Satoshi Nakamoto – Bitcoin’s creator – solved the Double Spend issue by creating a monetary system with fixed rules defined in computer code, not a government policy document.
Those rules run as a piece of software across a distributed network of computers without hierarchy, permission or trust. No central authority enforces the rules; participants in the Bitcoin network follow them because of economic incentives provided for issuing Bitcoin at a predictable and unchangeable rate toward a maximum fixed supply. This removes the risk of monetary abuse and generates ongoing consensus on balances, solving the double spend problem.
The key rules of Bitcoin’s monetary system can be summarised as:
- There is a fixed supply schedule of bitcoin towards a maximum of 21 million
- The rate at which bitcoins are created toward that maximum amount is fixed mathematically – halving every four years
- New bitcoins are created roughly every ten minutes (currently set at 6,25); the system is self-regulating to ensure this
- There is no other way that bitcoin can be created
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