Why Bitcoin’s Constant Supply Is the Strongest and Adequate Argument For it?

Why Bitcoin’s Constant Supply Is the Strongest and Adequate Argument For it?

We live in a credit-based economy. The biggest demon of the current economic system is that the Central or Federal Authorities have the right to print currency at their whim. \

Inflation is a necessary evil to drive the economy by increasing the profits for entities. However, exceeding the credit limits and increasing debts all seems to have taken an ugly turn.

Satoshi Nakamoto, the creator of Bitcoin, visioned an accountable and transparent monetary system. It has a constant rate of supply and generation designed to last for another 120 years.

Bitcoin’s Deflation Is Necessary

During the 1930s, the global presence and price of gold decreased drastically. The US Government abolished Gold in replacement for the US dollars. However, post world war II as Europe, Japan, China, Russia, and the other countries too started to make progress as well. Due to the unpredictability in foreign currencies, the US also started to increase its supply of Gold. Hence, the demand for Gold started picking up.

The price of Gold acts as a unified metrics for the global currencies of the world. As the countries make progress, they tend to increase their reserves. Moreover, during a slow-down, they resort to gold as a safe haven.

The utility of Gold is limited; gold is primarily used in jewelry and increasing the aesthetics of items. Hence, Gold is necessarily a luxury item.

We expect Bitcoin [BTC] to work as a global store of value, like gold. Hence, it must be deflationary in nature. In a credit-based economy, the percentage of deflation in Bitcoin will become essential metrics in the future.

What is Bitcoin?

According to famous academic Murad Mahmudov, Bitcoin is not just a currency; it is more than that.

He has also drawn application of the Lindy Effect theory in Bitcoin. The banks, Governments, and financial institutes have realized the potential of Blockchain technology. Esteemed Institutions have partnered with leading crypto projects or are in the pursuit of launching their own.

The next hurdle in the journey of Bitcoin to become a Full Global Economy is building trust around the Bitcoin Blockchain. This would reinforce its utility as a store of value. While Gold prices could be hurt tremendously, Bitcoin’s easy accessibility would still keep the asset globally viable.

As a Medium of Exchange

Furthermore, the smallest unit of Bitcoin: Satoshi is 0.00000001 BTC. Hence, the asset would always remain a possible mode of exchange.

Also, if accepted as a global medium of exchange, as no central authority would be able to control its supply, it will be self-regulated. Moreover, Governments can still cause inflation by regulating price and interest rates. This would deter corruption in the long run and also induce transparency in the global economy.

Nivesh

Hello, I am an Electrical Engineer currently pursuing Actuarial studies. I work as an analyst reporter for CoinGape. Here to share my knowledge and observation of the crypto space. Feel free to contact!

2 thoughts on “Why Bitcoin’s Constant Supply Is the Strongest and Adequate Argument For it?

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