Appreciation Of The Existing Bitcoins Supply
This offers some insight on a fascinating aspect of Bitcoin's technological achievement. For the first time in its history, mankind may now access a scarce resource. There will never be more than 21 million existing Bitcoins supply, no matter how many people use the network, how much its value grows, or how sophisticated the technology utilized to manufacture it.
There is no way to expand supply to keep up with the rising demand. There is only one way to fulfill the demand for Bitcoins if more people want to own them: appreciation of the supply. There is plenty of space for Bitcoin to develop by using smaller and smaller units as its value increases since each bitcoin is divided into 100 million satoshis. As a result, a new sort of asset is created that is well-suited to serving as a store of value.
All types of money were inexhaustible in their supply, which meant that they were unable to store value over time. As a result of its unchanging monetary supply, Bitcoin is the ideal way to store the value created by the finite resources of human labor. Because Bitcoin is the only medium that can never be devalued, it is the cheapest method to invest in the future, regardless of how much its value grows.
A nine-year-old currency with a supply growth rate comparable to the world's reserve currencies has been embraced by millions of people throughout the globe in 2018. To put it another way, the amount of Bitcoin already in circulation was around 25 times more than the amount of new coins created that year. For now, this is still less than half of what gold's stock-to-flow ratio is; but, by 2022, the Bitcoin stock/flow ratio is expected to pass gold's, and by 2025, it will be around two times as high as gold's as long as the dynamics of gold mining remain constant. When Bitcoin's stock-to-flow ratio reaches an infinity in 2140, it will be the first time any commodity or item has done this.
Since there is a limited number of bitcoins and the pace at which new bitcoins are being created is also decreasing, this has the effect of increasing the supply of current bitcoins substantially. Bitcoin mining is therefore similar to gold mining, ensuring that as a monetary medium, relatively less time and effort would go toward securing new Bitcoin supplies than other moneys whose supply can be increased easily; and more time and effort would be dedicated to useful economic production, which can then be exchanged for bitcoins. Miners' resources will be compensated mostly for processing transactions and protecting the network rather than for creating new bitcoins as the block subsidy decreases.
Physical objects have been used as currency for much of human history. Having a physical representation of value storage made it more difficult to grow the supply of the store of value. To establish absolute scarcity in Bitcoin, which does not have any physical existence and is entirely digital, the currency must be completely digital. It had never been done before in the history of physical materials that could be divided and transported.
Large quantities of money may be sent across the globe in a matter of minutes because to Bitcoin's ability to convey value digitally rather than physically. Because of the Bitcoin tokens' rigorous digital scarcity and lack of physical constraints to moving and carrying them, they are the best of both worlds: Bitcoin may be the best-ever saving technology, if that is really the case.
The first and most essential value proposition of Bitcoin is that everybody in the globe may have access to sovereign base currency. Any Bitcoin owner is granted economic independence that was previously unavailable. It is possible for Bitcoin users to transfer enormous quantities of money throughout the world without approval from anybody. This means that the physical powers of the political and criminal realms cannot entirely delay, destroy, or seize Bitcoin's value since it is not based on any tangible object anywhere.
Individuals now have a clear technological method to escape the financial influence of the governments they live under, which has been missing since modern states came into being in the early twentieth century.