JimmyGT on Nostr: One of the main questions people have about Bitcoin is how its fixed 21 million unit ...

One of the main questions people have about Bitcoin is how its fixed 21 million unit supply is enforced. The answer is simple and elegant. It's enforced by the consensus of those in the network running the software. In order to participate, you must play by the rules, much like in chess. You can change the rules of chess easily any time you want, but you will have trouble finding people to play with you. When you change the agreed upon rules, you are creating a fork of the game that may be similar, but that most people will not want to play. The network effect created by all the people playing by a single set of rules is extremely powerful.

What makes this even more powerful in the case of Bitcoin is that anyone wanting to increase the supply would dilute the value of everyone else's existing holdings. There is no way that most current holders would want that to happen, so they would never agree to it. Even if a majority did by some miracle or through coercion, it would create a forked version of Bitcoin that would be less valuable than the existing one. Everyone would be incentivized to switch back to the more valuable version. This, in fact, has already happened in Bitcoin's history.

The combination of the already existing network effect, plus the incentives built into the protocol itself from the very beginning, effectively make it impossible to increase the supply. This is the first time in human history that absolute scarcity has ever been achieved. This is why Bitcoin is a once-in- a-species revolutionary technology.