Recently, I’ve been reviewing the basic logic of Bitcoin and found that many people don’t really understand its supply mechanism. Today, let’s talk about why Bitcoin is called digital gold—the core reason lies in its scarcity design.

The total supply of Bitcoin is permanently limited to 21 million coins, which is not an arbitrary setting but the result of careful design by its creator, Satoshi Nakamoto, in the white paper. Why this number? There is actually a complete mathematical logic behind it. Satoshi adopted a clever halving mechanism: every 210,000 blocks mined (about four years), the reward for each new block is halved. This way, the rate of Bitcoin issuance gradually slows down and ultimately approaches the limit of 21 million.

Let’s look at the specific timeline to understand better. When Bitcoin was born in 2009, the reward was 50 BTC per block. In November 2012, the first halving occurred, reducing the reward to 25 BTC. In July 2016, it halved again to 12.5 BTC. In May 2020, the third halving brought it down to 6.25 BTC. And in April 2024, Bitcoin experienced the fourth halving, further decreasing the reward to 3.125 BTC. This decreasing design ensures Bitcoin’s scarcity and protects its long-term value.

Why must Bitcoin only be created through mining? This relates to the core need for decentralization. Bitcoin has no central bank or third-party institution; all transaction records are distributed across the blockchain. To ensure transaction security and reliability, a large amount of computational power is needed to verify each transaction. Miners solve complex hash calculation problems (proof of work) to confirm transactions, and they are rewarded with newly issued Bitcoin plus transaction fees. This incentive mechanism guarantees network security and automatically regulates the supply rate of Bitcoin.

Interestingly, Bitcoin’s issuance rules actually follow a convergent mathematical series. Just like 1/2 + 1/4 + 1/8 + 1/16 + ... = 1, the first four-year period produces 10.5 million coins, the second period produces 5.25 million, and so on. Ultimately, it asymptotically approaches 21 million but will never exceed it.

Besides the total supply limit, Bitcoin also has five units of measurement. The smallest unit is the Satoshi, which equals 0.00000001 BTC, named after the creator. Above that are micro-Bitcoin, milli-Bitcoin, and Bitcoin subdivisions, with the largest unit being one whole Bitcoin. This detailed unit design reflects Bitcoin’s integrity as a currency.

Therefore, Bitcoin is regarded as digital gold mainly because its scarcity is embedded in the code and cannot be changed by any institution or country. This immutable supply cap is the foundation of its long-term store of value.