Bitcoin’s maximum supply was set at 21M on day one by Satoshi Nakamoto. What was his reasoning for this benchmark?
Bitcoin is famous for being a deflationary currency. Its total circulating supply is capped at 21M and can never be altered. Although many have discussed the reasons for instituting a maximum cap, few know about why Satoshi chose 21M as the benchmark.
Luckily, we have many documents from the early days of Bitcoin to better understand this question. For starters, the total number of satoshis in circulation (21M BTC x 100,000,000) is an IEEE floating-point number. This makes computation far easier which is why these numbers are commonly used in computer operating systems.
Essentially, 21M was chosen because it makes computation simpler. 21 is also a triangular number which makes it especially attractive. For example, if you were to stack 6 blocks on 5 blocks on 4 blocks, and so on, you could create an equilateral triangle of 21 blocks total.
However, there are other reasons for the 21M benchmark. In an archived message from Satoshi, the mysterious Bitcoin founder calls it a “difficult choice because once the network is going it’s locked in and we’re stuck with it.” Here is his full statement on the matter:
If you imagine it being used for some fraction of world commerce, then there’s only going to be 21 million coins for the whole world, so it would be worth much more per unit. Values are 64-bit integers with 8 decimal places, so 1 coin is represented internally as 100000000. There’s plenty of granularity if typical prices become small. For example, if 0.001 is worth 1 Euro, then it might be easier to change where the decimal point is displayed, so if you had 1 Bitcoin it’s now displayed as 1000, and 0.001 is displayed as 1.”
Judging from these early writings, Satoshi actively entertained the possibility of Bitcoin being a world currency. However, the elusive question of “why 21M?” can ultimately come down to the fact that a number had to be chosen, and 21M possessed all the easily-calculable dimensions which made it the ideal candidate. The choice to make 21M the cap was, therefore, partly-rationalized and partly made arbitrarily.
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Source: Be In Crypto