Ethereum: Simplifying limit of 21 million
In the world of crypto currency, the topic often preoccupied with complexity is the limit imposed by the Ethereum network to prevent the individual too much to hold or “hit on a cap” on their balance. In particular, we are talking about a limit of 21 million bitcoins that can be kept by any address.
What is the problem?
Imagine having a huge collection of gold coins, without limiting how much you could own. Sounds great, doesn’t it? But what if one tried to accumulate as much gold as possible while others were trying to sell it at the same time? They would stay nothing, and their wallet would become worthless.
Similarly, in the Crypto currency, this problem is known as the issue of “Token scarcity”. When an individual tries to hold too much token (or bitcoin), they are basically competing with other users for a limited number of seats online. This can lead to a situation where some users remain empty wallets.
Conducting restrictions
So, how is this limit implemented? The answer lies in several simple concepts:
- Tokenomics : Ethereum’s basic blockchain protocol defines tokenomy, which manages the behavior of token online. One key aspect of tokenomics is the “Block Award” system.
- Gas : When a transaction occurs online Ethereum requires computer energy (gas) to confirm and process. This energy is usually paid by users who confirm the transactions through a cash or other funds balance. The limit of 21 million tokens affects how many gas units can be assigned to new blocks.
- Smart Contract Limit
: When the user tries to add new tokens to the network, he must wait for the available slot in the pool of the transaction (ie the “Block Rewards” system). If the slots are not available, users cannot add their tokens.
Simplification of mathematics
To make it even more digestible:
Imagine being in a cafe with 10 friends. You want to buy a new coffee that costs $ 5 each. The barista will only accept Gotovina, who can get into your wallet until he is emptied or someone pays for his drink.
Similarly, users are limited to the total number of tokens (21 million) and available slots in the transaction pool. When the user tries to add new tokens, they basically say “I want to buy coffee worth $ 5” – but there are not enough wallets or transactions to cover all those $ 5.
The result
In conclusion, a limit of 21 million is carried out by a combination of tokenomics (token scarcity), gas distribution and smart contract restrictions. This ensures that users can safely hold their tokens without overwhelming the network with excessive quantities of cryptocurrency.