"Bitcoin is absolute scarcity." Sounds common, right? But why should you care? Itโs one of those things Bitcoiners say without really diving in. So letโs unpack it. What happens when something is scarce?
Scarce resources create competition and make people want them even more. In a free market, this competition is what drives prices up. If demand is high and supply is low, prices rise. Thatโs the marketโs way of saying, โHey, we need more of this. If you can get it, you can make money!โ Itโs a balancing act. And with commodities, it works, because the incentive is to produce more of the good.
๐ต ๐๐ก๐ ๐๐จ๐ฅ๐ ๐จ๐ ๐๐๐๐ซ๐๐ข๐ญ๐ฒ ๐ข๐ง ๐๐จ๐ง๐๐ฒ
But what about money? Usually, something is chosen as money because itโs easy to trade (liquidity). But what if the supply wasnโt limited? Well, then anyone could just print more, and boomโeveryone's hard-earned cash is worth less because the prices of goods and services rise due to the changed money supply. Not cool, right? Scarcity in money ensures that money stays reliable and keeps its value. Due to productivity increases and increasing demand for the money, a scarce money can even buy you more in the future.
๐ ๐๐ก๐ฒ ๐๐ข๐ญ๐๐จ๐ข๐งโ๐ฌ ๐๐๐๐ซ๐๐ข๐ญ๐ฒ ๐ข๐ฌ ๐ฌ๐จ๐ฆ๐๐ญ๐ก๐ข๐ง๐ ๐ฐ๐'๐ฏ๐ ๐ง๐๐ฏ๐๐ซ ๐ฌ๐๐๐ง ๐๐๐๐จ๐ซ๐
So, why is Bitcoin such a big deal? Bitcoin is the invention of digital scarcity. Nothing like it before. Even gold, which is known for being rare, still increases by about 2% a year. But Bitcoin? Its supply is fixed, forever. When you price things in Bitcoin, every tech innovation actually makes stuff cheaper because Bitcoinโs supply doesnโt change.
๐ก ๐๐ก๐ ๐๐จ๐ง๐๐ญ๐๐ซ๐ฒ ๐๐ซ๐๐ฆ๐ข๐ฎ๐ฆ
Now, about the "monetary premium." When money loses its scarcity, it stops being a good store of value. Imagine if everyone had a magic money printerโit wouldnโt be worth much. Monetary goods usually have a higher purchasing power than their use-value alone. Thatโs the monetary premium. Silver, for instance, is in high demand industrially, so its premium isnโt huge. Gold has a bigger premium. But Bitcoin? Itโs got the highest premium because it wasnโt made to be used, it was made to be money. relay.livefreebtc.dev