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Bitcoin And Digital Scarcity- What You Need To Know


Nakamoto was able to develop digital scarcity because to this technical architecture. Because it is limited in supply, Bitcoin is the first example of a digital product that can't be endlessly manufactured. A digital item may be sent from one point in a network, such as by email or text message, or downloaded as a file without much difficulty, but the more correct term for these operations is copying, since the digital objects stay with their sender and can be copied indefinitely. With Bitcoin, the sender no longer owns the digital commodity once it has been sent.

For the first time, Bitcoin is the sole liquid commodity (digital or physical) with a fixed amount that cannot conceivable be raised. There was always a degree of scarcity prior to the introduction of Bitcoin. To think that any physical product is limited by its abundance on the earth is a frequent misunderstanding, since it is the work and time put into generating it that limits our ability to generate more of it. Bitcoin's scarcity has made it very valuable over time. Here's what you need to know about Bitcoin and digital scarcity.

Transactions, Value Creation, And The Supply Of Goods

In principle, an asset may be produced with a predictable low or constant rate of supply increase to enable it to continue its monetary function, but reality has always proved considerably more difficult than theory. Governments would never let private groups to create their own private currencies and thereby violate the primary means by which the government finances and expands. There would always be a great incentive for the government to raise the amount of money in circulation.

Because of Bitcoin's modest rate of supply increase, the world has finally arrived at an artificial form of money with an unbreakable guarantee. Macroeconomists, politicians, presidents, revolutionaries, military dictators, and TV commentators are all excluded from monetary policymaking with Bitcoin. The expansion of the money supply is governed by a predetermined algorithm that is implemented by every node in the network.

COPYRIGHT_WI: Published on https://washingtonindependent.com/bitcoin-and-digital-scarcity/ by Stefano Mclaughlin on 2022-03-11T08:05:19.098Z

Bitcoin's Inflation Is Immutable

A few years into Bitcoin's existence there was a very high rate of supply growth, which was not entirely credible, but as time went on the supply growth rate decreased and the network's credibility in maintaining this supply schedule has increased and continues to rise with each passing day in which there are no major changes to the network.

Scarcity is demonstrated by two hands that wait for water from the faucet
Scarcity is demonstrated by two hands that wait for water from the faucet

Bitcoin Had Passed The Market Test

When the Bitcoin network was first launched in January 2009, it was utilized only by a few of individuals on a cryptography mailing list for a period. The first day that the tokens in this network moved from being economically worthless to having a market value validated that Bitcoin had passed the market test: the network had run well enough for someone to part with real money to acquire some of its tokens. An internet exchange called New Liberty Standard sold bitcoins for $0.000994 in October 2009.

The first real-world transaction using bitcoin occurred in May 2010 when someone paid 10,000 bitcoins for two pizzas costing $25, establishing the price of a bitcoin at $0.0025. Over time, as more people became aware of Bitcoin and expressed an interest in obtaining it, its value grew.


The need for a bitcoin token is driven by the fact that it is required to run the first functioning and trustworthy digital money system. In its early days, while the network was still up and running, its digital token had a market value among small groups of cryptographers and libertarians, who attempted mining it on their own PCs and later even began buying it from one another.

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About The Authors

Stefano Mclaughlin

Stefano Mclaughlin - For the first five years of his career, Stefano worked as a financial advisor on state and local tax matters, developing internal marketing technology for his multinational tax business. With over 12 years of experience designing high-performance web applications and interactive interactions, Stefano is now a marketing technology specialist and founder.

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