LETTER #13: BITCOIN REPERESENTS THE VALUE CONSTANT.
Bitcoin can change the world because the world can't change Bitcoin.
In mathematics, constants are the numbers that are unchangeable OR the value that does not change.
We have defined the constant for length which is meter (m). The length of one meter is always the same. It doesn’t fluctuate. 1m = 100cm at every single point on the Earth.
Similarly, Kilogram (kg) is the constant for mass. One Kg weighs the same in all the countries around the world at all the times.
Imagine what would happen if they start fluctuating. For instance, one meter equals 100 centimeters today, 150 centimeters tomorrow, and 50 centimeters the day after OR, in case of Kg, one kg equals 1000g now, 1100g one hour later, and 2000g a week later.
Again, imagine I have the capacity of lifting only 20kg of dumb-bells and a day later they start weighing more than 50kg due to the fluctuations. What am I going to do? I would either have to wait until they start weighing 20kg again or order a new pair that weighs 20kg.
If I am a house builder and the length of one meter keeps on fluctuating I can never build a house with proper dimensions.
Life would become complex as we need to make calculations every time we do something. Thank God we have the constants for both length and mass.
Bitcoin - for the first time - brings the concept of ‘constant’ in the monetary ecosystem.
Unlike the currencies we use today - dollar, euro, yen ,yuan, etc. - Bitcoin’s supply is fixed at 21 million. Nobody can produce more than that, which is impossible to say for the dollar or any other currency that can be printed in trillions at the stroke of a button by a single person.
Think of Bitcoin as the ruler made of steel and the dollar as the ruler made of rubber. The rubber ruler (dollar) will give you different results at different times. For a source of absolute truth, you must have a steel ruler (Bitcoin).
When the supply of money is fixed, the prices of consumer goods fall as the productivity increases. Bitcoin enables this. If you own 1BTC, you own it out of 21M forever. Nobody can dilute your holdings by increasing the total supply of Bitcoin.
However, when the supply of money can be increased by some individuals, the price of everything rises which hurts those who save their wealth in that money. The purchasing power of this kind of money keeps on falling until it collapses entirely as it happened in countries like Weimar Germany, Zimbabwe, Lebanon, etc.
You work too hard for money. Then why let the government control and debase the money you earned.
FINAL THOUGHT….
The certainty of death gives value to life. Likewise, the certainty of supply gives value to the money.