Bitcoin has several intriguing characteristics. Unlike paper currencies that central banks and governments can always print at will, Bitcoin’s whitepaper only stipulates a limited supply cap of 21 million. That means only 21 million crypto trading will ever come into circulation despite the market demand or other conditions. That characteristic has increasingly fascinated investors and experts, with many wondering whether it is possible to change Bitcoin’s 21 million coins hard cap. Here’s all you should know about Bitcoin’s restricted supply cap.
Bitcoin’s Hard Cap
Bitcoin’s inventor, Satoshi Nakamoto, installed a strict limit on the number of tokens that could ever exist. That limit is known as the hard cap, encoded in Bitcoin’s protocol and enforced by nodes on the network.
The hard cap is critical to Bitcoin’s value proposition as a transaction currency and a store of value. Bitcoin is a remarkable investment asset because no one can increase or influence its supply. Besides, it also undergoes halving that further cuts its supply every four years. The limited and diminishing Bitcoin supply against the growing market demand allows it to gain and retain a higher purchasing power over time.
Changing Bitcoin’s Hard Cap
Some crypto skeptics argue that virtual currencies such as Bitcoin are software applications, making it possible to change or modify their network’s rules. However, Bitcoin’s inventor protected the cryptocurrency’s cap modification through the network’s incentive system and governance model.
The Bitcoin network has multiple players, but miners are the main actors with the strongest motivation to modify Bitcoin’s hard cap. Changing Bitcoin’s supply cap may temporarily increase miners’ revenues. However, that modification would also significantly harm Bitcoin’s core investment proposition of scarcity.
Many investors view Bitcoin’s predictable and fixed supply as its essential allure. The leading wealth managers and crypto platforms such as btq app credit Bitcoin’s scarcity as a significant motivation for its growing value.
Changing Bitcoin’s hard cap would remove the fundamental driver of its value proposition, which is not in miners’ best interests. While it would increase miners’ incentives, the change would impact a catastrophic and irreversible Bitcoin price collapse, culminating in a net loss for miners. Miners could be the first casualties if Bitcoin prices crash.
Bitcoin’s Governance Model
Some also speculate on the possibility of changing Bitcoin’s hard cap based on misunderstandings about its distributed ledger and consensus-based network. Although the Bitcoin network contains multiple versions of its source code, every node is independent and will reject any invalid blocks.
Several nodes run the latest Bitcoin source code version, but many still run older versions with unique implementations. That means convincing tens of thousands of nodes to agree to those changes is challenging.
Miners may have the strongest motivation to alter their hard cap, but they do not control the network or its rules. Their only job is creating new tokens and validating blockchain transactions. Nodes independently verify each block whenever miners submit them to the network. The nodes will automatically reject any block that violates the network’s rules, meaning miners do not have control over Bitcoin’s rule set.
People tested this theory in 2017 when 95% of Bitcoin miners agreed to increase the block size limit to improve the network’s scalability. However, nodes and users declined the change, forcing miners to adopt an alternative scaling option.
Overall, it could be possible to change Bitcoin’s hard cap by collaborating with several players, including miners, nodes, and users. However, it would need a lot of effort, time, and resources and impact a potential crash in Bitcoin’s prices.