Difficulty adjustment is the most reliable technology for making hard money and preventing the stock-to-flow ratio from declining, and it makes bitcoin fundamentally different from every other money. Whereas the rise in value of any money leads to more resources dedicated to its production and thus an increase in its supply, as bitcoin's value rises, more effort to produce bitcoins does not lead to the production of more bitcoins. Instead, it just leads to an increase in the processing power necessary to commit valid transactions to the bitcoin network, which only serves to make the network
...more
