Someone recently asked me why there are always 21 million bitcoins. This question actually reflects many people's misunderstandings of Bitcoin's design logic. Many people call Bitcoin digital gold, but few truly understand the underlying principles.

First, the conclusion: Bitcoin's maximum total supply of 21 million is set by Satoshi Nakamoto in the white paper. This is not an arbitrary decision but based on a sophisticated mathematical model. Every four years is a issuance cycle, during which the block reward halves once. The first cycle had a reward of 50 bitcoins per block, then it halved sequentially. Calculated as a geometric series, the final limit is 21 million.

Looking at the timing of each halving helps us understand how precise this mechanism is. The first halving occurred in November 2012, reducing the reward from 50 to 25; the second in July 2016, down to 12.5; the third in May 2020, down to 6.25. The fourth halving in 2024 has already been completed, and the current reward is 3.125 bitcoins. This decreasing design is intended to control inflation and protect Bitcoin's value.

Why must new bitcoins be produced through mining? Because Bitcoin uses a fully decentralized ledger system. All transaction records are on the blockchain, with no central bank or third-party institution. To ensure transaction security, miners need to solve computational puzzles (proof of work) to verify new blocks. Miners earn rewards that include newly issued bitcoins and transaction fees. This incentive mechanism guarantees the secure operation of the entire network.

Interestingly, as mining difficulty increases, miners' costs also rise. This involves a concept many overlook—funding rates. In derivatives markets, funding rates reflect the cost difference between long and short positions in perpetual contracts. When mining rewards decrease and costs rise, miners tend to hedge risks in the futures market, which directly impacts the market's funding rate levels.

Bitcoin's units are also quite interesting. The smallest unit is the Satoshi, 1 Satoshi = 0.00000001 BTC, named in honor of Satoshi Nakamoto. Larger units include micro-Bitcoin, milli-Bitcoin, and Bitcoin divisions, facilitating transactions of different scales.

The brilliance of this design lies in its self-regulating mechanism through mathematics and incentives. Scarcity endows Bitcoin with the function of a store of value, similar to gold. If you want to understand how these mechanisms influence the market, you can check real-time data on Gate, especially the difficulty adjustment and the funding rate changes of related derivatives. These indicators often reflect market participants' true assessment of Bitcoin's long-term value.