The major BlackRock released a video this week explaining how Bitcoin works. However, the observant viewer also noticed a disclaimer: “There is no guarantee that the 21 million Bitcoin limit will never be changed.” That of course causes a stir within the community, because for many people that is the core of Bitcoin.
The core of Bitcoin
Bitcoin is a savings tool for many people. A financial asset in which they store their wealth, precisely because Bitcoin has an absolute limit of 21 million units. And now that could suddenly change?
In theory, BlackRock is right. The limit of 21 million Bitcoin is an agreement, and it can be adjusted. However, that would result in such a change in the protocol that there is a so-called hard fork.
We speak of a hard fork if the computer code of Bitcoin changes in such a way that the existing software can no longer communicate with the new software.
Example: if the old software states that miners may receive a maximum of 3.125 BTC per block, and in the new software this has been increased to 6.25 BTC per block, then the old software would receive new blocks with >3.125 BTC as a reward for the miner reject.
And that causes a split in the network. Then everyone can choose which version of Bitcoin they consider most valuable.
A hard fork creates two versions of Bitcoin. In our example, those would be BTC-3.125 and BTC-6.25. Where BTC-3,125 maintains the 21 million Bitcoin limit, and the new version does not.
If you had 10 Bitcoin before the hard fork, then after the split you will have 10 BTC-3.125 and 10 BTC-6.25. For example, you can choose to sell your BTC-6.25 for BTC-3.125; because you believe that Bitcoin is only valuable with its hard limit of 21 million units.
You are thus, as it were, rejecting BTC-6.25.
Can You Really Change Bitcoin?
The question of whether you can change Bitcoin essentially depends on your definition of the digital currency.
Some argue that it is not possible at all, because Bitcoin is only Bitcoin with the hard limit of 21 million units. In other words: the rules we now apply result in what we have come to call Bitcoin. If you changed those rules, something different would arise.
And the original Bitcoin will live on as long as there are people who continue to use this version of the protocol.
Ultimately, it’s all a storm in a teacup. BlackRock is of course not planning to adjust the hard limit of 21 million Bitcoin, but only gives the disclaimer that it is theoretically possible.
So if you invest based on that absolute limit, then according to BlackRock it makes sense to think about this problem. Personally, I would never switch to a Bitcoin without the hard limit of 21 million units, because the asset then no longer makes sense as a savings tool.
Bitcoin is then no longer an interesting investment for me, and that is also the main reason why the chance that we will ever abandon the hard limit is very small.
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Source: https://newsbit.nl/blackrock-waarschuwt-limiet-van-21-miljoen-bitcoin-kan-veranderen/
