• Sun. Aug 14th, 2022

Can Bitcoin network participants change its 21 million cap? | The Guardian Nigeria News

ByHazel R. Lang

Jul 21, 2022

A hard limit is a limit set by the code of a blockchain on the absolute maximum supply of that digital asset. A fixed cap prevents the further production or circulation of this unit of virtual asset. Many people widely consider it to have a good effect because it promotes scarcity, which increases the value of each token. As a result, the hard cap of this virtual asset is set at 21 million by Satoshi Nakamoto, its anonymous creator. Maybe you can start buying and selling Bitcoin by clicking on this trading platform Bitprime Gold

Absolute scarcity refers to a finite, fixed supply of a good. There is no additional supply response despite increasing demand for an item.

Why does Bitcoin have a hard cap
Bitcoin has a hard limit which makes it valuable because its supply is limited. Any project attempting to impose a hard cap must follow the principles of supply and demand. Additionally, there is a warranty for the integrity and value of the underlying project. Team members and business leaders, on the other hand, have to strike a delicate balance to achieve this number.

Can the Hard Cap of Bitcoin be changed?
Some bitcoin skeptics argue that because bitcoin is just software, people can change its network rules. These critics say that with the black subsidy, the amount of new Bitcoins created in each block decreases every four years, and miners would like to protect their revenue stream by increasing the supply cap above 21 million Bitcoins.

On the surface, the network would incentivize miners to change the supply cap to generate more new digital coins. However, this adjustment will not take place for various reasons.

Why Bitcoin’s Hard Cap Can’t Change
The hard cap of this electronic money is secured from alternation by its incentive structure and its governance mechanism. Entities that govern Bitcoin’s ruleset have significant incentives to fight a change to the hard cap. This is because of the network architecture, but those who wish to change it have no power over it.

Bitcoin governance
The possibility of changing the hard cap of Bitcoin comes from two underlying misconceptions regarding this virtual asset as a distributed and consensual network. There are dozens if not hundreds of different versions of Bitcoin source code. For example, each node in the Bitcoin network runs software to reject any bad blocks.

Many nodes use the recent version of Bitcoin Core. However, some still use older versions and implementations. Therefore, although modifying the source code of Bitcoins Core is simple, convincing thousands of nodes to implement the changes is much more difficult.

More so, miners have no control over the rules of the network. Instead, miners create new blocks and validate transactions. When the network receives a new block from miners, thousands of nodes independently verify it. And this ensures that it generates an appropriate amount of new BTC, has legitimate proof of work, and contains valid transactions. Any blocks that violate these criteria will be rejected by the nodes, implying that miners have no control over the ruleset of this digital asset.

incentives
Miners are the single most incentivized people to change Bitcoin’s hard cap. Changing the absolute cap of this electronic asset could increase the income of miners for a short time. However, that would negate one of the main arguments for investing in Bitcoin, its scarcity.

The main feature that makes this digital asset attractive is its predictable fixed supply. However, it is not in the interests of miners to remove the virtual drive from Bitcoin’s value proposition.

The essential
Bitcoin’s absolute cap is critical to its value proposition as money and as an investment. Additionally, hard cap on bitcoin is encoded in bitcoin source code and enforced by network nodes.


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