The ceiling of 21 million bitcoins comes back into the debate. Developer Peter Todd defends the idea of a permanent emission to continue paying miners after 2140. Adam Back doesn’t want it. The boss of Blockstream sees this argument as a way of rallying users to a dangerous change in the rules of Bitcoin. No changes are planned for the moment.
In brief
- Peter Todd advocates a small permanent issuance of bitcoins after block rewards disappear.
- Adam Back rejects the idea and warns against the arguments used to promote it.
- Changing the 21 million cap would require a market-accepted hard fork.
Bitcoin: Peter Todd wants to extend the show
Bitcoin has just crossed the milestone of 20 million BTC mined. There are approximately one million pieces left to produce before reaching the limit provided by the protocol. That last million will take time.
Miners currently receive 3,125 BTC per block. This reward halves approximately every four years. Around thirty halvings are still to come and the last satoshis should be produced around 2140. After that, no more new bitcoins.
Peter Todd asks for a long time about what will happen to miners when this reward disappears. They will then have to live solely on the fees paid by users to register their transactions in the blocks.
Todd considers this income too irregular. Some blocks bring in a lot in fees, others much less. According to him, this situation could encourage miners to reorganize the blockchain in order to recover particularly profitable blocks.
His solution is to keep a small, permanent reward. Bitcoin would then gradually exceed 21 million units.
Adam Back doesn’t want to touch the 21 million
Adam Back doesn’t like the idea at all. The Blockstream boss accuses defenders of this type of change of constructing simple narratives to attract poorly informed users to changes he considers dangerous.
Back compares the process to the recent debate around BIP-110. This controversial proposal wanted to filter certain non-payment data in Bitcoin blocks. She only received around 2.53% of support from minors while the target threshold reached 55%.
Peter Todd, however, puts forward another argument.
Bitcoins continually disappear when their owners permanently lose their private keys. A small permanent creation could therefore compensate for these losses. In his model, the available supply would eventually stabilize since coins would be lost at the same rate as new ones would appear.
Monero already uses a comparable mechanism with its “tail emission”.
The problem of remuneration of miners does not come out of nowhere. Tremplin.io had already looked at the future profitability of mining when the rewards in new BTC disappear. Ultimately, costs will have to become much more important.
The answer is not really urgent. 2140 still leaves a few years to discuss.
Exceeding 21 million would require another Bitcoin
Peter Todd can propose a new monetary policy. We still have to convince the network. Changing the 21 million limit doesn’t feel like a simple software update. We would have to go through a hard fork. Users, developers, businesses, platforms and miners would then have the choice between the new rules and the old version of Bitcoin.
There is no guarantee that the inflationary chain would retain the Bitcoin name or its value. That’s the whole difficulty. The 21 million is not just a number in the code. This limit has been part of the economic discourse of Bitcoin since its beginnings. Investors buy it precisely because no one can normally decide to produce more of it.
The community has already experienced much less sensitive technical divisions. A direct modification of the monetary offer would affect the initial contract.
Adam Back is therefore not saying that Bitcoin will exceed 21 million. He warns against arguments that could one day be used to defend this idea. And the debate is only just beginning. The more the block reward decreases, the more the question of security financing will come up. Maybe the fee will be enough. Maybe not. For now, Bitcoin’s digital scarcity still rests on its cap of 21 million. No one has changed it yet.
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