ProofOfWork Show S01E04 Coin Supply & Demand!

coin supply

In this episode we explain that supply and demand, fundamental principles in economics, also apply to Bitcoin and its pricing. These forces can either increase or decrease supply and demand, thereby affecting price. Bitcoin was developed to address issues like inflation that erode people’s purchasing power over time. Traditional financial systems, managed by governments or central banks, often print more money, leading to decreased value and purchasing power of the currency. Bitcoin solves this by having a finite supply of 21 million coins, ensuring that its value is not diluted through overproduction. This offers a way to preserve value and purchasing power.