The Magical number ’21M’ – What is Satoshi Nakamoto’s logical reason behind it?

Bitcoin’s most crucial supply was set at 21M on day one by Satoshi Nakamoto. What was his logic for this benchmark?

Bitcoin is recognized for being a deflationary currency. Its total flowing supply is capped at 21M and can never be modified. Although numerous have reviewed the analyses for establishing a maximum cap, some know why Satoshi chose 21M as the benchmark.

Fortunately, we have several reports from the early days of Bitcoin to understand this question better. 

For starters, the total number of satoshis in circulation (21M BTC x 100,000,000) is an IEEE floating-point number.

This makes calculation far more satisfying, which is why these numbers are generally used in computer operating systems.

Importantly, 21M was preferred because it delivers computation simpler. 21 is also a triangular number, which makes it particularly attractive.

For example, if you were to stack six blocks on five blocks on four blocks, and so on, you could create an equilateral triangle of 21 blocks total.

Nevertheless, there are other purposes for the 21M benchmark.

In a piece of archived information from Satoshi, the mysterious Bitcoin founder calls it a “difficult choice because once the network is going, it’s locked in, and we’re stuck with it.” Here is his full statement on the matter:

If you envision it being used for some fraction of world commerce, then there’s only going to be 21 million coins for the whole world to be worth much more per unit. Values are 64-bit integers with eight decimal places, so one coin is represented internally as 100000000. There’s plenty of granularity if typical prices become small. For example, if 0.001 is worth 1 Euro, then it might be easier to change where the decimal point is displayed, so if you had 1 Bitcoin, it’s now viewed as 1000, and 0.001 is shown as 1.”

Concluding from these early works, Satoshi actively considered the probability of Bitcoin being a world currency.

Though, the elusive question of “why 21M?” can eventually come down to the fact that a number had to be determined, and 21M possessed all the easily-calculable dimensions, which made it the ideal candidate.

The decision to make 21M the cap was, hence, partly-rationalized and partially made arbitrarily.

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