Bitcoin Q&A: The 21 million supply cap


[AUDIENCE] Where does the
supply of bitcoin come from? How are you sure the market doesn’t get oversupplied? [ANDREAS] The supply of Bitcoin is
determined algorithmically, based on… a geometrically declining supply function. In the beginning, every ten minutes, fifty new bitcoin
[were] created. Every block, the heartbeat… …ten minutes, created fifty new bitcoin. This bitcoin is used as a reward in a game theory-based
security model that ensures every transaction is… independently validated by completely anonymous
actors, who have to stake electricity as a guarantee… of the security work they’ve done. If they succeed in doing the security work
of validating transactions correctly, they earn a reward based on a probabilistic return. Fifty bitcoin every ten minutes. That’s how
currency is introduced into the economy. Every four years, it gets cut in half.
Fifty to twenty-five in November of 2012. This year in July, this past July,
we had our second halving event, which was celebrated with
parties all over the world. Bitcoin’s [block] reward went from 25 to 12.5 bitcoin. The system is designed to have a monetary policy
that is purposely deflationary and simulates… the issuance of precious metals. It gets harder and
harder to mine gold, at greater and greater cost. Bitcoin is the same, the idea being that
less and less is issued over time. If you follow that geometric curve,
at some point you reach the end. In the year 2141, bitcoin is no longer issued.
Twenty-one million coins is the asymptotic cap. It will never reach 21 million coins. That is part of the
protocol. It is an unchangeable part of the protocol, and it is a rule enforced by every system
that participates in the Bitcoin network. It is meant to be sound money, but it’s
not the only monetary policy that exists. There are several other currencies that
implement different monetary policies. The idea is really for bitcoin to serve as a very
solid reserve currency for many other things. [AUDIENCE] I have a question
about bitcoin economics. [ANDREAS] Bitcoin economics, great!
[AUDIENCE] Referring to your first talk… [ANDREAS] Yes, thank you. [AUDIENCE] So 70% of all bitcoins
in the world have been given out? [ANDREAS] Mined already, yes.
[AUDIENCE] Okay. You seem to be a fan of bitcoin. [ANDREAS] I am.
[AUDIENCE] If there’s gonna be widespread adoption, do you think the supply of new bitcoins
is going to be sufficient for that adoption? Or is that going to be in the way of adoption? [ANDREAS] No. In my opinion, if there is
demand for bitcoin, the bitcoin that’s… already been issued is going to circulate
and create velocity in the economy. You have to think of this economy not
as a static thing, but as a dynamic thing, where the people who hold bitcoin are better off, in
an environment of adoption, investing that bitcoin. [AUDIENCE] Okay, I get that. I hold bitcoin, as many
of us do here. Would that make us the new 1%? [ANDREAS] It might make you the new 1%.
I certainly wouldn’t promise you that. It also might make you the new 0%.
We’ll see how it goes. In which case- [AUDIENCE] But in your world? [ANDREAS] Yes. To go to the root of the question,
Bitcoin’s current monetary distribution has a pretty… …nasty Gini coefficient, which
means it’s unequally distributed. The fundamental difference, if you become the new 1%,
is that you took a risk on an untested technology, based on a vision you had, rather than because
your grandfather killed more people than mine. [Laughter] Which is how the 1% have their money today. [AUDIENCE] But you don’t think that’s going to be in
the way of adoption? Because that’s my concern. [ANDREAS] I don’t think [the current distribution]
is going to be in the way of adoption. Also, we’re going to see other monetary
policies and other cryptocurrencies; they will serve different needs. We might see ones that are more geared
towards higher velocity currency, while Bitcoin becomes a long-term store of value. I don’t know, we don’t know
The market will have to decide these things. But I’m not particularly worried about the fact
that people who took enormous risk early on… get to have a significant reward if this works. Because if it doesn’t, nobody is going to bail you out.

61 thoughts on “Bitcoin Q&A: The 21 million supply cap”

  1. I feel better about the uahf fork now. When I found out that the bch was a clone that essentially introduced "free money" to the system I was very pessimistic on the future of bitcoin. We now had two coins btc and the new bch which allows for greedy individuals to simply create a new market in which they can buy in at rock bottom. Based on who has more supporters. We live in a greedy time and that greed was just given a chance to take away the vision.

    But then the fact that you said bitcoin might just be a store of value was a rather nice thing to hear….. I think

  2. 4:00 Andreas, I love your books and videos but that's not even close to why the 1% have the money they do today. To be in the global 1% you must make an excess of $32,000 a year, and to be in the US 1% you need to earn $450,000 a year. The 1% is always changing, people move into the 1% and people move out of it. It is largely comprised of elderly folks who have had a long time to advance their career/salary.

  3. In practice, the real bitcoin is gonna be used as the base of a fractional reserve. Debt and interest is how 21m and cryptos will be defeated, just like how it defeats everything else.

  4. Just a simple thought. If the whole world owned bitcoin. The 1% can't make the rules. When decisions that are disadvantageous to 99% of the world are enforced 99% of people can simply say they don't like it. Refuse to support it and create a new version where the 1% does not exist. Bitcoin. Is not revolutionary because it's the best money system it's revolutionary because it's democracy where third world countries with millions of people being take advantage of will no longer exist because that can just form a currency of their own and choose to use it instead. They will give it more value as it becomes more accepted and greed will make the profit seekers buy it to realize the gains it can have. Fi a I ally but essentially they will have just been tricked into buying a newly fabricated coin (worth nothing until the poor majority gave it value) using their bitcoin to buy it. And if they don't then the new coin is the accepted coin and the poor people no longer need bitcoin making it worthless as it has no demand. To truly understand the fact that the rich are greed seeking gamblers that hoard money only to create more money by holding on to it will open the door to understanding that can never be possible with decentralized currencies. Unfortunately those that do not understand that I'm sorry, but one day everyone will finally understand what that truly means for society. The current y can be stopped but the idea cannot. If I live where everyone accepts pebbles for anything the I will never starve and if someone takes all the pebbles from the world we all starve I'm sure we will compromise and come up with a fair exchange. Maybe seashells or coconuts lmao the idea is that we share and to make you trust me to share with you I will let you have this pebble. And I will accept that pebble for an equal trade at a later time. Hello 21st century barter system nice to meet you

  5. Andreas, thank you for all your great information. You have helped me so much in my understanding of bitcoin and money itself

  6. OK is anyone wondering if cryptocurrency might be a completely hack with so called Satoshi done by the owners of the FED to try getting everyone to adopt cryptocurrency then pretty much control the monetary system completely!?

  7. I am big a fan of this channel, but would ask. What does a country do when it no longer holds enough gold (or Bitcoin) to pay its citizens, because it gave the gold (or Bitcoin) to that/those other country/countries that made your country (your citizens) want to buy their stuff? If we cannot find the answer to this question, then for all it's technological brilliance, Bitcoin will have solved nothing.

  8. dumb kid wasn't taught supply and demand. There are more than enough Satoshis for everyone, 300,000 per human. But even if there were less PRICES ADJUST!!

  9. i am not 100% sold if a deflationary currency can work. does anyone have a link to an in depth discussion on this subject. thanks

  10. Although I'm pro BTC, there's one problem I find with this explanation. A lot of people, plain and simple just got very lucky. In the beginning of Bitcoin, the only risk you took to mine was getting a computer virus. It's absurd that a person could download the software and simply click "mine" and now be a multi-millionaire. There was no risk taken, no value earned, they just got lucky.

    Risk began creeping in when mining got more expensive and people were actually buying BTC on exchanges. But even still BTC was dirt cheap, putting $100 in isn't much of a risk. Having said that, I'm not too worried about the new crypto-elite either, but I do recognize it's still a centralization of wealth-power and could lead to bad things, but to me, the pros outweigh the potential cons.

  11. Andreas, I would be interested in your opinion about the effect of malware derivatives of stuxnet etc on an evolving internet based system of money

  12. If Bitcoin moves to Proof of Stake it just mean central control by banks and large wealthy stakeholders. Back to square one…

  13. True. Many of the 1% have inherited their money. But people like Bill Gates, Steve Jobs, etc made their money by actually building something. The speaker acted pissed because many became the 1% unfairly. Well… you people just got lucky in some BS program. Didn't "build" squat. Does that seem right to you? And no… having a bunch of computers just crunch numbers to mine these bitcoins is not really building anything.

  14. With increasing demand for Bitcoin, the price will also surge, leveling things out. Instead of looking at the 21 million BTC and wondering how that'll be enough for 7 billion people, we should instead remind ourselves that 1 Bitcoin has 100 million satoshis. If you own one full Bitcoin, chances are you'll be in the top 1% of BTC owners.

  15. And what is with all those lost and destroyed BTC wallets? By 2100 you will gain untracabe lost of min 10% of total BTC currency… hardware or human error…

  16. so do i need to go to a bitcoin bank to get the actual bitcoins to keep ? and if it's only online them what do i do with the bit coins i get in person, spend it like cash ?

  17. A currency is only as good as the trust that is put in it. What if by 2141 we aren't using Bitcoin? It's a bit of a stretch to assume BTC will last another 124 years, so much can happen especially in the 21st century.

  18. The full block chain size is currently roughly 145GB, I can handle such a download in a laptop or a desktop pc but how does it work on a mobile? I can not download such an amount of data into my phone, so I guess there is an intermediary when using the mobile app?

  19. We should think of the question more carefully which is if the supply of new bitcoin will be sufficient for widespread adoption or not. I really like the question 🙂

  20. Please answer my question: Today many people are mining bitcoins and they earn a little percentage of Bitcoin per transaction. After bitcoins reach its limit of 21 million, how will it reward for mining bitcoin?

    Thanks,
    Avinash Singh Khalsa.

  21. Hi Andreas.
    Sometimes you say things that just don’t add up. For example; How the hell was it an enormous risk early on, for those that bought bitcoin at£1. £10 or £100 ? – that’s hardly an enormous risk.

  22. Imagine a world filled with trillionaires that are mostly crypto-anarchists and tech geeks. LOL. The anarchists could wage war against governments.

  23. Here is my take on BITCOIN……

    It's about trust and confidence. Bitcoin have been running smoothly for roughly 9 years without any hiccup . Even if other more recent coins have more modern technology architecture, people will go with the one which is proven most stable and has the largest user base. Think I phone ( best operating system / first smart phone ) vs other smart phones … Levis jeans ( best quality / first jeans ) vs copy cats….

    Lighting Network ( LN ) will finish off the competition much improved speed and cost for transactions . Think BITCOIN 2.0 the new and improved version , ALT coins are after all just copy cats ….

    Also I hate how people say it takes so much electric power to create BITCOINS , well how much energy does it take to mine GOLD ??? is the question I ask …. A LOT , yeah that's right use your GOD given brain once in a while…..

    In it's inception it was 15c or so now 14.000 US pretty damn good investment I would say and remember BITCOIN is just in it's infancy . If you invested 100 dollars in 2010 into BITCOIN your net worth would be over 100 million dollars US now , insane but true… never before in history has something created such EXTREME wealth , in this is just the beginning.

    Now let's look at the US dollar FIAT currency , roughly 250 TRILLION in debt with future obligations they lie it's not 20 TRILLION , who the HELL is going to pay for this NO ONE , devalued daily , printed endlessly , I think BITCOIN is a much better investment long term think RARE like GOLD limited in supply only 21 million or so can ever be mined , NOT devalued daily doing the opposite going up daily , sure dips and valleys but going up and up …. profit taking in between to be expected but in the end going up…..and up ….

    BTW BITCOIN is now the 6th largest currency in the WORLD , you read that right …. and
    remember it's just in it's INFANCY …. even micro bits will server you well in the future.

  24. somehow i dont know but this the technologie of future but what i dont see is fair because from bitcoin is gonna make world a corrupted place like the rich is rich and poor stays poor 🙁

  25. The whole "equality/inequality" is bunk. Tired of smart people "debating" this. As if the millionaires of today didn't take risks on business visions they had and were rewarded for it, No certainly their grandfather just killed for it and stole it. Bunk narrative.

    For some reason otherwise intelligent people often lose it on this topic. I think their politics cloud their judgment.

  26. What if a new currency or coin gets created with a new set of parameters? Then wouldn't the whole premise of decentralized currency fail? I haven't bet more than I can lose but I want to. I'm fed up with using blood soaked fiat dirty money. Xrp is the establishment for example. Are we working with them or trying to make them obsolete? If we do not crush the establishments form of power than how can a digital means of free trade exist?

  27. I GOT A WALLET, I think Dig this 1MMW2ovFEAuCMo6KjqvqL6Ccy7vbFPhbXz if that is my private key please disregard and oops

  28. This issue has always bothered me about bitcoin. The supposed 21 million cap in bitcoins is simply a number in a computer program. The cap can be changed simply by changing the 21 to a 22.

    Every time the bitcoin code is changed, such as with the lightning network, they are showing how the 21 million cap can be changed.

    If enough people want the 21 to be 22, it will become 22. This is just like the debt ceiling in congress. They keep setting a ceiling and then keep raising it.

    The only way to truly have cap is if there were a physical limit. Since crypto is a computer program it is physically impossible to have any cap or limit.

  29. What would happen to inactive bitcoins in the long run?.. Many people have lost their key, and have no way of retrieving the account. And I assume many more will in the future. I'm guessing this would only increase the value of the remaining bitcoins in circulation. Maybe after the 21mil have been mined, miners will use their complex computers to try to unearth long lost accounts. If thats even possible.. And if it is, couldnt they use the same method to get into active accounts? hmmmm

  30. Since it came down to 3500$ I been putting in 50 or 100$ every other day or so just becouse I missed out on the first run doesn’t mean I will miss out again this is your chance u have 1509$ sleeping around go and use it get half a bitcoin u will thank me in 2022

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