Good Morning Everyone,
The concept of a truly inelastic and verifiably scarce digital asset is something that i believe remains alien to most humans on the planet at present, despite having existed for some thirteen years already and being completely in the open. It’s a concept that on first glance sounds fairly simple and straight forward, but it’s such a conflicting notion compared with the world of money printing and pricing signal-distortion in which we have become accustomed, leading most to remain ignorant to the gravity of such a characteristic and failing to grasp the profound nature of this innovation we call bitcoin.
We are products of a system that is predicated on the basis of infinite growth expectations, despite the obvious reality of living on a planet of finite (albeit it adequately sufficient) resources. This system has distorted our perception of value altogether. We have become deeply confused about what is truly important and fundamental to sustain life, and have strayed along way off the path as a result of a monetary system that gears our time preference, thus our behaviour, to being increasingly short term oriented.
I believe our time preference is predominantly to blame for the lack of understanding and appreciation for the characteristic of digital scarcity. And our time preference is a symptom of a broken monetary system. The average person remains fixated on what the latest shitcoin is, or what meme stock is going to make them rich tomorrow (high time preference) - as a result of being increasingly time-poor we are incentivised to seek shorter and shorter term gains - rather than having any interest in deploying any serious cognitive resources toward making sense of the ramifications for this novel innovation. Perhaps it just seems to intangible to zoom so far out for most people? Maybe it is just not practical, and is subconsciously perceived to be unlikely to provide any kind of chemical reward compared with the surge of dopamine attained when their favourite “crypto” surges in price?
The fact of the matter is that digital scarcity does now exist. For the very first time in human history we have a verifiably scarce asset. Not only does it exist, the majority of the supply has already been issued. Which in itself is a crazy thing to realise. Bitcoin has only been running for 13 years, and already over 90% of total supply has been issued. I saw this image the other day (thanks to @bitcoinfool) and it beautifully captured the profundity of the this alien concept. Given that we’re so visually dominant, i figured it may hit home with people a little more that the pure numbers.
The image shows a circular pie chart split into 21 segments. 19/21 are filled with orange representing the already issued supply. Two segments remain black representing the remaining supply to be issued over the next one hundred and twenty odd years. When you see it like this, the visual representation of bitcoins scarcity leaps right off the page.
In thirteen short years 19m bitcoin have been mined. Over the next 120 years the remaining 2m will be issued, at which point the only way to acquire bitcoin will be to incentivise someone to sell you theirs, or by selling goods and/or services for bitcoin.
However as previously discussed in the below letter, the reality of bitcoins issuance and the nature of a truly inelastic and verifiably scarce asset is far more confronting. While the issuance continues for the next 120 years, 99% of total supply will have been issued by 2035 with the remaining 1% issued over the following 100 years.
We have already entered a new global monetary regime following the end of Bretton Woods II - What Zoltan Pozsar is calling Bretton Woods III - and it is to be a return to scarce resources being at the core of what determines value, this is a return to re-prioritising scarcity as the fundamental property which underpins money within our complex human civilization. If this is the case, it’s going to be wild to see how the world grapples with the fact that the only verifiably scarce digital asset on the planet has almost been entirely issued. Perhaps it is in this moment that the gravity of true verifiable digital scarcity truly hits home?
Time will tell.
The race is on to accumulate as much as possible of the remaining 9% of bitcoin supply in the next 13 years. No doubt by this time the nature of money will have changed forever and the realities of true scarcity likely begin to sink in.
Grateful as ever to be alive to witness history in the making.
Wishing you all well. Hope you have a great start to your week. I’ll talk to everyone tomorrow.
AK
