Is Ethereum Limited Like Bitcoin?

We look at one of the basic differences between Bitcoin and Ethereum

You may have heard that there is a limited supply of Bitcoin that can be mined. The mysterious creator, Satoshi Nakamato, has limited the supply that can be mined to 21 million Bitcoins. So far, just under 17 million have been mined, leaving only 4 million in reserve.

So, Ethereum Must Run on the Same Principle, Right

Well, actually, no. This is mainly due to the fact that Ethereum is a platform that was created with a different goal in mind to Bitcoin. Take, for example, gold. There can’t be an unlimited amount of gold, and the same is true of Bitcoin. So, we can think of Bitcoin as a commodity like gold for the purposes of this article.

Ethereum is aspiring to be a platform for decentralized services, and a center for trading. Vitalik Buterin, the founder of Ethereum, hasn’t put a cap on the amount that can be mined. However, as the block time increases (the difficulty associated with mining Ethereum increases as the block numbers go up), mining will become less worthwhile, as the rewards do not increase with difficulty. Therefore, Buterin is estimating that it will “self-limit” at around 100 million tokens.

In fact, he is banking on this by gradually reducing mining rewards as Ethereum starts to move from proof-of-work (mining to verify transactions) to proof-of-stake (no mining necessary). The main goal of this is to reduce energy costs, but this may also help to limit the amount of Ethereum produced, as there would then be even less incentive for miners to mine.