The asset bitcoin is a scarce electronic monetary unit. It exists within a system where the users can all have a reasonable assurance that the level of issuance is fixed and will never exceed its pre-set limit of 21 million bitcoin. Users running a full node can verify and enforce this issuance limit themselves, refusing to propagate transactions or blocks trying to break the rule. The more users accept the Bitcoin rule set, by running their own full node, the more assurance users can have that the rules they signed up for will be upheld.

Bitcoin’s supply curve is pre-set and inelastic. Unlike commodities, whose supply may increase or decrease in line with demand, bitcoin’s supply growth is predetermined and unaffected by changes in demand. Bitcoin’s production process is similar to that of gold in that it is costly. However, as the price of gold increases, more gold miners will be incentivised to extract gold, and given that the difficulty of extracting gold changes only very slowly over time the supply of gold will increase if more miners are mining. By contrast, if the price of bitcoin increases and more bitcoin miners seek to extract bitcoin, the network will increase the difficulty of mining. This difficulty is automatically adjusted every two weeks to keep bitcoin issuance in line with the predetermined supply schedule.