JP Morgan’s Jamie Dimon blunders: ‘How do you know it ends at 21 million?’

JP Morgan CEO Jamie Dimon still doesn’t understand much about Bitcoin. “How do you know it ends at 21 million? Have you looked at the algorithms? Do you believe that?” , he said at a conference on Monday. Yet one of the unique properties of Bitcoin is that the scarcity of 21 million bitcoins is extremely reliable and can be mathematically verified.

JP Morgan CEO Jamie Dimon remains skeptical about Bitcoin. ?«£Personally, I think bitcoin is worthless,?«• he said Monday at the Institute for International Finance event, Yahoo Finance reported. The bank top man is known as an ardent bitcoin critic.

Dimon says he doubts whether the maximum amount of bitcoins is really limited to 21 million. The scarcity of bitcoin weighs heavily on its economic value for many people. “How do you know it ends at 21 million? Have you looked at the algorithms? Do you believe that?” , said Dimon. He may not yet know how Bitcoin works and what open source is.

Open source

Open source means that the code is public. This is because of knowledge sharing and collaboration, but also because of transparency and safety. This is because public code helps to prevent viruses or spyware from being accidentally contained or that unwanted actions are carried out. If so, you can see it in the code.

convert it into an executable file using a compiler . That way you know that the file only executes its intended code and nothing else. If you use open source code in that way, it is extremely reliable.

21 million

In the case of Bitcoin, the code can be viewed and downloaded via Github. The maximum amount of bitcoins is determined in just a few lines:

CAmount GetBlockSubsidy(int nHeight, const Consensus::Params& consensusParams) {

int halvings = nHeight / consensusParams.nSubsidyHalvingInterval; // Force block reward to zero when right shift is undefined. if (halvings >= 64)???????? return 0;?? CAmount nSubsidy = 50 * COIN; // Subsidy is cut in half every 210,000 blocks which will occur approximately every 4 years. nSubsidy >>= halvings; return nSubsidy;

}

Above, the number of halvings is first calculated by dividing the block height ‘nHeight’ by the halving interval (which is set at one per 210,000 blocks). After that, nSubsidy sets the miner’s reward at 50 times the amount of one ‘COIN’ (one ‘coin’ consists of 100,000,000 satoshis – the smallest amount of bitcoin). Originally, miners received 50 bitcoins per block. Finally, the miner’s reward is halved the same number of times via the operator ‘>>=’ based on the number of halvings. There have now been three halvings, which is why miners currently only receive 6.25 bitcoins per block.

If you calculate the halvings, you will discover that the miner’s reward has been halved so often around the year 2140 that the reward is lower than one satoshi. At that point, the last amount of bitcoins has been mined and there will be a total of about 21 million bitcoins. In this way, the maximum number of bitcoins can be calculated mathematically.

Bitcoin protocol

Bitcoin is a digital currency and a network, but at its core it is primarily a protocol. Everyone who adheres to the protocol participates in the network. Are you deviating from protocol? Then you speak a different language that is not understood by the participants of the Bitcoin network.

The rules of the Bitcoin protocol are defined in the code. If you change the code to adjust the issuance of bitcoins, you will also change the protocol, with the result that the participants of the Bitcoin network will ignore you from now on.

Decentralized

If you do adjust the maximum number of bitcoins in the code that you run yourself, you will therefore cut yourself off from the rest of the Bitcoin network. You then have your own and incompatible copy of the Bitcoin network, with more than 21 million bitcoins and only one participant. This has no consequences for all others who still follow the Bitcoin protocol.

In theory, you could convince others to also switch to another protocol with more than 21 million bitcoins. A new and competitive network is then created. At the same time, there will always be people who will not switch and continue to use the original Bitcoin protocol. Nothing changes for them; the Bitcoin network will continue to exist and there will still be a maximum of 21 million bitcoins on it.

That is immutable, because it is hardwired and participation in the Bitcoin network is equivalent to following the Bitcoin protocol.

Therein lies the power of Bitcoin: it places power with the users through decentralization. Participation is voluntary and there is no one who can personally turn the buttons of the network. Rules without rulers , and an unchanging reliability that no one can challenge.

Scarcity

So Jamie Dimon may not know exactly where the clapper hangs, but he accidentally hit the nail on the head. The reliability of the decentralized Bitcoin protocol and the verifiable and unchanging scarcity of 21 million bitcoins are the core reasons why bitcoin is so valuable.

Bitcoins are perhaps one of the few things that we can say are truly verifiably scarce. Almost everything can be multiplied: houses can be built, gold can be dug deeper or found in space, but bitcoins are limited by mathematics. And there is no arguing with that; math is just true or false.

J.P. Morgan

Jamie Dimon has been critical of Bitcoin for years. In 2017, he called it “fraud” and worse than the tulip mania, and vowed to fire any employee who would invest in bitcoin.

Yet JP Morgan seems to have come around quite a bit over time. Analysts at the bank are now making wild price predictions and recommending that customers invest 1% of their assets in bitcoin. Earlier this year, JP Morgan also announced a bitcoin fund, following other banks.

To each his own, Dimon thinks. “I don’t care, it doesn’t make a difference to me ,” he said on Monday. “Our clients are mature. Sometimes there is disagreement. That’s how markets are created. So, if they want exposure and want to buy bitcoin, we can’t manage it, but we can give them access in a legitimate, cleanest way possible. “.

21 million bitcoins? Not quite. There are a little less.

material: jurvetson, license CC BY 2.0

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