Why was 21 million picked as the number of bitcoins to be created?

  • Why did Satoshi pick 21 million as the number of bitcoins to be created? What is the significance of that number?

    I thought this question had already been asked, but I can't find it.

    I added the finance tag since this question is asking about not just the math behind how 21 million blocks was created, but the reasoning behind all that math from an economic perspective (assuming there was one)

    I asked myself the same question, but I don't see any clear answer posted on this.

  • Chris Moore

    Chris Moore Correct answer

    8 years ago

    Here's a mathematical explanation:

    Calculate the number of blocks per 4 year cycle:

    6 blocks per hour
    * 24 hours per day
    * 365 days per year
    * 4 years per cycle
    = 210,240
    ~= 210,000

    Sum all the block reward sizes:

    50 + 25 + 12.5 + 6.25 + 3.125 + ... = 100

    Multiply the two:

    210,000 * 100 = 21 million.

    Economically, because the currency is effectively infinitely divisible, then the precise amount doesn't matter, as long as the limit remains fixed.

    Good explanation, but you're just postponing the answer. Why 4 years per cycle? Why was 4 years per cycle picked as the number for years per cycle?

    All this info makes sense, but doesn't really answer the question!

    If you check my original answer, you'll see I ended with "but I don't know the economics behind it". I see that has since been edited - not by me.

    Interesting. Does this mean that slightly more than 21 million bitcoins will be created?

    No, slightly less than 21 million, because of the rounding error on the last halvings.

    I think we best conclude that nobody knows why Satoshi chose for 21 million or 4 years per cycle. But I would not recommend accepting this answer as correct. In fact it only answers "What's the maximum amount of bitcoins that can exist?".

    See my guess why 21 million was picked in my answer below.

    The American presidency could be the 4 year schedule

License under CC-BY-SA with attribution

Content dated before 6/26/2020 9:53 AM