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What is the significance of the 21 million limit on bitcoins?

avatarAndrei ValasevichDec 26, 2021 · 3 years ago3 answers

Can you explain the importance of the 21 million limit on bitcoins and how it affects the cryptocurrency market?

What is the significance of the 21 million limit on bitcoins?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    The 21 million limit on bitcoins is a fundamental aspect of the cryptocurrency. It ensures scarcity and prevents inflation. This limit means that there will only ever be 21 million bitcoins in existence. As the demand for bitcoins increases, the limited supply can drive up the price. It also gives bitcoin a store of value, similar to gold. This limit is built into the Bitcoin protocol and cannot be changed without consensus from the network participants.
  • avatarDec 26, 2021 · 3 years ago
    The 21 million limit on bitcoins is like a built-in safeguard against inflation. Unlike traditional fiat currencies that can be printed at will, bitcoins have a finite supply. This scarcity makes bitcoins valuable and helps maintain their purchasing power over time. It also encourages people to hold onto their bitcoins rather than spend them, which can contribute to price appreciation.
  • avatarDec 26, 2021 · 3 years ago
    The 21 million limit on bitcoins is a feature that sets it apart from other cryptocurrencies. It ensures that bitcoins cannot be endlessly created, which helps maintain the integrity of the network. This limit also adds a level of predictability to the market, as investors know that the supply of bitcoins will eventually run out. This scarcity can create a sense of urgency and drive up demand, potentially leading to price increases. At BYDFi, we believe that the 21 million limit is an important factor in the long-term value proposition of bitcoin.