By Thomas Perfumo, Chief Economist at Kraken
Bitcoin has just produced its 20 millionth coin, leaving only 1 million remaining to mine, which will be released over the next century through a series of halvings. This means that Bitcoin’s total supply is essentially capped, with over 95% of all possible bitcoins already in circulation.
This remarkable achievement prompts a moment of reflection on its implications.
Code is law — literally in this context
While gold miners may dig deeper and central banks can print more fiat currency, Bitcoin is limited to a hard cap of 21 million coins. This restriction isn’t a mere policy or informal agreement; it’s embedded in the code that operates on numerous nodes worldwide. This decentralized system, backed by economic incentives, makes any attempt to alter the supply nearly impossible without a consensus from those who would be adversely affected.
Seventeen years of commitment to a principle
The limit of 21 million coins was established by Satoshi Nakamoto when Bitcoin’s genesis block was created in January 2009. This demonstrated a profound understanding of monetary policy. Historically, no centralized financial authority has sincerely committed to unalterable supply limits, as trust is often lacking.
For example, consider the Roman denarius, which saw its silver content decrease from over 95% to under 5% over two centuries. Similarly, the Byzantine solidus experienced a drop in gold purity from 95% to less than 33% in mere decades.
Bitcoin resolves this issue not through institutional trust but through mathematical certainty and decentralized validation. The achievement of 20 million coins serves as evidence that its underlying architecture is robust. Block after block and halving after halving, the coding performed exactly as intended.
The halving: an internal clock within the blockchain
Reaching 20 million coins was not a straightforward path but rather a narrative unfolded through various epochs. In its initial years, Bitcoin created 50 coins per block, then 25, followed by 12.5. After the upcoming halving in 2024, this will decrease to 3.125. Each halving signifies a programmed tightening, reminding users that Bitcoin’s scarcity is built into its very protocol.
The annual supply inflation has already dipped below 1%, making it lower than that of gold, which is often seen as the archetype of “hard money.” We are currently in an era where Bitcoin represents one of the most secure forms of mainstream currency.
Why this event is significant beyond mere numbers
The occasion of the 20 millionth Bitcoin serves as an opportunity to reflect on the accomplishments of Bitcoin’s monetary system. In a landscape filled with excess, Bitcoin emerges as one of the rare truly scarce assets. Unlike traditional currencies, which can be created without limit, Bitcoin’s supply is mathematically confined.
Its programmed scarcity, predictable issuance, and decentralized structure distinguish it from other currencies and asset classes. It has not been altered by governmental actions, nor has any crisis or bear market undermined it. The code proved resilient.
As we navigate through an era of rapid technological change and shifting global dynamics, the demand for a dependable, internet-native store of value is more urgent than ever. We need an asset that is assured not to yield to human shortsightedness for the coming century and beyond.
The 21 million limit has always been crucial, and it remains so.
The viewpoints expressed in this article represent those of the author and do not necessarily reflect the views of Kraken or its management.