Recently, I saw someone ask why the total supply of Bitcoin is only 21 million coins. In fact, there is a sophisticated mathematical design behind this, worth a deeper understanding.

Since its inception, Bitcoin has been set as a deflationary asset, which is why many call it digital gold. Like gold, a limited supply means scarcity, and scarcity ensures long-term value preservation. The 21 million figure is not arbitrary; it is precisely specified by the creator in the white paper.

The core mechanism is quite simple: a new block is generated approximately every 10 minutes on the blockchain, and each block rewards miners with a certain amount of Bitcoin. Initially, the reward was 50 BTC per block, but there is a key design—every 210,000 blocks (about 4 years), the reward halves. The first 4 years produced 10.5 million coins, the next 4 years 5.25 million, and so on. Mathematically, this can be expressed as an infinite series: 50 + 25 + 12.5 + 6.25 + ... , which converges exactly to 21 million.

Regarding the halving events, several have already occurred. In November 2012, the reward dropped from 50 to 25; in July 2016, from 25 to 12.5; in May 2020, from 12.5 to 6.25. The most recent was in April 2024, the fourth halving, when the reward decreased from 6.25 to 3.125. Each halving tends to trigger market fluctuations, making it one of the most closely watched events in the Bitcoin ecosystem.

Why must new coins be produced through mining? Because Bitcoin uses a fully decentralized ledger system, with no central bank or third-party institution. All transaction records are distributed across the network and require extensive computation to verify and confirm each transaction. Miners are the guardians of this system; they solve complex cryptographic puzzles to package transactions and generate new blocks. This process consumes a large amount of computing power, and the difficulty adjusts continuously to maintain an average block time of 10 minutes.

Miners are incentivized by two parts: the newly issued Bitcoin reward and transaction fees. This incentive mechanism attracts miners worldwide to keep investing, ensuring the security and trustworthiness of the entire network.

Regarding units, Bitcoin has five levels: the largest is BTC itself, then centiBTC (cBTC, 0.01 BTC), milliBTC (mBTC, 0.001 BTC), microBTC (μBTC, 0.000001 BTC), and the smallest unit is Satoshi (0.00000001 BTC). The name Satoshi comes from the creator, Satoshi Nakamoto, as a tribute.

This design has been operational to this day because of its solid mathematical foundation, transparent rules, and tamper-proof nature. If you're interested in the deeper mechanisms of Bitcoin, you can check real-time data and trends of BTC on Gate, where you can also explore more related crypto assets.