However, Nakamoto’s invention, through the usage of the Proof-of-Work mechanism in a distributed ledger, enabled computers running a piece of software to enforce strict spending conditions that prevented a digital representation of value to be spent twice for the first time – or at least made it prohibitively expensive to do so.
While miners and nodes together work through the issuance and enforcement of bitcoin, investors interested in acquiring ever-more scarce BTC have to bid their way through the limited supply of the asset.
The block reward, as it is called, has been cut in half every 210,000 blocks – roughly every four years – ever since Nakamoto mined the first one which yielded a 50 BTC reward.
Curiously, the 21 million supply cap of the Bitcoin protocol isn’t written in its white paper or its code.
In addition to bringing scarcity to the digital realm, Bitcoin therefore also enables a predictable monetary policy scheduled ahead of time, which breaks away from the current monetary system where governments and policymakers can increase the issuance of money as we’ve tangibly experienced over the past couple of years.
As the block reward trends to zero until the next century, new bitcoins will not be issued and miners would reap only the fees of transactions on the Bitcoin blockchain.
In addition to protecting people’s purchasing power, with its predictable policy Bitcoin enables planning for the future as users can rest assured that nobody will debase their money.
Currently, only a small percentage of the world’s population truly grasp the unique concepts of programmatically decentralized and scarce money, so while the Bitcoin price might trend to infinity over the long term, that won’t likely become a reality until most of the global population – or most of the world’s capital – starts understanding that.