3.1.0. Finite Coin Supply
In every nation, a Central Bank usually has the ability to produce and release an unlimited amount of fiat currencies.
Of course, we all know that the more fiat currencies are printed and released by a Central Bank, the more the value of the fiat currencies depreciates resulting in inflation of the prices of goods and services. This is the reason why one dollar today has far lesser value than it did five years ago.
In other words, fiat currencies are designed to be inflationary. The fact is: the longer you keep your fiat money in the bank, the less you own!
On the other hand, cryptocurrencies are designed to be the exact opposite of fiat currencies. One remarkable technology of a Blockchain is that there is a finite number of cryptos that can be produced and released by a Blockchain!
For instance, the Bitcoin Blockchain can produce and release a maximum number of 21 million Bitcoins. That is, there will never be more than 21 million Bitcoins in this world.
What do you think will be the impact of such limited supply on the price of Bitcoin as more and more people get to know and use the crypto coin?
This means the ratio of Bitcoin per each person dwindles as more and more people acquire the coins. Thus, Bitcoin is deflationary whereas fiat currencies are inflationary!
Remember, the more the demand and the scarcer a product, the higher the price. Gold is scarce, that is why the more the demand of gold increases, the higher its price. Interestingly, Bitcoin will be far scarcer than gold with just 21 million in total supply, and the demand is rapidly growing!
That explains why the price of Bitcoin moved from about one dollar to above 60 000 USD between 2010 and 2020, which is about 6 million percent increase in just a decade!!
Was there anything like this before in human financial history? And this is just the beginning.
This means though the costs of POW mining might expensive, yet the ever-increasing price of Bitcoin dwarfs the costs of mining, making Bitcoin mining to be very profitable. That is, any amount of Bitcoin you get from mining, no matter how little, is still highly profitable.
