As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: […] It is secure from being stolen by strongmen or governments, and transportable across borders.” – Satoshi Nakamoto, the unknown creator(s) of Bitcoin in an e-mail exchange, August 2010.
Bitcoin's hardcoded supply policies revolve around a fixed maximum supply of21 million Bitcoinand a predetermined supply schedule embedded within its protocol. Unlike traditional fiat currencies, where central banks can adjust the money supply whenever they choose, Bitcoin operates on a fixed model. Scarcity is built into the system to mimic the properties of precious metals like gold, preventing inflationary pressures over time.
How does the Bitcoin supply work?New Bitcoin is introduced into circulation through mining. Miners were initially rewarded with50 BTC per ‘block’, and this reward undergoes a “halving event” every 210,000 blocks, or about four years. During a halving, the reward is cut in half, reducing the rate of new Bitcoin entering circulation and, therefore, slowing inflation. The last halving, which took place in April 2024, further reduced the block reward from6.25 to 3.125 Bitcoin per block, reinforcing Bitcoin's scarcity. To learn more about Bitcoin halving, please see our report:Bitcoin Halving & Beyond.
Bitcoin’s value as a digital store of value, often called “digital gold,” comes from its limited supply and growing adoption. These factors make it an attractive hedge against inflation, and therefore fiat currency devaluation. For newcomers, understanding Bitcoin’s supply mechanics is key to recognizing its unique monetary properties and long-term potential.
