JP Morgan CEO Jamie Dimon remains a skeptic of almost everything Bitcoin – including the idea that the total supply is limited to 21 million coins.
“How do you know it’s going to stop at 21 million?” he asked while discussing crypto with CNBC’s Squawk Box on Thursday. “Maybe it will get to 21 million and Satoshi’s picture will come up and laugh at you all.”
This is not the first time he has questioned Bitcoin’s sacred number – a defining feature often highlighted by the asset biggest boosters. Theoretically, an absolute supply cap would give Bitcoin greater scarcity than any government-issued currency on Earth, strengthening it as a store of value.
“Do you read all the algorithms? Do you all believe that? I don’t know, I’ve always been skeptical of such things, he said at an Institute for International Finance event last October.
Many have actually read Bitcoin’s algorithms – which are open source and freely visible to the whole world. As pointed out by Jameson Lopp, co-founder of Bitcoin wallet company Casa, Bitcoin’s supply cap is implicitly enforced by just 5 lines of code.
To be precise, Bitcoin is programmed to halve its supply issuance rate every 210,000 blocks, which is roughly every four years. While 50 new BTC were issued per block in 2009, only 6.25 BTC are associated with each block today.
These events, called “halves,” is programmed to happen only 33 times, after which Bitcoin’s block reward will be cut to zero. This should happen by the year 2141, assuming nothing changes before then, Bitcoin developer Luke DashJr told Decrypt.
“After 10 halvings, rounding errors start to get truncated,” he specified, referring to the problem of block rewards not being able to split past Satoshi’s by the year 2049. “So if more precision is hard-forked in, ideally it should be by 2049.”
The math behind these halvings works out so that Bitcoin’s supply cannot reach or exceed 21 million.
That said, anything enforced by code can technically be changed, as long as users agree to it. Many argue that the Bitcoin community will be forced to upgrade the software to produce more than 21 million coins, in order to provide consistent funds to support the mining industry.
While Bitcoin’s supply is limited, it is still infinitely divisible. Small units of the currency could still be used for small transactions, even if the price were to enter the seven-digit range.
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