The Valuation Problem

"There is nobody to adjust the bitcoin money supply as the population of users grows. That would have required a trusted party to determine the real world value of things."

Satoshi Nakamoto, 8 February 2009

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Satoshi Nakamoto, Bitcoin's pseudonymous inventor, was acutely aware of Bitcoin's elasticity problem. After all, his intent was to develop a better money, and a good money must have a stable purchasing power. He was unhappy about the fact that a growing number of users would mean that the price of Bitcoin would go up.

Writing in 2009, Satoshi saw no way to adjust the money supply: "If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that."

The Bitcredit Solution

Bitcredit solves the valuation problem by using real world data to determine the correct currency supply, as follows:

Read on: Real bills