In a world where money is infinite, the most valuable thing is something that isn’t
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The lunch set that cost RM1.50 in my childhood costs RM3 today. If you’ve read the earlier pieces in this series, you know why — governments expand the money supply by structural necessity, and the cost arrives silently through prices. The response is to hold assets whose supply doesn’t bend to the same political pressures.
But not all assets are equal in this regard. There’s a ladder.
At the bottom: fiat currency — infinite supply, government-controlled, depreciating by design. Further up: property and stocks — real and productive, but dependent on market conditions and subject to cycles. Then: metals like gold — scarce, outside monetary policy, thousands of years of institutional trust. And at the top of the ladder, a more recent and more extreme version of the scarcity argument: Bitcoin.
Understanding why Bitcoin sits where it does requires understanding what makes gold work — and where gold’s limits are.
Gold: The Original Hedge, and Its One Flaw
Gold has served as a store of value for over five thousand years. It sits outside any government’s balance sheet. No central bank can create more of it. No political decision can debase it. Across empires, currencies, and financial crises, gold has retained purchasing power in ways that the paper money of each era eventually didn’t.
But gold has one flaw that becomes apparent when you look closely: its supply is limited in the short run, but not in the long run, and crucially — it responds to price.
When gold prices rise high enough, previously uneconomical mining operations become profitable. New mines get funded. Exploration accelerates. Equipment that wasn’t worth deploying at $800 per ounce becomes worth deploying at $2,500. The supply curve bends toward price. Not quickly — mining is a multi-year process — but it bends. Gold’s scarcity is real, but it’s geological and economic scarcity, not mathematical scarcity. Human ingenuity and capital can, over time, find more of it.
This is not a fatal flaw. Gold has still vastly outperformed most fiat currencies over any long timeframe. But it is a ceiling on the purity of the scarcity argument. And it’s the exact problem Bitcoin was designed to solve.
Bitcoin: Scarcity by Code, Not Geology
Bitcoin’s supply is fixed at 21 million coins. Not approximately. Not subject to revision. 21 million, hardcoded into the protocol, enforced by every node in the network simultaneously.
No miner can create more. No government can legislate more. No institution can lobby for more. The supply schedule was written in 2008 and has executed exactly as written every day since. Every four years, the rate at which new Bitcoin enters circulation halves — a mechanism called the halving — until eventually no new coins are created at all. At that point, the only variable left in the equation is price.
This is a categorically different kind of scarcity than gold. Gold’s scarcity is subject to the economics of extraction. Bitcoin’s scarcity is mathematical. You cannot drill for more of it. You cannot fund an expedition to find a new deposit. The number is the number.
You can, however, own a fraction. Bitcoin is divisible to eight decimal places — one hundred millionth of a coin, called a satoshi. This means the fixed supply doesn’t create an access problem as prices rise. It creates an incentive to enter early, when your fraction of the total supply is acquired at a lower valuation. The fraction doesn’t change. The world’s valuation of that fraction does.
Why Bitcoin Was Created
The timing of Bitcoin’s creation is not coincidental.
On October 31, 2008 — six weeks after Lehman Brothers collapsed and governments around the world began emergency interventions in financial markets — an anonymous figure using the name Satoshi Nakamoto published a nine-page paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper proposed a decentralized system for transferring value without banks or governments as intermediaries.
On January 3, 2009, Satoshi mined the first Bitcoin block — the genesis block. Embedded in the data of that first block was a headline from The Times newspaper: “Chancellor on brink of second bailout for banks.” It was both a timestamp and a statement. Bitcoin was not an accident of timing. It was a direct response to governments having unlimited power over the supply and stability of money.
Satoshi wrote in a February 2009 forum post: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Everything we covered in the earlier pieces in this series — the electoral trap, the COVID printing, the debt mechanism, the stablecoin strategy — is exactly the problem Bitcoin was engineered to circumvent. Not by asking governments to behave differently. By making their behavior irrelevant to the supply of a separate currency.
Volatility as Price Discovery
The obvious objection is volatility. Bitcoin has dropped 50%, 70%, even 80% from peak prices multiple times. How can something that swings that dramatically be a store of value?
The honest answer is that Bitcoin is a store of value that hasn’t finished being discovered.
When a company IPOs, the first weeks and months of trading are chaotic. Price swings dramatically as the market argues about what the company is worth — what multiple of earnings, what growth rate, what risk premium. Slowly, as quarters of earnings arrive, as analyst coverage builds, as institutions accumulate positions, the range tightens. The asset matures into its valuation.
Bitcoin is in a years-long version of that process — for an entirely new category of asset. The volatility is the sound of the market arguing about whether the scarcity argument holds, whether adoption will continue, whether governments will accept or suppress it, whether the institutional infrastructure is real. As each of those questions gets answered — and they are being answered, progressively — the range tightens.
Gold had centuries to stabilize. Bitcoin is sixteen years old. The volatility is not evidence that the thesis is broken. It is evidence that the thesis is still being priced.
The Institutional Arc
For the first decade of Bitcoin’s existence, institutional finance treated it as a curiosity at best, a fraud at best. Larry Fink, CEO of BlackRock — the world’s largest asset manager — once called Bitcoin an “index of money laundering.”
Then something changed.
BlackRock’s iShares Bitcoin Trust, launched in January 2024, accumulated over 662,500 BTC by June 2025 — more than 3% of Bitcoin’s total supply — representing $72.4 billion in exposure. It took SPDR Gold Shares over 1,600 trading days to reach $70 billion in assets under management. IBIT did it in 341.
In 2025 alone, institutions acquired 944,330 BTC — surpassing the total amount purchased across all of 2024. Pensions, sovereign wealth funds, and endowments are now allocating. The CLARITY and GENIUS Acts are moving through US legislation to establish Bitcoin as a recognized asset class alongside stocks and bonds.
There’s an irony worth naming: Bitcoin was built to escape institutional finance, and now institutional finance is selling it to retirees in ETF form. Early Bitcoin believers argue that this absorbs and dilutes the original ethos — a form of money outside state control, now distributed by the same banks the genesis block implicitly criticized.
That tension is real. But it doesn’t change the underlying math. The supply is still 21 million. The institutions buying Bitcoin don’t create more of it. What they do change is the holder profile — and the holder profile is the most important signal of where an asset is going.
When individuals speculate on Bitcoin, it looks like a casino. When BlackRock, sovereign wealth funds, and public company treasuries hold it on their balance sheets, it begins functioning like a vault. The asset didn’t change. The conversation around it did — permanently.
The Tax Cycle as a Practical Note
One pattern worth understanding for anyone considering an entry point: Bitcoin tends to weaken in December.
This isn’t sentiment or superstition. It’s structural. Institutions holding Bitcoin with unrealized gains can sell near year-end to harvest losses, reduce taxable earnings on their balance sheets, and re-enter in January. Until tax treatment of crypto is standardized with holding period rules or other adjustments, this seasonal pressure will likely persist.
For patient, long-term investors, December weakness is a feature, not a warning. It’s a predictable re-entry window created by institutional tax mechanics — not by any change in the underlying thesis.
The Super Cycle Case, Plainly Stated
The argument for Bitcoin over the long term isn’t complicated once the components are in place:
Fiat currency supply is infinite and expanding by political necessity. Bitcoin supply is fixed at 21 million, enforced by math. Demand is growing — retail adoption continues, institutional allocation is accelerating, and nation-states are beginning to hold it as a reserve asset. When all coins are mined, supply literally cannot increase regardless of price. Demand, however, has no similar ceiling.
Fixed supply plus structurally growing demand, sustained over decades, means the floor keeps rising. Not in a straight line — the volatility is real and will continue as the asset matures. Not without risk — adoption could stall, regulation could shift, a better technology could emerge. But the asymmetry of the bet, for those who enter with a long enough time horizon, is unlike anything available in traditional asset classes.
The growth is not a gift. It is compensation for bearing the uncertainty of an asset still mid-discovery, still building its institutional infrastructure, still being argued about in legislatures and boardrooms. The people who held through the previous cycles — through the 80% drawdowns, through the regulatory threats, through the years when calling Bitcoin a store of value was considered eccentric — are the ones for whom the compounding has been most significant.
Risk comes with return. In this case, the risk is visible and the return is still in progress.
Previous Article: You Can’t Beat Inflation by Saving. Here’s What Works Instead.
The Scarcity Ladder: Bitcoin, Gold, and the Case for Fixed Supply was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.