Vocal Critic of Bitcoin
It’s no secret that JP Morgan CEO Jamie Dimon has been a vocal critic of Bitcoin, frequently questioning its legitimacy as a currency and its underlying technology. However, his most recent comment regarding the digital currency’s supply cap of 21 million has raised a few eyebrows in the crypto community.
During an interview with CNBC’s Squawk Box, Dimon questioned the legitimacy of the 21 million supply cap, stating “How do you know it’s gonna stop at 21 million? Maybe it’s gonna get to 21 million and Satoshi’s picture is gonna come up and laugh at you all.”
This is not the first time Dimon has expressed skepticism about Bitcoin’s supply cap. Last October, he stated at an Institute for International Finance event, “You all read the algorithms? You guys all believe that? I don’t know, I’ve always been a skeptic of stuff like that.”
What is the 21 million supply?
The 21 million supply cap is one of the defining features of Bitcoin and is often highlighted by the asset’s biggest boosters. The idea is that the absolute supply cap would give Bitcoin greater scarcity than any government-issued currency on earth, empowering it as a store of value.
However, many in the crypto community have pointed out that the 21 million supply cap is not a random number, but is rather the result of a carefully designed algorithm. The algorithm is open-source and freely viewable by the entire world. As pointed out by Jameson Lopp, co-founder of the Bitcoin wallet company Casa, Bitcoin’s supply cap is implicitly enforced by just 5 lines of code.
Bruh it's like 5 lines of code. https://t.co/DWxPHFsgJs pic.twitter.com/ssripW7tVy
— Jameson Lopp (@lopp) October 11, 2021
To be precise, Bitcoin is programmed to cut its supply issuance rate in half every 210,000 blocks, which is roughly every four years. This process is called “halving.” In 2009, 50 new BTC were issued per block. Today, only 6.25 BTC come attached to each block. These halvings are programmed to occur just 33 times, after which Bitcoin’s block reward will be cut to zero. This should occur by the year 2141, assuming nothing changes before that time, according to Bitcoin developer Luke DashJr.
2/
— Dan Smith (@smyyguy) January 10, 2023
Bitcoin has never generated meaningful transaction revenue relative to its security budget, heavily subsidizing security with block rewards.
The current model is unsustainable, weakening its likelihood of becoming the global reserve currency.
While it’s true that anything enforced by code can technically be changed, as long as users consent to it, it’s important to note that any changes to the algorithm would require a significant amount of consensus within the Bitcoin community. This is because any changes to the algorithm would be implemented through a process called “hardfork,” which would require the majority of the network’s users to agree and update their software accordingly.
Furthermore, while the 21 million supply cap may seem to limiting at first glance, it’s important to remember that Bitcoin is still infinitely divisible. Tiny units of the currency, called satoshis, can still be used for small transactions, even if its price were to enter the seven-figure range.
In conclusion, while Jamie Dimon may be skeptical of Bitcoin’s supply cap, it’s important to remember that the 21 million supply limit is not a random number, but rather the result of a carefully designed algorithm. The algorithm is open-source and freely viewable by the entire world, and any changes to it would require significant consensus within the Bitcoin community.
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