, Columnist
Bitcoin’s Bulls Should Fear Its Other Scarcity Problem
As the value of this asset class rises, generating price spikes becomes increasingly difficult.
A victim of its own success.
Photographer: OZAN KOSE/AFPThis article is for subscribers only.
In the eyes of many Bitcoin advocates, scarcity is a key advantage over more conventional assets.
Unlike fiat money, which can be created from nothing on a bank’s balance sheet, or gold, which can be mined from the ground in quantities still far from being exhausted, the supply of Bitcoins was set from the start at 21 million. That means, in the words of its pseudonymous founder Satoshi Nakamoto, it should ultimately be “completely inflation free” — making it a far better store of wealth than assets whose real value declines over time.