The BTC Scarcity Model describes Bitcoin’s inherent design feature that limits its total supply to 21 million units. This model is enforced by its protocol, which includes periodic halving events that reduce the rate at which new bitcoins are created. The fixed and decreasing new supply establishes a predictable constraint on the asset’s availability. This foundational principle differentiates Bitcoin from fiat currencies, which lack such predetermined supply limits.
Context
The BTC Scarcity Model is a central tenet of Bitcoin’s value proposition, often discussed in financial reports concerning digital assets. Debates frequently involve its effectiveness in maintaining value over time, particularly against inflationary pressures. Understanding this scarcity mechanism is essential for comprehending Bitcoin’s economic appeal and its comparison to traditional stores of value.
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