- Digitally Scarce
- Bitcoin is the first and only, truly scarce, digital resource ever created in the world. This scarcity helps make it the digital equivalent of gold.
- Bitcoin’s protocol has a strictly fixed supply cap of 21 Million Bitcoin. Only that much will ever exist. That code is immutable, meaning it never changes. EVER. Satoshi can’t even add more coins if he wanted to
- Because of this, society now has the opportunity to embrace the digital equivalent to gold
- The limited supply makes the laws of supply and demand kick into overdrive, greatly increasing its volatility in the short-medium term, but overall increases in value over the long-term.
- Bitcoin is prime real-estate. Just imagine if the entire world was in a bidding war for a portion of a football field made out of gold
- Immutable Store of Value
- Today, people don’t truly own their money. The bank takes custody of your funds and promises you access to those funds.
- Actually owning and holding money is part of what gives it value; the fact that it’s yours, and no one else’s. Bitcoin gives people for the first time ever, absolute, independent ownership of their property
- Bitcoin stores/keeps its value (like gold) over time, and nothing will ever change it. You can rely on your savings in the future.
- Qualities of a good money: scarce, durable, portable, divisible, verifiable, storable, fungible, salable, and recognized across borders. Bitcoin therefore, has the properties of (the best form) money
- In order to be a good store of value, a good money must be “hard money”, or durable and hard to produce, and can never be counterfeited. This is called unforgeable costliness, and is forever embedded into Bitcoin’s code. This aspect of the code is immutable, meaning it can never be changed
- Bitcoin’s Proof of Work, (or PoW) is a mathematical representation of the unforgeable costliness/work somebody (the miners) risked just to make a bitcoin. Miners invest their own time and energy into finding that digital gold, with no guaranteed ROI
- Just as anybody can join The Bitcoin Network, anyone can be a miner, provided they have the equipment, internet and electricity. This barrier to entry is partly what makes Bitcoin independent from governments and central authorities.
- the protocol Incentivizes people who contribute computing power to the network (miners) by verifying transactions in the form of newly-“mined” coins, and/or transaction fees. You get rewarded bitcoin for verifying and securing the Network
Why: NO OTHER MONEY HAS ALL OF THESE PROPERTIES!!!
- The innovation of Bitcoin’s digital scarcity was the way out of a broken financial system where in an economic crisis, governments rescued banks at the expense of the people by taxing them through inflation
- Today, the supply of global money is dictated by central banks (primarily, the United States Federal Reserve, which controls how many dollars will be in the world economy, and for what purpose)
- The 21 Million cap is Bitcoin’s most important rule. Why?. Once it’s all made, there will never be any more Bitcoin created. Therefore, Bitcoin is a deflationary currency, which prevents bad people from stealing your money/its value by “printing” more & inflating the supply
- The 21 Million limit makes the laws of supply and demand kick into overdrive, greatly increasing its volatility in the short-medium term, but overall increases in value over the long-term.
- These coins are divisible into 100 million units each, like fractions of an ounce of gold, making Bitcoin prime real-estate. These units are called satoshis, named after the anonymous founder of Bitcoin, Satoshi Nakamoto. Just imagine if the entire world was in a bidding war for a portion of a football field made out of gold.
- Bitcoin is an inflation Hedge, a shield against the failure of today’s financial infrastructure
- Under a fiat soft-money system, authorities constantly devalue your savings by printing more money out of thin air, fix prices, and poorly reallocate funds/taxes to things that aren’t actually in your best interest
- today under the centralized, fiat-money standard, the authorities of the money can create (print) more on a whim without showing any provable work, and dilute everyone’s purchasing power. Authorities that process payments can also prevent, freeze, and even confiscate transactions because their service enables them to be the custodial owners of said funds
- Hard money flourishes in a decentralized system because nobody can own the entire supply and corrupt the money’s value and damage the economy
- Even as a hard money, gold was monopolized by governments and central banks who diluted its value by printing more paper notes than the actual supply of gold.
- Ultimately, the people give Bitcoin its value, especially as more people come to question the flaws of the economy and how it really works
- Voluntary actors in the market choose to buy Bitcoin because of its invaluable properties. The value and demand continues to rise exponentially
- Bitcoin provides the certainty that its value will last and not be corrupted, and will serve as a medium of exchange for goods and services