Category: 2. Bitcoin, scarcity & trust in money

As more value is created via economic activity, new money must be introduced in the system so that the economy can continue to flow.  Grossly oversimplifying, new fiat money is created by Commercial Banks. The extent to which they create new money is rationed by the Central Bank. These are common ways:  Providing credit, like…

Money can only be useful (and sound) if the ledgers can be trusted to be accurate and honest, and if its supply is kept under control. This means unreasonable amounts of money won’t suddenly be created or destroyed, with consequential impact on its spending power. So how do fiat currencies solve this today? Simple: the…

A scarce commodity is something that has a limited supply; it isn’t easy to create, copy, or otherwise access. Physical stuff can be scarce (like we’ve seen with gold), but digital things are an entirely different matter. A byte is very easy and cheap to copy, as the music and film industries have painfully discovered…

Money is a metre/yardstick for measuring value. This aspect of money is taken for granted by everyone who participates in the economy by using it as a medium of exchange. All trade and economic activity relies on it – it’s like a universal language. And just like when we speak our own language, we don’t…

In the previous article, you learned the definition and basic characteristics of a cryptocurrency – including the distinction between the money and the money system, and the role of cryptography.  You also had a brief intro to the history and evolution of money up until Bitcoin. This should have given you a grasp on how…

What you’ll learn Why scarcity matters so much for sound money
 How the existing money system works
 Fiat money isn’t scarce & why that is a problem
 Why achieving digital scarcity is such a big deal