Halvings and supply schedules: where new coins come from

Every proof-of-work coin has to answer the same question: how many new coins are created, and when? The answer is written into the protocol from day one and shapes everything from miner incentives to how scarce a coin is. Bitcoin's famous "halving" is one answer. There are several others, and they're worth understanding before you hold any of them.

Where new coins come from

On proof-of-work chains, each block includes a special first transaction — the coinbase — that pays the miner. That payment has two parts:

• The block subsidy: brand-new coins created by the protocol.
• Transaction fees paid by everyone whose transaction made it into the block.

The subsidy is how new coins enter circulation. The supply schedule is simply the rule for how big that subsidy is at each point in the chain's life. On proof-of-stake chains, new coins are issued as staking rewards instead, but the same question applies.

Bitcoin: halve every four years

Bitcoin's rule is the best known. The subsidy started at 50 BTC per block and halves every 210,000 blocks — roughly every four years. After the April 2024 halving it's 3.125 BTC per block; the next halving, expected around 2028, takes it to 1.5625.

Because each halving cuts issuance in half, the total converges on a fixed limit: just under 21 million bitcoin. Most of it already exists. The last fractions of a bitcoin are expected to be mined around the year 2140.

Two consequences follow:

• Scarcity is predictable. Anyone can calculate Bitcoin's supply for any future block. No committee can change it without the network agreeing to a rule change.
• Fees must eventually pay for security. As the subsidy shrinks, miners rely more on transaction fees. Whether fees will be enough to secure the network long-term is one of Bitcoin's genuine open questions.

Other schedules

Not every coin follows Bitcoin's pattern, and the differences are deliberate:

• Litecoin copies the halving model: the subsidy halves every 840,000 blocks — also about every four years, because Litecoin's blocks come four times as often — and the total converges on 84 million LTC.
• Dogecoin abandoned a cap. It issues a fixed 10,000 DOGE per block indefinitely — about five billion a year. Because that amount is fixed while the total grows, the percentage inflation falls slowly over time, but the supply never stops increasing.
• Kaspa uses a smoother version of halving: instead of a sudden cut every few years, the reward steps down a little every month, adding up to a halving each year, toward a maximum supply of about 28.7 billion KAS.
• Ethereum has no fixed cap. Since moving to proof-of-stake, new ETH is issued to validators, while a portion of every transaction fee is burned. Whether total supply rises or falls at any moment depends on how busy the network is.

None of these is "right". A fixed cap maximises predictability and scarcity; ongoing issuance keeps paying for security without relying entirely on fees. Each is a trade-off chosen by design.

What halvings do — and don't — mean for you

Halvings attract a lot of attention, much of it about price. It's worth separating what's certain from what's speculation:

• Certain: the rate of new supply drops on schedule, and miners' revenue per block falls unless fees or the coin's price make up for it.
• Not certain: what happens to the price. Past halvings have been followed by large moves in both directions over different time frames, and every halving is known years in advance, so markets aren't surprised by it.
• Practical: around halvings, miner economics can shift, and on smaller chains a big drop in mining power can briefly slow blocks. That's one more reason to wait for enough confirmations on larger amounts.

Supply schedules and your keys

A coin's supply schedule tells you how much of it will exist. It says nothing about who controls the coins you hold. However scarce a coin is, coins held on an exchange are an IOU, and coins at an address only you control are yours.

SSP supports several proof-of-work coins with very different schedules — among them Bitcoin, Litecoin and Dogecoin — and holds all of them the same way: in a 2-of-2 multisig vault, controlled by your two devices.

The honest summary

New coins come from the block subsidy, and every chain sets its own rule for how that subsidy changes. Bitcoin halves it every four years toward 21 million; Litecoin does the same with four times the supply; Dogecoin issues a fixed amount forever; Kaspa halves smoothly every year; Ethereum balances issuance against fee burning.

Know the schedule of what you hold. It explains a coin's scarcity, its miners' incentives and some of its long-term risks — though not, on its own, its price.