>> If the supply increase was predictable and everyone knew about it, like a steady 2% bump in gold each year, markets could theoretically adjust smoother prices would gradually factor in the extra supply, avoiding sudden shocks. Long-term holders would still take a hit, but it’d be less brutal since they could plan for the dilution.
like say for example... Bitcoin?
yeah i guess markets could "theoretically" adjust to the supply increase 🤣
Bitcoin has a hard cap of 21 million
BItcoin also has a diminishing security budget. Nothing one should be proud of.
In economic and cryptographic terms, Bitcoin’s so-called diminishing security budget is not a vulnerability but a deliberate design feature fostering resilience and innovation.
The halving mechanism, reducing block subsidies to 3.125 BTC post-2024, aligns with Austrian economic principles of sound money, ensuring scarcity while incentivizing miners through rising transaction fees and Bitcoin’s appreciating value.
Historical data shows network hash rate recovering post-halvings-2020 saw a 25% dip followed by a 20% surge within months-demonstrating market-driven adaptability.
Bitcoin’s unstoppable worldwide free market and location-agnostic mining incentivizes energy advancement, efficiency, innovation and sustainability.
#Bitcoin also enables the utilization of wasted and stranded energy. It harnesses remote and renewable energy, enabling infrastructure growth in underserved regions like sub-Saharan Africa (check of the company "Gridless").
Far from a flaw, this incentivizes global participation, securing the network as a public utility for an automated future, akin to essential software for AI-driven systems.
Unlike inflationary models, Bitcoin’s transparent, finite supply fortifies it against centralization risks, ensuring long-term security and uncensorable integrity.
Looking ahead, as block rewards approach zero over the next century, Bitcoin’s rising value ensures miner incentives endure, with each Satoshi carrying greater purchasing power.
This drives global participation, leveraging energy innovations-from stranded renewables to micro-mining integrated into devices-securing the network as a public utility.
Much like essential software, mining will underpin secure, uncensorable monetary and communication systems, including AI and drone networks, reinforcing Bitcoin’s decentralized integrity against any centralization threat.
Speculating on Bitcoin’s future security budget overlooks its proven resilience. Altering a system, robustly designed for millennia of sound money and valued by millions, to address theoretical flaws risks disrupting its intricate design and balance.
Such shortsighted interventions ignore Bitcoin’s market-driven adaptability, evidenced by post-halving hash rate recoveries, and its endurance against countless critics since 2009, from early skeptics to "crypto" enthusiasts and central banking naysayers, proving its design’s foresight.
You're evading the point, this reply addresses your comment "explain to me how gold is still a solid SoV for 4000 years DESPITE a 1-2% supply inflation." In relation to monero.
Again, bitcoin is hard capped at 21 million, distributing the set amount is different than an uncapped supply increase
Distributing a capped supply and a constant tail emission is effectively the same in regards to predictability. All information is known ahead of time to the market VS unpredictable centralized cantilliion fiat inflation
Also, less supply doesn't necessarily and always = more scarce which is a function of both supply and demand. You can't control demand.
https://github.com/libbitcoin/libbitcoin-system/wiki/Scarcity-Fallacy
Your point about money demand and purchasing power is well-taken but incomplete.
In monetary economics, the predictability of a currency's supply does not inherently ensure its efficacy as a store of value. Bitcoin's protocol-enforced scarcity, capped at 21 million coins with diminishing issuance, aligns with Austrian economic principles of sound money, prioritizing absolute scarcity and verifiability over elastic supply models like Monero's tail emission.
As Saifedean Ammous argues, Bitcoin's transparent ledger and scalable divisibility, bolstered by second-layer solutions like ecash or Lightning as experienced here on Nostr, deliver both robust integrity and private, efficient transactions-outstripping alternatives prone to dilution or hidden centralization risks.
Even a tiny amount of money, like one dollar, could theoretically supply an entire economy if it’s divisible enough.
Author of The #Bitcoin Standard, Saifedean writes: “What matters in money is its purchasing power, not its quantity, and as such, any quantity of money is enough to fulfil the monetary functions, as long as it is divisible and groupable enough to satisfy holders’ transaction and storage needs.”
This comes from a summary of the book on Medium, which captures the essence of his argument about divisibility being key to a currency’s functionality, not its total amount.
Something else he's said that I agree with: Money’s effectiveness depends on how well it can be divided to meet economic demands, not how much of it exists. For example, even a single dollar could work if it could be split into tiny fractions for transactions, much like how Bitcoin’s is almost infinitely divisible supports its scalability and rids any concern of "elasticity".
A fixed supply, when paired with sufficient divisibility, can dynamically adapt to demand through market-driven adjustments in purchasing power, not artificial supply expansion. In summary, Bitcoin’s current and potential infinite divisibility through protocol upgrades or layered solutions eliminates the need for an elastic supply while preserving its scarcity.
This makes it a superior alternative to gold, which is prone to capture and supply shocks, fiat, which suffers from centralized overissuance or any ever increasing commodity, even if the increase is predictable.
Additionally, Bitcoin’s strictly capped supply of 21 million coins, paired with its scalable divisibility, distinguishes it from cryptocurrencies with perpetually increasing issuance, even if predictable.
Such coins, akin to commodities, risk gradual dilution of value and susceptibility to centralized mining incentives, undermining their long-term reliability as a store of value compared to Bitcoin’s unalterable scarcity.
By enabling transactions at increasingly granular levels, Bitcoin ensures that its fixed supply of 21 million coins can meet the demands of a global economy without diluting investors, rendering the elasticity argument obsolete.
Saifedean argues that Bitcoin’s fixed supply is a cornerstone of its value as a money.
Unlike fiat currencies, which central banks can print at will, or even gold, which can see supply shocks from new mining tech or discoveries, Bitcoin’s hard cap is coded into its protocol, making its scarcity absolute and predictable.
This fixed supply with new issuance halving roughly every four years mimics the increasing difficulty of extracting gold but without the physical world’s vulnerabilities, like new mines flooding the market.
In the book, he says Bitcoin’s supply schedule “ensures that at any point in time, there will only ever be a fixed amount in circulation, and no authority can change or violate this,” which he contrasts with gold’s historical supply swings, like the Spanish conquest or the California Gold Rush mentioned earlier.
This ties into his broader point that scarcity, enforced by code rather than physical limits, makes Bitcoin resistant to the capture and manipulation gold falls prey to.
>"In monetary economics, the predictability of a currency's supply does not inherently ensure its efficacy as a store of value."
I didn't claim this. My point was a similar one. Just like predictability, less supply or capped supply does not necessarily = scarcer. You're completely ignoring the other side of scarcity which is demand.
If there is a supply of one, yet no one demands it, there is no scarcity. Similarly if a good has a smaller capped supply that is less demanded, and another good has a larger continuous supply with much more demand, the latter can be more scarce at any point in time than the former.
>"This makes it a superior alternative to gold, which is prone to capture and supply shocks, fiat, which suffers from centralized overissuance or any ever increasing commodity, even if the increase is predictable."
Those are disadvantages yes, but you're ignoring other advantages gold has over Bitcoin (fungibility, privacy, network effect, wider acceptance, independent of digital infrastructure, longer proven history as SoV, physical, doesn't cease to exist without miners, etc). What properties people value more than the other is subjective.
>"...even gold, which can see supply shocks from new mining tech or discoveries"
Threats from new technology apply to Bitcoin as well if not more so. Easy example is the threat of quantum computing potentially breaking it along with what that would do to confidence in it as a SoV
>"Bitcoin’s hard cap is coded into its protocol, making its scarcity absolute and predictable."
Capped supply, predictability, or code alone can't enforce SoV - a network of people must be in consensus with it. If that network dilutes with growing "normies" that become the majority, and government entices them with carrots and sticks down the road to move their money to a fork, with a supply controlled by the state, the smaller "original" network might still exist, but there goes the SoV narrative.
Value is indeed subjective, and here it's driven by sound money (store of value, medium if exchange) properties - scarcity, portability, divisibility, fungibility, durability, verifiability, and universal demand.
Bitcoin's protocol, with its unalterable cap, incorruptible design, nation-state resistance, and support for uncensorable systems like Lightning and Nostr, uniquely satisfies these criteria, drawing global demand unmatched by any asset in history.
