What is the effect of Bitcoin's fixed maximum supply?
Correct answer
Answer D: The money supply cannot be expanded arbitrarily.
Quick explanation
Bitcoin's rules specify in advance the maximum number of bitcoin that can be created. Additional bitcoin cannot simply be created at will.
Detailed explanation
The limit of around 21 million bitcoin is a Bitcoin protocol rule. New bitcoin are not created all at once but issued over many years as a block subsidy. This subsidy decreases at defined intervals, limiting the total amount that can be newly created.
Around 21 million is the usual shorthand. Because Bitcoin calculates in whole satoshis and rounds the subsidy down at each halving, the amount that can actually be created through block subsidies is slightly below exactly 21 million BTC. The key point is that the network has no mechanism automatically creating more bitcoin once issuance ends.
The limit says nothing about how many bitcoin are actually available. Lost keys can make holdings inaccessible, and many bitcoin remain unmoved for long periods. Nor does the cap determine a market price. It describes only the issuance of new units allowed under the current rules.
Key takeaway
The 21-million cap limits issuance, not price or ownership.
Common misconception
Beginners often confuse the supply cap with the amount already circulating or with a price ceiling.
What the sources support
The Bundesbank describes how money can be created in a banking system. Bitcoin sources instead document protocol-limited issuance. The bridge is a comparison of different money-supply rules; it does not imply any Bitcoin price guarantee.