DeutschThe cryptocurrencies available on the market can be divided into two large groups. On the one hand, there are digital currencies in which virtually an infinite number of coins can be mined. However, this group is clearly in the minority. In the second group of cryptocurrencies, however, the number is limited. This group also includes the leading cryptocurrency, namely Bitcoin. Limiting the number of Bitcoins means that, due to the respective calculation algorithm, a maximum of XY coins can be mined at all on a technical basis.
What is the Advantage of the Limitation?
Limiting the number of possible coins definitely has a major advantage, namely price stability. A comparison with classic central bank money, such as the Swiss franc, certainly helps here. The responsible central bank in Switzerland can more or less bring more francs into circulation at any time by printing new banknotes. This can easily lead to inflation, because the more money there is on the market, the less the franc is worth in principle. With cryptocurrencies whose number is limited, such inflation is not possible – at least due to the quantity. However, it also depends on whether the limitation of the number is relatively utopian or within a comprehensible framework.
Is the Number of Bitcoins Limited?
As you have already learned, Bitcoin is also one of the cryptocurrencies whose number is limited. Exactly 21 million Bitcoins can be mined at most. Currently, around 14 million Bitcoins are in circulation, so most of them have already been mined. Experts expect that all 21 million Bitcoins will not be mined until 2130.
How is the Limitation Achieved?
The fact that the number of Bitcoins is limited is no coincidence, but has an important background. The quantity limitation can only take place if the so-called reward for a produced block is constantly reduced. At the beginning, for example, there was a reward of 50 Bitcoins for one block, while now it is only 6.25 Bitcoins. This is because the reward is halved after every 210,000 blocks. From block 6,930,000, the reward will simply be reduced to zero.
Due to the natural scarcity, the so-called halving events in the past led to a real hype before the block reward was halved. Therefore, many investors are toying with the idea of buying Bitcoin as early as possible before a halving.
