Hardest of the Hard
Bitcoin is hard money. What is meant by this? Hard Money can be thought of, very simply, as a money that is resistant to inflation.
Hard money stands in contrast to fiat currencies such as Pounds Sterling, Dollars and Euros, all of which can be printed (inflated) by their respective Governments without end.
Hard money is backed by a physical good (specie; Copper, Silver, Gold), as opposed to being backed solely by an issuing Government, although in Bitcoin’s case the physical is obviously digital.
Hard money is understood in terms of the quantity in circulation, both in the present and in the future — it’s price is therefore dictated by the amount of demand there is within the Market.
What then makes Bitcoin the hardest of the hard?
Once there are 21 million Bitcoin in the world, no more Bitcoin will be created, ever. The existing supply will be the defining amount for all time. For the record there are currently 18.6M in circulation. No person or entity can ever produce more than 21 Million.
The monetary hardness of Bitcoin is further guaranteed by its consensus rules — the code that either accepts or rejects transaction history. These rules include, among other things, the requirement for a solution to the cryptographic challenge (Proof of Work / POW), a verification ensuring no transaction spends more Bitcoin than its sender has, and a check that no Bitcoin has been issued over the supply limit.
Finally instead of “quantitative easing”, a euphemism used by Central Bankers to describe their limitless printing of money, Bitcoin employs the exact opposite “quantitative hardening”; every 4 years the rewards given to Bitcoin miners for solving the cryptographic challenge are halved, thus affecting the rate of supply. The net effect of this is that it is anticipated that the last Bitcoin will be mined in 2140.
Bitcoin dematerialises money — but the hardness doesn’t just remain, its gets harder. Bitcoin is the hardest of the hard.
Originally published at https://www.thehodler.co.uk on December 26, 2021.
