We'll dive into three main aspects of Bitcoin as store of value over the next three sections: Bitcoin's scarcity, network effect and decentralization. Specifics about how the Bitcoin network operates are covered in a later section called "Bitcoin's Base Layer."
There are exactly 21 million Bitcoin that will ever exist. Any change to the monetary policy requires consensus among a decentralized network of tens of thousands of nodes (pared-down computers run by Bitcoin users and miners). Firmly capped supply and decentralization together ensure that Bitcoin is an excellent hedge against inflation. No one can create extra Bitcoin and debase the value of the asset.
As more dollars chase the same fixed number of Bitcoin, Bitcoin's price will rise. This is the mechanism by which Bitcoin protects its owner from the negative effects of inflation.
Some fast facts on Bitcoin's scarcity:
Bitcoin are brought into existence through a process called mining.
Of the 21 million Bitcoin that will ever exist, more than 18.5 million have already been mined.
A quantity of 6.25 Bitcoin are mined approximately every ten minutes. This is the "block reward" or "block subsidy."
Every four years this quantity is halved, making Bitcoin increasingly scarce. The date this occurs is the "halving."
After the next halving (estimated March 2024), 3.125 Bitcoin will be mined every ten minutes.
In 2021 Bitcoin is approximately 80% as scarce as gold (as measured by stock-to-flow).
After the next halving (estimated March 2024), Bitcoin is projected to be scarcer than gold and US residential housing.
More context on Bitcoin Supply
If you're interested in stock-to-flow, here are two helpful articles. The higher the stock-to-flow value, the rarer the asset. Bitcoin's stock-to-flow is just over 50 during the period 2020-2024 and it will be over 100 after the 2024 halving. In contrast, gold's stock-to-flow in 2021 is approximately 60 . Stock-to-flow for US residential housing in 2021 is somewhere in the 80-95 range.
Stock-to-Flow for US Residential Housing