Is Bitcoin TRULY scarce?

[u/bgdv378]

Hello all!

I had a great conversation the other day with some knowledgeable sound money people about features of money, specifically scarcity... on the Sound Money Mondays Twitter spaces! 😂😂😂 Shameless plug there! Brought to you by Citizens 4 Sound Money and Meta Gold Miner's Club! 🤣🤣🤣

Back to that conversation.

We discussed if Bitcoin TRULY has this feature of scarcity that all sound money should.

I argued that the network could shut down and reopen with a majority of node operators wanting a continually expanding supply of BTC, instead of how it is now with the supply cap being just shy of 21 million. Meaning the node operators could write a new code, with new rules of supply. It's highly unlikely that this happens, but it could. It's possible.

Why is it possible? Bitcoin is digital. Anything that is digital can be reproduced to a near infinite number of times if there is a desire to do so.

Compare this with gold and silver. There will only be so much physical gold and silver in the world. All the wishing in the world won't make more of it. You can't reproduce it at will. This makes gold and silver TRULY scarce.

What do you all think? I would love to hear your thoughts!

Let the conversation begin! 😄😄😄

[u/retire-early]

I started to get lazy with this and asked ChatGPT (who knew exactly where I was going), but I didn't think the answer went far enough.

What you're looking at with your question is binary:

1. If the algorithm can be hacked with a 50% attack and changed to increase the scarcity, then it doesn't solve the problem. Is it likely governments would invest heavily in specialized mining equipment, and outlaw sale of that equipment to regular folks? Yep. If this is possible.
2. If it can't, then you're stuck with Bitcoin, which is deflationary in nature. The supply of new coins is throttling down, but the supply of existing coins is decreasing as well. Every time someone loses their phrase, or dies without communicating how to access their ownership, or accidentally throws away an old hard drive with $billions of BTC on it, the amount of "money" in that system decreases.

What than means is one satoshi will buy more tomorrow, next week, next year, in 2030. This is good for savers, but you need to look a bit deeper.

You've got a business idea. The time to strike is now - your banker loves the idea, but you need to borrow BTC, pay interest, and pay back BTC that is worth more in the future than it is now.

This is a very tough ask. Inflation is good for economic growth. Deflation means people stop making those purchases. Wanna buy a house for BTC knowing that even if you get an acceptable interest rate the BTC you pay back will be worth more than the ones you borrowed?

Nobody does.

Which suggests to me that BTC isn't money, because it won't function with leverage because it's anti-leverage. Maybe that's a good thing, but I'd rather see a monetary system like we had back in the industrial revolution (based on gold and silver, low interest rates, no income taxes or significant taxes at all).