🐚 The Wampum Shells

Native Americans and early European settlers used wampum shells extensively as a medium of exchange. Because they were difficult to find and harvest, they naturally had a very high stock-to-flow ratio, making them an excellent form of hard money. The European settlers even adopted these shells as legal tender starting in 1636. However, when advanced boats and technologies were employed to harvest the seashells from the sea, their supply was highly inflated. This sudden technological leap made them too easy to produce, which caused a massive drop in their value and destroyed their salability across time. By 1661, seashells stopped being legal tender and completely lost their monetary role. This historical event demonstrates how a technological innovation can destroy the hardness of money by drastically increasing its flow. Bitcoin solves this vulnerability perfectly using a brilliant technology called "difficulty adjustment". If more computing power or better machines are directed to mine Bitcoin, the network automatically increases the difficulty of the math problems required to get the reward, ensuring that the supply of new coins remains strictly limited and cannot be inflated by better technology.