Do you know the key difference between Bitcoin and fiat currencies? The key difference between both Bitcoin and fiat currencies is that fiat currencies are printed by Central Banks whenever required, whereas the supply of bitcoin is limited. Explore about bitcoin investor to learn about the regulation and distribution of Bitcoin.
Some of you may have already known this difference but do you know why there is only a fixed or limited supply of bitcoin? You may have read about many reasons, but the most common ones that people think are that bitcoin is electronic cash that cannot be inflated. However, the reasons that we are going to discuss in this article are completely different.
All bitcoins are already issued.
In reality, all the bitcoin has already been issued, and there aren’t any bitcoins that miners are creating, but it seems like another way. The founder of bitcoin, Satoshi Nakamoto, has issued all the bitcoins while releasing the bitcoin network. The miners do other work for which they are paid or rewarded. People often get confused between distributing bitcoins and issuing bitcoins. It is imperative to understand the difference between the two.
When introduced to the bitcoin network, the founder of bitcoin issued all the bitcoins through bitcoin software, and the miners do the work of distributing bitcoins. The miners distributed bitcoins to crypto exchanges, bitcoin users, other miners, and more and sell them bitcoins to get funds to carry out mining operations.
After issuance, now comes the distribution of bitcoin, which is still going continuously after 2009. Satoshi Nakamoto could have issued more bitcoins and allowed miners to distribute them. Still, the issuance is limited because it will have to face some regulatory reasons.
Satoshi made a promise of limited supply.
When the bitcoin system was introduced, Satoshi Nakamoto promised that there wouldn’t be any more bitcoins issued in the future. Miners became the largest contributors of the bitcoin network who accepted the promise of Satoshi and started to work on the distribution of coins by following the rules that supply won’t change. If anyone tries to change the limited supply of bitcoin, it will probably be confused and will contradict the promise or offer that Satoshi made to miners and bitcoin users.
In today’s time, the miners are working by distributing bitcoins and are earning for their work. It means that bitcoins have given employment to many people.
Another reason why Satoshi Nakamoto didn’t issue more Bitcoins
There is another reason to know about the limited supply of bitcoin. When we look at the 21 million bitcoins that Satoshi issues, do you know what he issued? In 2009, when bitcoin was introduced, what people considered it? A commodity? A store of value? Anything else? No. Bitcoins weren’t given any name when bitcoins were introduced, and there wasn’t any worth of the bitcoins.
At that time in 2009, bitcoins didn’t have any value, but still, Satoshi managed to issue 21 million Bitcoin. It is imperative to understand that if Satoshi had issued bitcoin now, they would be of immense value. As an individual or a private person, Satoshi didn’t want to issue more bitcoins that aren’t regulated or haven’t any value.
Was the decision of Satoshi right?
The major step taken by Satoshi Nakamoto of not issuing more bitcoins was a good and wide decision for himself as a developer and an issuer. The wise decision made by him made him stand out of all the financial as well as the legal difficulty that could have occurred to him. Even though miners and bitcoin users would say that there must be an unlimited supply of bitcoin, all users face the difficulty of storing bitcoins and about legalities. With a limited supply of bitcoin, there is an increase in demand for it, and people consider bitcoin as a store of value or valuable asset like Gold.
Besides the limited supply of bitcoin, there are many other unique things about bitcoin that explain the difference between fiat currencies and digital currencies. If there weren’t a limited supply of bitcoin, there wouldn’t be much demand for it, and also, its price wouldn’t have reached the sky.