Ethereum: Is it possible for more than 21 million bitcoins to exist if 51% agree?

Bitcoin Limitations: Can It Support More Than 21 Million Bitcoins?

When it comes to digital currencies like Bitcoin, the concept of scarcity is crucial. One of the most widely accepted advantages of Bitcoin is its limited supply: only 21 million Bitcoins will ever exist. However, this assumption has been disputed by some observers who argue that the current design of the protocol, including a 51% attack vulnerability, could potentially allow for an unlimited number of Bitcoins.

The 51% attack vulnerability arises from the way the Bitcoin network works. With over 50% of mining power controlling the network validation process (aka the “51 rule”), a malicious entity can manipulate the block creation process and prevent new blocks from being added, effectively allowing them to control the entire network. This vulnerability has been exploited by various individuals and organizations in the past.

So, is it possible for there to be more than 21 million Bitcoins if the Bitcoin protocol allows for an unlimited number of miners? Let’s explore this further.

How ​​the Current Protocol Design Limits Scarcity

The bitcoin protocol is designed with several mechanisms to ensure a limited supply. Here are some key aspects:

• Proof-of-work (PoW): The process of verifying transactions and creating new bitcoins is based on complex mathematical calculations, called “hashes.” Miners compete to solve these hashes in a race-like process using their powerful computers. To win, they must solve the hash faster than anyone else.

• Energy Consumption: Creating a new block requires significant computing power, which is now largely provided by specialized mining platforms. As the network expands, so does energy consumption, contributing to greenhouse gas emissions and environmental concerns.

• Transaction Fees: Miners are incentivized to participate in the validation process not only through their computing power, but also through transaction fees (which are paid in new bitcoins).

• Block Reward: The block reward is a fixed amount of new bitcoins awarded to miners for creating a new block, which has been gradually reduced over time.

Is it possible to create more than 21 million bitcoins?

If the bitcoin protocol allows for an unlimited number of miners, it is theoretically possible for an individual or group to manipulate the network to create an unlimited supply of bitcoins. However, this scenario would require a fundamental change to the current design.

Here are some ways this could happen:

• Centralized mining: If more than 50% of the mining power is concentrated in the hands of a single entity, that entity could potentially control the entire network and create new blocks without anyone checking or validating them.

• Algorithmic multisig wallets

  

  : This type of wallet allows multiple users to control an account, effectively creating multiple “signatories” who can validate transactions and create new bitcoins.

• Smart contract systems: Some blockchain platforms are developing smart contract systems where the creation of new bitcoins is tied to specific actions or conditions, rather than through traditional mining.

While these scenarios are theoretically possible, they also raise significant concerns about the security, transparency, and decentralization of the bitcoin network.

Conclusion

In conclusion, while the concept of an unlimited supply of bitcoin seems appealing, the current protocol design, including the 51% attack vulnerability, limits scarcity. Any attempt to create an unlimited supply of bitcoin would require a fundamental change to the underlying design, which is not currently possible with traditional technology.

As with any digital currency, it is essential to be aware of these limitations and potential vulnerabilities when using or investing in bitcoin and other cryptocurrencies.