Why Invest in Bitcoin | Predetermined Bitcoin Limit

Bitcoin Investment, Predetermined Bitcoin Limit


As a result of this predetermined limit and in planning for a growing public adoption, Bitcoin’s economy is ultimately a deflationary one: the supply is fixed, but the demand is supposed to increase over time. This means that the price of goods and services expressed in bitcoins should go down over time (assuming the success of Bitcoin’s adoption).

For example, in 2010, software developer Laszlo Hanyecz participated in the first transaction exchanging bitcoins for something tangible: he bought two pizzas for 10,000 bitcoins. With Bitcoin’s price around $30,000 in early 2021, he would only have to pay 0.001 bitcoin (or 100,000 satoshis) for the same order!

So why the sub-unit chosen for Bitcoin is so small. The reason is that the blockchain does not record amounts smaller than satoshis. For example 56.4 sats is not a valid amount; it has to be either 56 or 57. As a result, the satoshi unit had to be small enough that even if Bitcoin reached a million dollars or more one day, the satoshi could still be useful to price everyday things. In that scenario, a sat would be worth a cent ($0.01).




Why Invest in Bitcoin | Predetermined Bitcoin Limit

Why Bitcoin Investment, Predetermined Bitcoin Limit

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