Bitcoin’s hard cap will not change through its incentive structure and governance mechanism. Due to the architecture of the network, the entities that manage the Bitcoin rule set have great incentives to fight the hard cap changes, but those who wish to change it have no power over the network.
The individuals most motivated to modify the Bitcoin hard cap are miners. Changing the hard cap of Bitcoin may increase the income of miners in a short period of time. However, doing so would negate one of the main arguments for investing in Bitcoin: its scarcity.
The attractiveness of BTC to many investors lies in its predictable fixed supply. However, eliminating the fundamental drivers of Bitcoin’s value proposition is not in the best interests of miners. Although this modification will increase the income of miners calculated in BTC, it will cause a catastrophic and permanent price drop, resulting in a net loss of income of miners calculated in legal form.
Compared with bitcoin-denominated income, miners are more concerned about their fiat-denominated income, because almost all of their costs, wages, equipment costs, and energy expenses are paid in fiat currency. As a result, if the price of Bitcoin drops, miners will lose money.
The possibility of changing Bitcoin’s hard cap stems from two potential misunderstandings regarding BTC as a distributed, consensus-based network. First of all, there are dozens or even hundreds of different versions of the Bitcoin source code. For example, every node in the Bitcoin network runs a piece of software that rejects any incorrect blocks.
Although many nodes are running the latest version of Bitcoin Core, some nodes are still using older versions and implementations. Therefore, although changing the source code of BTC Core is simple, it is obviously more challenging to convince tens of thousands of nodes to implement these changes.
In addition, miners cannot control the rules of the network. Instead, miners are responsible for creating new blocks and verifying transactions. When a miner submits a new block to the network, tens of thousands of nodes independently verify it to ensure that it generates an appropriate amount of new bitcoins. Have a legal work certificate And contains valid transactions. All blocks that violate these standards will be rejected by the node, which means that miners cannot control Bitcoin’s rule set.
This theory was confirmed by reality when 95% of miners agreed to lift the block size limit in 2017 in an attempt to allow Bitcoin to expand. On the other hand, nodes and users resisted this transition and successfully forced the miners to switch to different extension methods.