What lies behind BlackRock's statement about Bitcoin? And if the 21-million Bitcoin supply cap were to change, what would the future hold for this cryptocurrency?
BlackRock, one of the world's largest asset management firms, has drawn the attention of the crypto community with the release of a promotional video about Bitcoin.
However, what sparked widespread discussion wasn’t the content of the advertisement itself, but rather a disclaimer embedded in the video by BlackRock: “There is no guarantee that the 21-million Bitcoin supply cap will not be changed.”
Promotional video about Bitcoin by BlackRock. Source: BlackRock
Although it appears only 90 seconds into the video, this statement felt like a cold shower, dampening the initial excitement of Bitcoin supporters. Many argue that BlackRock is intentionally spreading misinformation to create uncertainty among investors.
What’s noteworthy is that this statement is not limited to the promotional video. BlackRock also included it in the prospectus for its spot Bitcoin ETF (IBIT), submitted to the U.S. Securities and Exchange Commission (SEC). In the prospectus, BlackRock listed several potential risks for investors, including the risk of a change to Bitcoin’s supply cap.
Can the 21-Million Bitcoin Cap Truly Be Changed?
According to Super Testnet, a Bitcoin developer known for BitVM, the answer is “possible,” but at a very high cost.
From a technical standpoint, altering the supply cap could be achieved through a hard fork—a complex process requiring consensus from the majority of stakeholders in the Bitcoin network:
Node operators: Responsible for maintaining and validating transactions on the network.
Core developers: Develop and maintain Bitcoin’s source code.
Miners: Provide computational power to verify transactions and produce new blocks.
Investors: Hold Bitcoin and have a vested interest in the network's stability.
To initiate a hard fork, developers would propose changes to the protocol rules, followed by community discussions to reach consensus. If the majority agrees, a hard fork would proceed, creating a new chain with updated rules, potentially including a change to the supply cap.
However, Super Testnet emphasizes that this new chain, even if it allows for an unlimited supply, would no longer be Bitcoin in its original sense. He asserts that the inflation cap is a defining feature of Bitcoin, explicitly outlined in Satoshi Nakamoto’s whitepaper.
“Remove the supply cap, and whatever you have left is no longer Bitcoin,”
-- Super Testnet asserts --
In other words, changing the supply cap would lead to a network split, creating two different versions of Bitcoin. The original version would retain the 21-million cap, while the new version would feature a revised supply, potentially unlimited.
Who Would Want to Change Bitcoin’s Supply Cap?
One of the primary motivations might come from miners. Bitcoin's reward system is designed to diminish over time. Every 210,000 blocks (approximately every four years), the block reward is halved.
This means that either the price of Bitcoin needs to rise, or transaction fees need to increase to sustain miners' profitability. By the time the last Bitcoin is mined around 2140, miners will rely solely on transaction fees for their earnings.
The Block Size War. Source: BitRaw
However, Super Testnet believes that miners alone lack the power to drive a successful hard fork.
History has proven this through the "Block Size War" of 2016-2017. During that time, the majority of miners wanted to increase the block size to speed up transaction processing, but they faced strong opposition from the community and ultimately failed.
Community reaction to BlackRock's statement. Source: X
The community's reaction to BlackRock's statement has been highly varied, ranging from mockery and skepticism to concern.
Many social media users expressed outrage, accusing BlackRock of intentionally devaluing Bitcoin for its own benefit. Others were more pessimistic, believing that the 21-million Bitcoin cap will eventually be broken by the power of financial "giants."
"Do you really think that your tiny node running on a Raspberry Pi will stop BlackRock from changing Bitcoin's supply?"
-- A Twitter user sarcastically remarked --
However, there are also more moderate opinions, suggesting that BlackRock is simply fulfilling its legal obligation to warn investors about all potential risks, including even the most unlikely ones.
In conclusion, changing the 21-million Bitcoin supply cap is an incredibly complex issue. It not only requires the consensus of the majority of the community but could also lead to a network split, creating a new version of Bitcoin that is entirely different from the original.
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