What makes Bitcoin sound money?

The term "sound money" refers to money that keeps its value because it can't be created arbitrarily. Here we go through why Bitcoin is often described in those terms.

Scarcity with a hard limit

There will never be more than 21 million bitcoin. Unlike a promise, that limit can be checked by anyone, at any time, because the rules are open and run by thousands of independent computers.

• Fixed supply: no one can print more.
• Known issuance schedule: new bitcoin arrive at a predictable rate that slows over time.

Predictability builds trust

With ordinary money you have to trust that those who control the money supply make wise choices. With Bitcoin you instead trust mathematics and open code, something you can inspect yourself.

Sound money isn't about abolishing trust, but about moving it from promises to rules.

Open and borderless

The Bitcoin network is open around the clock and works the same wherever you live. That makes it possible to save and move value without asking permission.

What sound money does not mean

• It does not mean the price stops swinging in the short run.
• It does not mean quick returns.
• It means the supply is predictable, nothing else is promised.

Want to understand the opposite? Read about inflation and purchasing power.

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This is not financial advice. The text describes properties of Bitcoin for educational purposes.