Quantitative hardening refers to the process of decreasing the rate at which new supply of a particular asset is introduced into the market. In the case of Bitcoin, quantitative hardening is achieved through the halving mechanism, which reduces the rate of new Bitcoin issuance by half approximately every four years.
This reduction in the rate of new Bitcoin creation contributes to Bitcoin's scarcity as the total supply of Bitcoin is capped at 21 million coins. The decreasing supply combined with a growing demand for Bitcoin due to its perceived value proposition as a decentralized, secure, and censorship-resistant form of money, can potentially drive up its value over time.
Therefore, the concept of quantitative hardening in Bitcoin reinforces its scarcity by limiting the new supply entering the market, which can positively impact its value proposition as a store of value and medium of exchange.
