Bitcoin is breaking record after record, currently trading at $91,099, and we are witnessing the market heating up in real time. If you have been paying attention, you might wonder what is driving this momentum. The answer lies in what is often called “number go up” (NGU) technology. This term reflects how the unique design of Bitcoin naturally encourages price growth. Let’s see what this means.
Why the Scarcity of Bitcoin Matters
NGU technology is rooted in Bitcoin being a finite asset. Only 21 million bitcoins will ever exist, making it one of the scarcest assets on the planet. Unlike traditional currencies, there is no way to create more of it.
As more people recognize this limited supply, demand grows. Increased demand pushes prices higher, which attracts even more interest. This creates a feedback loop where rising prices fuel greater demand, causing prices to climb further. The Bitcoin stock-to-flow model by pseudonymous analyst PlanB is where you can see the NGU in action.
A Shift Driven by Strategic Decisions
The election of Donald Trump seems to have accelerated this trend. Recently, the United States announced that the Bitcoin it holds—around 210,000 BTC—will be treated as a strategic reserve. This is a strong signal, as the U.S. has stated it will not sell these holdings.
This decision changes how Bitcoin is perceived on the global stage. It is no longer seen as just an investment or speculative asset but as part of a national strategy. Senator Cynthia Lummis has even proposed a bill to formally establish a Bitcoin reserve for the United States, which could lead to major developments when Trump begins his term.
Game Theory and the Global Race
Game theory suggests that other countries will need to respond. Once one nation starts treating Bitcoin as a strategic asset, others cannot afford to ignore it.
If the U.S. officially launches a Bitcoin reserve, other nations will likely act quickly to secure their own. Early movers stand to gain the most. This could trigger a global race to accumulate Bitcoin, with countries scrambling to position themselves for the future.
Some nations have already started. Bhutan, Argentina, El Salvador, Ethiopia, and the UAE are actively mining Bitcoin to build reserves. These countries are positioning themselves strategically by incorporating Bitcoin into their financial systems.
Trump: If we don’t embrace crypto and #Bitcoin technology, China will.
Saylor: The first country to buy #Bitcoin by issuing its own currency, wins.
Game theory suggests that the United States or China will adopt a #Bitcoin standard because if they don’t, they will lose to a… pic.twitter.com/lwpmfNptLz
— Mark Harvey (@thepowerfulHRV) July 29, 2024
Mining as a Strategic Tool
Bitcoin mining has become a practical way for nations to grow their reserves. Nico Smid, founder of Digital Mining Solutions, highlighted how Russia is investing in mining infrastructure across BRICS nations. The plan involves using Bitcoin for international trade settlements.
Other nations are expected to follow the example set by countries like El Salvador and Bhutan. By using surplus energy to mine Bitcoin, these countries can strengthen their reserves while preparing for shifts in the global economy.
Participants in the Bitcoin Economy
Right now, a variety of players are adding Bitcoin to their balance sheets:
- Governments (El Salvador, Bhutan)
- Sovereign investment funds
- Institutional investors (Bitcoin ETFs)
- Corporations (MicroStrategy)
For these entities, the choice is clear: adapt to the new financial landscape or risk being left behind. The increasing demand for Bitcoin, combined with its fixed supply, ensures that its value will continue to grow over time.
Going Forward
The race to secure Bitcoin is already underway. The U.S. decision to treat Bitcoin as a strategic reserve has heightened the urgency for other nations to act. Countries are now moving quickly to acquire or mine Bitcoin, knowing that early action offers the greatest advantage.