Bitcoin’s maximum offer was set at 21 million on the first day by Satoshi Nakamoto. But why exactly on this number?
Bitcoin is known for its deflationary nature. Its total circulating supply is limited to 21 million and can never be changed.
Although the reasons for introducing an upper limit have been widely discussed, few know why Satoshi chose exactly 21 million as the limit.
Why exactly 21 million Bitcoins?
Fortunately, we have many documents from Bitcoin’s early days to answer this question. First, the total number of Satoshis in circulation (21M BTC x 100,000,000,000,000) is an IEEE floating point number. This facilitates the calculation considerably, which is why these numbers are often used in computer operating systems. Essentially, 21 million were chosen because it makes the calculation easier. 21 is also a triangular number, which makes it particularly attractive.
For example, if you stacked 6 blocks on 5 blocks on 4 blocks (etc.), you could create an equilateral triangle of a total of 21 blocks.
But there are other reasons for the 21M benchmark. In an archived message from Satoshi, the mysterious founder of Bitcoin calls it a “difficult choice, because once the network is up and running, it’s locked up and we hang on to it.
Satoshi Nakamoto’s complete explanation on the subject:
“If you imagine that it will be used for a fraction of world trade, there will only be 21 million coins for the whole world, so it would be worth much more per unit. Values are 64-bit integers with 8 decimal places, so 1 coin is internally represented as 1000000000000.
There is a lot of granularity when typical prices become small. For example, if 0.001 is worth 1 euro, then it might be easier to change where the decimal point is displayed, so if you had 1 bit coin, it is now displayed as 1000, and 0.001 is displayed as 1.”
Based on these early fonts, Satoshi has actively considered the possibility of Bitcoin becoming a world currency. However, the elusive question of “Why 21M?” is mainly due to one thing: that a number had to be chosen and that “21M” has all the easily calculable dimensions that make it the ideal candidate.
The decision in favour of 21M was therefore partly rationalised and partly arbitrary.