How do human psychological preferences for scarcity shape Bitcoin's value?

Let's talk about an interesting phenomenon first.

Why are limited edition sneakers, rare stamps, or paintings by famous artists so expensive? Their use value might not be high; the shoes might not be more comfortable than ordinary ones, and stamps can no longer be used to mail letters. But they all share one common characteristic: rarity.

This taps into a fundamental human psychology: scarcity creates value. We are inherently wired to believe that things that are difficult to obtain or limited in quantity are more valuable. There are several reasons behind this:

1. Fear Of Missing Out (FOMO): "If I don't buy it now, I'll never get another chance!" This psychology prompts us to act quickly, fearing that if we miss out, we'll never be able to acquire it again.
2. Symbol of Status and Identity: Owning something rare that others don't makes people feel special, tasteful, and capable. It's like wearing a limited edition watch; it doesn't just tell time, it also tells others, "I'm successful."
3. Expectation of Value Storage: Knowing that something is rare, we believe that more people will want it in the future, and its value will increase. "If I buy it today, I can sell it for a good price later."

Now, let's apply this logic to Bitcoin, and you'll find that its design plays on this "scarcity" psychological switch to the extreme.

How does Bitcoin achieve "scarcity"?

It's not like gold, which requires arduous mining. It's just a bunch of code; theoretically, you could just copy and paste it, right? But its designer (whoever it may be) was a master psychologist, setting two ironclad rules for Bitcoin that no one can change:

1. Fixed Supply: 21 Million Coins This is like God saying, "There are only 21 million units of gold in the world, and once it's all mined, there will be no more." Over 7 billion people worldwide are vying for these 21 million Bitcoins. Think about it, on average, each person can't even get 0.003 of a coin. This inherent sense of scarcity is the most important cornerstone of Bitcoin's value. Unlike the money in our hands (fiat currency), where governments can "print more" when they feel there isn't enough, leading to devaluation, Bitcoin's total supply is hardcoded and cannot be increased by anyone.

2. Halving This is an even more brilliant stroke. Bitcoin doesn't all come into existence at once; instead, it's slowly released to "miners" as a reward through the "mining" process. Moreover, approximately every four years, this reward automatically halves.

   • Initially, 50 Bitcoins were generated every 10 minutes;
   • In 2012, after the halving, 25 Bitcoins were generated every 10 minutes;
   • In 2016, it halved again, becoming 12.5;
   • In 2020, it became 6.25;
   • In 2024, it halved again, becoming 3.125...

   What does this design imply? It means that Bitcoin is becoming increasingly difficult to "mine," and the rate of new coin production is slowing down. This sends an extremely strong psychological signal to the market: "Look, this thing is getting harder and harder to get!" Each halving serves as a reminder to everyone of its scarcity, playing out a grand drama of "fear of missing out."

So, how does human preference for scarcity shape Bitcoin's value?

In summary:

• Created the consensus of "digital gold": It is precisely the 21 million coin supply cap and the continuous halving mechanism that make people willing to compare it to gold. People buy it not for everyday purchases, but because they believe it can, like gold, hedge against inflation and serve as a store of value. You can think of it as a "gold bar" placed on the internet, which no one can steal, and whose quantity is extremely limited.
• Drove speculative and investment demand: When people generally believe something is scarce and will become even scarcer in the future, they will hoard it, expecting its value to appreciate. This expectation attracts a large number of investors and speculators, and as more people buy, the price naturally rises. The rising price, in turn, attracts more attention, further reinforcing the idea that "it's scarce and valuable," forming a positive feedback loop.
• Conferred a sense of identity to holders: In the early days, Bitcoin holders were seen as geeks and pioneers. Now, holding Bitcoin in certain circles has also become a label for being "in the know" or "forward-thinking." This sense of belonging and identity also makes people more willing to hold it long-term rather than selling it easily, thereby reducing the circulating supply in the market and indirectly intensifying its "scarcity."

In essence, Bitcoin's value is largely determined not by its functional utility (e.g., how fast payments are) but by the story of its "scarcity" that hundreds of millions of people globally have collectively endorsed. It successfully solidified humanity's deeply ingrained psychological preference for scarce things into code, creating a new asset whose value is purely based on mathematics and psychology.