Why is Bitcoin’s supply limit set to 21 million?

Bitcoin’s supply is capped at 21 million. But why did Satoshi Nakamoto pick that specific number? There are at least two plausible explanations.

Bitcoin

THERE IS A FIXED SUPPLY OF 21 MILLION BITCOIN 

In brief

• Bitcoin was designed so that there is a finite supply of 21 million BTC.
• One explanation for the 21 million Bitcoin limit is the money supply replacement theory.
• An alternative suggestion is that the limit could be mathematically extrapolated from Bitcoin's operating parameters.

Like many other cryptocurrencies, Bitcoin (BTC) was designed around the principle of a finite supply. That means there’s a fixed upper limit on how many Bitcoin can ever come into existence.

In Bitcoin’s case, the upper limit was set by its creator, Satoshi Nakamoto, at exactly 21 million. For other cryptocurrencies, this cap can vary considerably—ranging from as low as 18.9 million for Monero (XMR) and Dash to as high as 100 billion for the likes of XRP and Tron (TRX).

The money supply replacement theory

By limiting its maximum supply, and slowing the rate at which new Bitcoin come into existence, Satoshi intended each individual Bitcoin unit (known as a satoshi) to appreciate in value over time.

According to an email purportedly shared between Nakamoto and Bitcoin Core contributor Mike Hearn, Satoshi reasoned that if 21 million coins were to be used by some fraction of the world economy, 0.001 BTC (1 mBTC) could be worth around €1. This prediction came true back in 2013, when Bitcoin first broke through the €1,000 price point; today, each mBTC is currently worth closer to €8.25.