In 2020, my mother asked me why her grocery bill had gone up so much. She wasn’t complaining about buying more. She was buying the same things. Same store, same brands, same quantities. The bill was just higher, and it kept getting higher. I tried to explain inflation to her. She looked at me and said, “But who’s taking the money?” That question stuck with me. Because she was more right than she knew.
Fiat currency, inflation, and Bitcoin’s fixed supply are three concepts that seem technical until you understand the mechanics. Then they become personal. In South Africa, we’ve lived those mechanics more viscerally than most. The rand has lost roughly 99% of its value against the dollar since the early 1970s. That’s not bad luck. That’s a system working exactly as designed, for some people, and not for others.
What fiat currency actually is
The word “fiat” is Latin for “let it be done.” A fiat currency is money that has value because a government declares it to have value. Not because it’s backed by gold, silver, oil, or any physical commodity. Just because the state says so, and because enough people collectively agree to act as if it’s true.
This hasn’t always been the system. For most of recorded history, money was tied to something real. Gold and silver coins were money because they had intrinsic value, they were the thing of value, not a representation of it. The gold standard, which linked paper notes to fixed quantities of gold, provided a brake on government spending. You couldn’t print money you didn’t have the gold to back.
That brake came off in stages. The US dollar, the world’s reserve currency, made its final break from gold in 1971, when President Nixon unilaterally ended the Bretton Woods agreement and severed the dollar’s link to gold entirely. Every major currency since then has been, in principle, infinitely printable. The constraint on money creation became political will rather than physical reality.
Milton Friedman spent decades arguing that inflation is always and everywhere a monetary phenomenon. He meant something specific: when you increase the supply of money faster than the supply of goods and services, prices rise. It’s not complicated. More money chasing the same amount of stuff means each unit of money buys less. That’s inflation. It’s not an accident. It’s not a glitch. It’s the predictable arithmetic of expanding a currency’s supply.
What money printing actually looks like at scale
The scale of money creation in the past two decades has been extraordinary. Between 2020 and 2022 alone, the US Federal Reserve expanded its balance sheet by roughly five trillion dollars, more than it had expanded in the preceding century combined. The European Central Bank and the Bank of England ran comparable programmes. Central banks in emerging markets, including the South African Reserve Bank, followed their own versions of the same playbook.
The inflationary consequences were entirely predictable to anyone who understood the underlying mechanics. When economies were locked down in 2020 and money was pumped in to compensate, the additional currency didn’t immediately produce more goods. It sat in the system, waiting. When supply chains loosened and spending resumed in 2021 and 2022, the price increases hit everywhere at once. Petrol. Food. Building materials. Insurance. The rand’s purchasing power fell further. South Africans who had savings denominated in rands watched those savings quietly erode.
This is the system working as designed. Not as advertised, perhaps, the official mandate of central banks is price stability, but as the underlying mechanics dictate. When you have the power to create money and the political pressure to use it, you use it. And the cost of using it is borne most heavily by people who hold savings in the currency you’re diluting.
My mother wasn’t wrong to feel that someone was taking the money. They were. Just not in a way that shows up on a receipt.
Why Bitcoin’s fixed supply is not a minor technical detail
Bitcoin was created in 2008 and launched in January 2009. Satoshi Nakamoto, whose identity remains unknown, embedded into the protocol a supply cap of 21 million bitcoin. Not as a policy choice that could be reversed. Not as a guideline. As a mathematical constraint enforced by the protocol’s code and maintained by the consensus of a global decentralised network.
New bitcoin enters circulation through a process called mining, and that issuance is scheduled to decline over time. Every four years approximately, the rate at which new bitcoin is issued is cut in half, an event called the halving. By 2024, roughly 19.7 million of the 21 million bitcoin Had already been mined. The remaining supply Will be issued in decreasing quantities over the next century, with the last bitcoin expected to be mined around 2140.
Nobody can change that schedule. No central bank board can vote to expand it. No government can pass legislation requiring more bitcoin to be created. No CEO can issue a memo accelerating the timeline. The protocol enforces the supply cap, and the network, tens of thousands of nodes running worldwide, enforces the protocol. It Would require the coordinated agreement of a global majority of participants to change it, and no such agreement Has ever come remotely close to forming.
For someone who Has grown up in a country where the currency Has been debased for decades, this is not a minor detail. It is the foundational property that makes Bitcoin a different kind of monetary asset.
The mechanics of scarcity and what it means for savings
Scarcity alone doesn’t make something valuable. Lots of things are scarce that nobody wants. What matters is scarcity combined with demand, combined with utility, combined with verifiability. Bitcoin Has all four. There Will only ever be 21 million. People want it, and that demand Has grown every year since Bitcoin’s inception. It functions as a bearer asset and a settlement network. And anyone can verify the supply at any time by examining the blockchain.
Compare that to the rand. The South African Reserve Bank publishes money supply statistics, but the average person Has no way to verify, in real time, how many rand exist or are being created. You trust the institution to manage the currency responsibly. And you absorb the consequences when it doesn’t, or when political pressures override monetary discipline.
With Bitcoin, there is no institution to trust. There is code, and mathematics, and a network that enforces both. That’s an unusual thing to say about a monetary asset, but it’s accurate. The rules are public, auditable, and unchangeable by any individual actor. In a world where monetary policy is increasingly shaped by political expediency, that property is more valuable than it might initially appear.
The South African context matters here
I think South Africans are better positioned than most to understand what a sound monetary asset actually means. We Have lived through the rand trading at roughly four to the dollar in the late 1990s, then collapsing to over 19 to the dollar by the early 2020s. We Have watched the purchasing power of local savings erode in real terms against any hard international benchmark. We Have experienced load shedding that is, in part, the consequence of fiscal mismanagement, of a state that spent what it didn’t Have and borrowed to cover the rest.
These aren’t abstract macroeconomic phenomena. They are the reason families who saved diligently for thirty years find their retirement funds don’t go as far as they expected. They are the reason young South Africans increasingly think about emigration as a financial strategy, not just a lifestyle one.
Bitcoin doesn’t solve all of those problems. But a monetary asset with a fixed, verifiable, unchangeable supply that is not controlled by any government or central bank addresses the specific mechanism by which savings get eroded. It doesn’t require you to trust the SARB, the ANC, or any other institution to preserve the value of what you’ve set aside.
What the critics get right and where they miss the point
The standard criticism of Bitcoin’s fixed supply is that it makes the currency deflationary, that prices denominated in Bitcoin Would fall over time as the economy grows but the currency supply stays fixed, and that deflation is economically damaging because it encourages hoarding over spending.
There’s something to this argument in the context of debt-based economies where deflation can trigger debt spirals. But the criticism misses the point that Bitcoin is being proposed not as a replacement for all economic activity but as a savings asset, a store of value, not necessarily as the primary unit of account for everyday transactions. The question isn’t whether Bitcoin is the best medium for buying bread. The question is whether it preserves purchasing power over a ten or twenty year horizon better than a government-issued currency does. The data since 2009 suggests it does, dramatically so.
Michael Saylor at MicroStrategy made this argument extensively from 2020 onward, and it resonated with a growing number of institutional and individual investors. His thesis wasn’t that Bitcoin Would replace the dollar. It was that holding dollars over time is a losing strategy for wealth preservation, and that a fixed-supply asset is a superior alternative for the portion of a balance sheet dedicated to long-term savings. I covered this institutional adoption dynamic in detail in The Strategic Reserve: Bitcoin as the Ultimate Treasury Reserve Asset (SimplB, 2025), which traces how that reasoning Has spread from individual investors to corporate treasuries to sovereign wealth discussions.
Understanding inflation as a design feature, not a bug
Here is the thing that took me the longest to fully accept: mild inflation is not an accident of fiat monetary systems. It is a deliberate feature. Central banks target roughly 2% annual inflation in developed economies, and higher rates are often tolerated in emerging markets. The justification is that a small amount of inflation encourages spending over saving, which in theory keeps the economy moving.
What that means in practice is that every year you hold cash, you are taxed by approximately that inflation rate. The tax is invisible, it doesn’t show up on any statement, but it’s real. A 2% inflation rate means that money sitting in a savings account loses half its purchasing power every 35 years, even before accounting for whether savings account interest keeps pace. At 6% inflation, closer to what South Africa Has experienced over long periods, purchasing power halves every 12 years.
Bitcoin’s supply schedule cannot be redesigned to serve government policy. That’s not a limitation. For anyone who understands what fiat inflation actually is, it’s the point.
My mother was right. Someone is taking the money. It’s just not visible on any receipt, and there’s no line item for it in any government budget. It’s embedded in the system itself. Bitcoin, for all its volatility and complexity, represents the first serious attempt in centuries to build a monetary system where that mechanism doesn’t exist, where the rules are public, fixed, and enforced by mathematics rather than by institutions that can always find reasons to change them.
That’s why the fixed supply matters. Not because 21 million is a magic number. But because it’s a number that nobody can change.
