Built into the bitcoin protocol from the beginning was a limit to the number of coins that will ever be created. The limit is 21 million. Technically, the limit is 20999999.9769, short of 21 million by 3 bitcents.
Without a limit to the possible number of bitcoins, they would become like fiat money and decrease in value as more and more and more bitcoins were created. With a limit on it, bitcoin should increase in value.
Bitcoin creation begins with a transaction. The transaction synchronizes with the network where it is not confirmed until it is added to a block. Any bitcoin user can initiate a transaction. There is no pattern to when or by whom transactions are broadcast to the network. Miners gather up transactions and add them to a block.
A block is limited to being about 1 megabyte in size. Satoshi Nakamoto set this limit on block size in 2010. At the time, transmission speeds were lower and if the block were too big, it would slow down the syncing time and this could cause problems on the network. One megabyte is 1,024 kilobytes.
Blockchain.info has the latest information on the blocks being created including who created them, the size, and the number of transactions.
At the time of this writing, the latest block has these attributes:
It is 7 minutes old, involved 1952 transactions, sending 31,963.57 BTC, and its size is 1,040.02 kilobytes. The block just before that was 2 minutes older. It held 2311 transactions, sending 56,810.53 BTC. It was 1,094.54 kilobytes.
The limitations built into bitcoin are part of the reason for its success. It is often compared to gold which is limited. There is only so much gold available in the world which is why its value remains high. It’s not like fiat money where more can be printed out.
As the popularity of the bitcoin increases, more questions are being asked about whether the limit can be lifted. After all, more than 66% of the entire bitcoin pool has already been created. By the beginning of 2018, this will be up to 80% of the total 21 million.
The system is created so that the number of bitcoins created will diminish over time. The faster they are created, the faster these additional creation limits will be implemented. Also because the network is self-regulating, who is capable of changing the protocol to increase the number of possible bitcoins?
Any change has to be adopted by the network community. In August 2017, there was a change in the protocol. Called Segregated Witness (shortened to SegWit), it is a change in the transaction format. Because blocks are limited in size, and slowing down the process, the SegWit protocol allowed a change to be made. The size of the block has not changed but the way that a transaction is added to the block has made it more efficient.
Another change was being considered as of November 2017. It’s SegWit2x. Time will tell if this change will be accepted.
Bitcoin can be confusing enough for the newbie. So long as a person can receive a verified financial payment into their wallet, all is well. If you are used to a world where your bank account remains the same as it always was, you want to be able to trust the ability to buy and sell bitcoin according to the established protocols. If the amount of currency in your bitcoin account suddenly changes because of machinations of programmers behind the scene, it can be disconcerting.
The reality is that limits set in 2009 or 2010 were fine for the time. Bitcoin has been so successful, it is easy to take it for granted. There is a lot of the attitude of if it ain’t broke, why fix it. Unless you are a miner. It’s one thing to buy bitcoin. It’s another thing to mine it. One major change was that bitcoin forked and bitcoin cash emerged.
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