Bitcoin's 21M Cap Debated as Transaction Fees Plummet to 0.5%

Peter Todd has reopened debate over Bitcoin's 21 million-coin limit after pointing out that transaction fees currently make up just 0.5% of miner revenue.

Todd, an early Bitcoin developer and self-proclaimed 'Bitcoin thought leader,' argues that the cryptocurrency is moving from subsidy-supported security to a fee-dominant model. However, he notes that there's no proven example showing this will work at Bitcoin's scale.

In a July 23 talk at Bitcoin++ Toronto, Todd discussed the potential of tail emission, which would continue creating new Bitcoins after the current schedule ends and push the total supply beyond 21 million. He suggested a low perpetual issuance rate could be economically small compared to normal price swings but still provide miners with an incentive to extend the chain.

Critics have framed the cap debate as a risk to preserving Bitcoin's monetary rule, which users expect to remain fixed. Dan Held called the idea 'bad' and linked to a 2019 essay arguing that a monetary system conveys information through rules that market participants expect to remain predictable.