Bitcoin’s Mathematical Monetary Policy Is Far More Predictable Than Gold and Fiat Currencies – Economics Bitcoin News

This past April, records show that 19 mil­lion bit­coins have been mined into exis­tence and 133 days lat­er, there are 1.88 mil­lion bit­coins left to mint today. The network’s block sub­sidy halv­ing is expect­ed to occur on or around April 20, 2024, as there are less than 91,000 bit­coins left to mine until that point. While Bitcoin’s infla­tion rate per annum is 1.73% today, after the halv­ing in 2024, the cryp­to asset’s year­ly infla­tion rate will be down to 1.1%.

The Institute of Mathematics: ‘Bitcoin Can Only Function Because of the Clever Mathematics Which Is in the Background Enabling It to Exist’

Time goes by fast and today, there’s less than two years left until the next Bit­coin reward halv­ing takes place rough­ly 617 days from now. Bit­coin gives min­ers a reward every time a block is dis­cov­ered by a min­er ded­i­cat­ing hashrate to the net­work. At the time of writ­ing, min­ers get 6.25 bit­coins per block and on or around April 20, 2024, the block reward will be cut in half to 3.125 bit­coins per block. At that time, it will be a lot more dif­fi­cult to obtain bit­coins via the min­ing process and today, there are only 1.88 mil­lion bit­coins left to mine.

Bit­coin is a very pre­dictable mon­e­tary net­work that oper­ates in an autonomous fash­ion. Unlike the unpre­dictable infla­tion rate in the U.S., peo­ple can safe­ly pre­dict Bitcoin’s infla­tion rate per annum. There’s no stim­u­lus added to the equa­tion and cen­tral bankers can­not change Bitcoin’s issuance rate per year on a whim as they often do when there’s an ‘emer­gency.’ When the next Bit­coin halv­ing takes place, Bitcoin’s issuance rate per year will be 1.1%. With Bitcoin’s open net­work, the pub­lic knows this for a fact. The Fed­er­al Reserve, on the oth­er hand, can cause busts and booms by increas­ing the mon­e­tary sup­ply and hik­ing and low­er­ing the bench­mark fed­er­al funds rate.

Gold’s Correlation to Inflation and the Precious Metal’s so-Called Scarcity

While the pre­cious met­al gold is con­sid­ered scarce and peo­ple sus­pect the price of gold will rise dur­ing eco­nom­ic uncer­tain­ty, that’s not nec­es­sar­i­ly a fact. Research shows that gold has “an extreme­ly low cor­re­la­tion to infla­tion.” While Bit­coin is a very pre­dictable finan­cial sys­tem, the cryp­to asset itself has a low cor­re­la­tion to infla­tion as well. As the con­sumer price index (CPI) in the U.S. and infla­tion rates across the world have risen, bit­coin (BTC) dropped in val­ue while infla­tion print­ed high­er peaks month after month. While BTC hasn’t seen much cor­re­la­tion with infla­tion — like gold and sil­ver — it is still a more pre­dictable asset class than pre­cious metals.

We have rough esti­mates on how much gold is mined annu­al­ly, as sta­tis­tics show that rough­ly 2,500 tons are mined out of the earth every year. But thanks to gold smug­gling, that esti­mate is real­ly just an edu­cat­ed guess. Sur­prise gold deposits also hurt gold’s alleged scarci­ty fac­tor and it is well known that there are mas­sive gold deposits under the ocean floor, and with­in aster­oids in space as well. How­ev­er, at present, humans can­not access the gold in space or under the depths of the ocean. Gold is still con­sid­ered scarce despite these ele­ments. A U.S. Geo­log­i­cal Sur­vey esti­mate says there’s rough­ly 50,000 tons of gold under the earth’s sur­face, but the esti­mate is assessed as “a mov­ing number.”

Gold and Fiat Currency Issuance Rates Are Not Reliable, While Bitcoin Is a Far More Predictable Monetary Asset

As far as Bitcoin’s mon­e­tary sup­ply is con­cerned, the pub­lic knows for a fact that there will only be 21 mil­lion bit­coin. With gold we know there’s rough­ly 20% of the earth’s gold remain­ing, but because some meth­ods of min­ing are uneco­nom­i­cal right now, there’s a chance they could become prof­itable in the future. Mean­ing, there’s a chance that tech­nol­o­gy advances enough to where gold min­ers can access the pre­cious met­als buried under the ocean floor or in aster­oids out in space. If this hap­pened, gold and oth­er pre­cious met­als could become a lot less scarce just like the fiat mon­ey cen­tral bankers print on a whim. With Bit­coin, we know that’s not the case, and won’t be, as the network’s infla­tion rate per annum will con­tin­ue to decline.

At the time of writ­ing, we know the Bit­coin infla­tion rate is around 1.73% and as men­tioned above, by the next halv­ing it will shrink to 1.1% in 2024. By the next year in 2025, Bitcoin’s infla­tion rate per annum will drop below 1% and by the 2028 halv­ing, the issuance rate will be around 0.5% per annum. We also know that the last bit­coins will be mined in the year 2140, but we are not cer­tain about the final­i­ty of gold min­ing. More­over, after the cen­tral bank’s mon­e­tary expan­sion over the last two years, esti­mat­ing the infla­tion rate bankers set is like try­ing to read tea leaves.

While bit­coin may not be the best hedge against infla­tion, at least for right now, we can guar­an­tee that the asset is scarce and far more pre­dictable than any pop­u­lar mon­e­tary asset issued or mined today.

What do you think about Bitcoin’s Math­e­mat­i­cal Mon­e­tary Pol­i­cy being more pre­dictable than gold or fiat cur­ren­cies? Let us know what you think about this sub­ject in the com­ments sec­tion below. 

Jamie Redman 

Jamie Red­man is the News Lead at Bitcoin.com News and a finan­cial tech jour­nal­ist liv­ing in Flori­da. Red­man has been an active mem­ber of the cryp­tocur­ren­cy com­mu­ni­ty since 2011. He has a pas­sion for Bit­coin, open-source code, and decen­tral­ized appli­ca­tions. Since Sep­tem­ber 2015, Red­man has writ­ten more than 5,700 arti­cles for Bitcoin.com News about the dis­rup­tive pro­to­cols emerg­ing today.

Image Cred­its: Shut­ter­stock, Pix­abay, Wiki Commons