Bitcoin and its limited quantity offered is a misconception

Statements like the one in the headline are frustrating for many. But if we think about it a bit more carefully, it is also interesting how such statements are made in the first place. There are still respected investment managers who do not believe in the limits of Bitcoin (BTC). Their argument is that if it is so easy to fork Bitcoin Up indefinitely, then there is de facto no limit to the supply. For example, investment researcher and former hedge fund manager Jesse Felder wrote about Bitcoin in a Twitter post a few weeks ago:

Bitcoin believers rely entirely on the idea that Bitcoin is limited in availability, which makes it far more attractive than fiat currencies, which are printed like crazy by central bankers around the world. However, Bitcoin has already gone through a hardfork on several occasions, multiplying the number and type of Bitcoins in circulation. If you add up all the hardforks that Bitcoin has gone through since its inception, the total number of Bitcoins has actually grown faster than the number of dollars. That is a fact.

And Fields is far from being an isolated case. In the market and investment podcast The End Game, investment manager and writer Fred Hickey said this week

The number five crypto currency is Bitcoin Cash! Number 12 of the largest is Bitcoin SV – there are no limits to these things. If Bitcoin became too expensive, they would simply go to another. These are speculators, they pile up everything that is crypto-currencies.

That the Bitcoin community is a mere accumulation of speculators is something we can confidently reject without even acknowledging this claim with a deeper answer. Rather, we want to address the misguided idea that the Bitcoin (BTC) offer can be expanded at will by hardforks. How do these gentlemen arrive at these assumptions? After all, one can certainly not deny them a certain intelligence.

While many Bitcoiners will probably roll their eyes while reading these quotes, this article will show that there is more to it than just a lack of adequate research on the subject of Bitcoin. So let’s go on an exciting search for answers together.

Bitcoin is unique! But why?

Most readers who have dealt with crypto currencies quickly realise that Bitcoin is unique. But have you ever really thought about why this is so?

It is only partly the technology. The block chain code is open source and can be copied and adapted to create new Bitcoin-like crypto currencies. In fact, there is already a whole range of so-called Bitcoin clones. But no matter what they call themselves, they are simply not Bitcoin.

Bitcoin Cash has increased the block size, which allows for greater throughput at the expense of a higher degree of centralisation. Bitcoin SV has again increased the block size many times over. But the market clearly shows that investors prefer the original version of Bitcoin:

  • Marketcap of Bitcoin: $352,529,970,499
  • Bitcoin Cash Marketcap: $5,246,747,735 and
  • Marketcap of Bitcoin SV: $3,332,880,979

But have you ever heard an institutional investor talk at length about how Bitcoin’s SegWit scaling solution gives them more confidence in the security of decentralization than the lush 128MB blocks of Bitcoin SV? This may have happened in individual cases, but it is certainly not the rule. Moreover, I probably don’t go out of my way when I say that scalability is not a decisive investment criterion. It is not the Bitcoin-specific features that ensure that funds are predominantly invested in BTC. It is the network effects.