BA-03 · LESSON 03

Scarcity and issuance

KEY DEFINITIONS

Terms used in this lesson

Block subsidy: New bitcoin that consensus permits a block's coinbase transaction to create at a particular height.
Coinbase transaction: The special first transaction in a Bitcoin block, which claims permitted subsidy and fees and has no ordinary prior-output input.
BTC: The common market ticker for bitcoin.
Hash rate: The number of mining hash attempts performed per second.
Proof-of-work target: The maximum header-hash value accepted for a block; lowering it makes valid hashes harder to find.

New bitcoin enters circulation through block rewards that fall over time. Mining difficulty adjusts to production speed, and transaction fees increasingly pay miners.

55 min Difficulty 1/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · state machineOne valid action transforms a known stateSelect any state to inspect its exact role.

RELATIONSHIP MAPOrdered mechanism flow

01
BEFOREKnown state
Identify the facts and objects that exist before the action.
02
ACTIONScarcity and issuance
The Scarcity and issuance lesson isolates the event that proposes a change.
03
RULEDeterministic check
The enforcing rule accepts or rejects the proposed transition.
04
AFTERSuccessor state
Accepted work creates a new state without silently changing the prior facts.
05
FAILUREState unchanged
A failed condition must not produce a partially accepted successor.

Rule shown: A valid transition names the prior state, action, enforcing rule, and successor state.

STAGE 1 OF 5BEFORE: Known state

Identify the facts and objects that exist before the action.

Governing relationship: A valid transition names the prior state, action, enforcing rule, and successor state. Complete path: 1. BEFORE, Known state. Identify the facts and objects that exist before the action. 2. ACTION, Scarcity and issuance. The Scarcity and issuance lesson isolates the event that proposes a change. 3. RULE, Deterministic check. The enforcing rule accepts or rejects the proposed transition. 4. AFTER, Successor state. Accepted work creates a new state without silently changing the prior facts. 5. FAILURE, State unchanged. A failed condition must not produce a partially accepted successor.

1. State transitionWhat exists, what changes, and what results

BEFORE

Ignore already-known implementation edge details and multiply each era's subsidy by 210,000 blocks.

MECHANISM

A valid coinbase may create no more than the subsidy allowed at that block height plus fees from included transactions.

AFTER

The cap is a consensus issuance ceiling. Actual spendable supply can be lower because rewards may be underclaimed or keys lost.

Text equivalent: Starting from Ignore already-known implementation edge details and multiply each era's subsidy by 210,000 blocks. The mechanism begins when A valid coinbase may create no more than the subsidy allowed at that block height plus fees from included transactions. The resulting lesson is The cap is a consensus issuance ceiling. Actual spendable supply can be lower because rewards may be underclaimed or keys lost.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 5

Award a block subsidy

A valid coinbase may create no more than the subsidy allowed at that block height plus fees from included transactions.

Complete path: 1. Award a block subsidy: A valid coinbase may create no more than the subsidy allowed at that block height plus fees from included transactions. 2. Halve by height: Integer block height, not calendar date or market demand, selects the subsidy era. Each 210,000-block interval halves the permitted subsidy. 3. Adjust mining difficulty: Every 2,016 blocks, the target changes based on elapsed time, within consensus limits, so issuance tracks block height despite changing hash rate. 4. Sum the issuance schedule: About 210,000 blocks times 50 BTC creates the first era's maximum 10.5 million BTC. Later eras add 5.25 million, 2.625 million, and so on. 5. Shift toward fees: As subsidy falls, transaction fees become a larger fraction of miner revenue. Whether future fees support sufficient security is an economic question, not guaranteed by the cap.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

Height selects subsidy, coinbase outputs cannot exceed subsidy plus fees, and cumulative issuance sums each integer-truncated era.

CHANGED CONDITION

A coinbase one satoshi above the ceiling is consensus-invalid; changing the observed epoch duration affects the target and difficulty factors, not the subsidy assigned to a height.

Important distinction: Exactly 21 million spendable bitcoin are guaranteed to exist. Consensus limits issuance to an amount approaching 21 million. The genesis reward, underclaimed subsidies, provably unspendable outputs, and lost keys reduce usable supply.

Text equivalent: The accepted path is enforced by Height selects subsidy, coinbase outputs cannot exceed subsidy plus fees, and cumulative issuance sums each integer-truncated era. If the required condition changes, A coinbase one satoshi above the ceiling is consensus-invalid; changing the observed epoch duration affects the target and difficulty factors, not the subsidy assigned to a height.

Loading lesson visuals...

Learn the idea

Bitcoin issuance creates new bitcoin in a block's coinbase transaction. The block subsidy began at 50 bitcoin, commonly written 50 BTC, and halves every 210,000 blocks. Hash rate is the number of mining hash attempts performed per second. The proof-of-work target is the largest header-hash value a valid block may have; a lower target means greater difficulty. Difficulty adjusts every 2,016 blocks toward a ten-minute average. The supply limit approaches 21 million because the halving subsidies form a finite geometric series.

GUIDED EXPLANATION1/5 ideas inspected

Award a block subsidy

A valid coinbase may create no more than the subsidy allowed at that block height plus fees from included transactions.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“Exactly 21 million spendable bitcoin are guaranteed to exist.”

Consensus limits issuance to an amount approaching 21 million. The genesis reward, underclaimed subsidies, provably unspendable outputs, and lost keys reduce usable supply.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.