshi = 5^10 * 2^9. The division is performed by bitshifting, so the 5s are really identical to 4s or 2^2 for these purposes, so all together 2^29. So the fee will entirely disappear in 30 cycles of 210,000 blocks, or about 120 years.[/nitpick]

koin

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Quote from: Fuzzy on June 28, 2011, 06:50:31 AM

Has anyone that is familiar with the source code behind bitcoin figured out why such an arbitrary number was chosen, and why it's so low to begin with?

a little over a year ago one bitcoin was worth just $0.006 (see laszlo's pizza as evidence)

here's why that is relevant:

unfortunately most people don't grasp the basics. ask someone around you this question:
  right now general motors stock (nyse:gm) is trading at $30 a share
  ford (nyse:f) is trading at $14 a share.
  which company is "better" (or "worth more").

if the answer comes back gm, now you know why 21 million bitcoins was the perfect number.

notice when bitcoin's "tipping" point started. about the time it hit parity with the dollar. too many people think bitcoin is superior because it trades more than a dollar. not that i don't agree bitcoin is superior, but that comparative value should hardly be a factor.

(incidentally, ford's market cap at $51 billion is greater than gm's at $47 billiion. but that doesn't matter, as the only correct answer to the "which is better" question is "don't know, how many shares are there?")

phatsphere

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21M is not a hard limit where the supply will suddenly stop. it's a limit process and the 21M will never actually be reached! therefore, this is somehow mathematically equivalent to an infinite supply ... thank's to the number of decimal digits, it's also no problem at all.

luxgladius

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Keep in mind that "a Bitcoin" doesn't exist in any real sense in the code. What does exist is the satoshi (.00000001 BTC). In other words, there's not really such a thing as 21 million Bitcoins. Rather, in the technical sense there are 21x10^6*10^8=2.1x10^15 = 2.1 quadrillion satoshis. In comparison, according to Google, the world GDP is about $56 trillion, which is to say about 5.6 quadrillion pennies. (Yes, I know the whole world GDP is not actually measured in dollars, but go with me here.) So really, it's not that ridiculous a level of volume.

stic.man

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tymothy

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Why 21 million specifically? I want to imagine that it's some nice fraction of the USD value of the money supply of all world currencies (21 trillion? glancing at Wikipedia) give or take. So if the value of the Bitcoin economy was valued at 1-ten thousandth of all existing currencies, it would trade at .01 USD, which looks good enough for it to be on par with the Yen and other currency's exchange rate and give it the potential to be taken seriously as a currency. And one-ten thousanth seemed very possible on the low end, so 21 million was decided. Complete guess.

wareen

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The 21 million actually derive from a few other educated guesses, which may be a bit easier to relate to:
- 10 minutes between blocks (network propagation delay doesn't allow this to be much lower)
- 50 BTC per block (that's probably the most arbitrary)
- 4 years between block reward halving (that might come from expectations about the growth-rate of Bitcoin usage)

The 4 years were rounded down to 210.000 blocks probably just to have nicer numbers.

Pity he didn't chose 100 BTC per block to start with, because then we'd have a total of 42 million BTC Wink

Quote from: aeroSpike on June 28, 2011, 07:36:20 AM

I also don't understand the reasoning. If you're serious about a currency becoming a major player in the world, you'd at least try to keep the expected single unit value in the same order of magnitude as existing currencies.

That's not going to work because Bitcoin price is so highly volatile. Even an order of magnitude can be crossed quickly within weeks as we have seen. If you design it around the market capitalization of the whole world economy (or only the part which is accounted in USD) then we'd have to deal with immensely large numbers now or the inflationary phase of Bitcoin would be much much longer.

JoelKatz

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Quote from: aeroSpike on June 28, 2011, 07:36:20 AM

I also don't understand the reasoning. If you're serious about a currency becoming a major player in the world, you'd at least try to keep the expected single unit value in the same order of magnitude as existing currencies. That's also what was done with the €. Once it exists it will lead its own life and establish natural exchange rate levels, but 21M can never do that.

In any case, we can always correct it. Just create a new currency, which is not minable, but only obtainable by exchanging BTC. The BTC that is exchanged will be lost from the Bitcoin circuit.

You could think of multiple coexisting virtual currencies, each based on its own economical model.

We can fix it just by changing the capitalization. Just as 1 calorie is 4.814 joules but 1 Calorie is 4,814 joules, if at some point in the future, 4.814 BitCoins is a fortune, we can call it 4,814 BiTcoins.

stic.man

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move the decimal place, voila! Plenty of coins!

aeroSpike

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I also don't understand the reasoning. If you're serious about a currency becoming a major player in the world, you'd at least try to keep the expected single unit value in the same order of magnitude as existing currencies. That's also what was done with the €. Once it exists it will lead its own life and establish natural exchange rate levels, but 21M can never do that.

In any case, we can always correct it. Just create a new currency, which is not minable, but only obtainable by exchanging BTC. The BTC that is exchanged will be lost from the Bitcoin circuit.

You could think of multiple coexisting virtual currencies, each based on its own economical model.

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