Every Bitcoin that exists was minted out of thin air by miners. And Bitcoin’s hard cap of 21 million coins, often hailed as its greatest strength, means no more than 21 million Bitcoin will ever be minted. Except that’s not entirely true.
Wait, it’s possible to change Bitcoin’s code? Yes.
It has happened many times: CVE-2010–5139 (2010); SegWit (2017); CVE-2018–17144 (2018); Taproot / BIP 341 (2021); CVE-2023–50428 (2023); etc. So there isn’t actually a 21 million limit on Bitcoin; there’s only a 21 million limit as long as miners decide to leave it there. And Bitcoin miners decide to upgrade and change things all the time.
Miners can change every operational parameter of Bitcoin’s code if they agree to. By the way, that’s the opposite of immutable.
The hard truth is if Bitcoin miners want to modify the 21 million limit — they can. Miners can change every operational parameter of Bitcoin’s code if they agree to. And by the way, that’s the opposite of immutable. Nonetheless, applying what’s real today, this article will proceed under the current rules assuming the effective Bitcoin ceiling of 21 million.
Just like Bitcoin, every HEX token in existence was minted out of thin air by miners. However, unlike Bitcoin’s code, HEX is truly immutable — it can never be changed. Ever. The code operating HEX is locked and isolated. Locked means that once the HEX smart contract was deployed on the blockchain, it cannot be altered — there are no mechanisms for anyone, including developers, to change its functionality. Being isolated means, HEX doesn’t rely on external contracts or data feeds, minimizing dependencies that could introduce vulnerabilities. Together, these features ensure true immutability— guaranteeing HEX operates exactly as programmed, providing users with a consistent, unchangeable, and secure platform.
Key Insights on Immutability:
Inflation pays Bitcoin miners to consume resources. Inflation pays HEX miners to stake their tokens. The key difference — the real magic — is when people stake their HEX they aren’t being diluted by the inflation. HEX miners with stakes of average length and size experience zero dilution because their stakes receive the newly minted tokens. Put another way: HEX pays miners to time lock their tokens.
HEX’s nominal inflation is programmed at 3.69% — this is lower inflation than Bitcoin ever had in its first 10 years of existence until it reached $20,000. However, the observed real inflation in HEX averages just 1.14% at time of writing because the miners are incentivized to time-lock their stakes. Liquid HEX holders (i.e. not staked) incur the tradeoff of being able to sell their tokens in exchange for not receiving the daily yield from staking.
1.14% Average Inflation in HEX
By harvesting the inflation in HEX to the staker class, miners harvest the positive price performance through virtual lending. The value stakers can’t yet claim is effectively transferred to liquid HEX holders who manage the cost of dilution to maintain liquidity.
When it comes to dilution by inflation, Bitcoin’s design faces a constant negative price externality from miners. They must sell their mined Bitcoin to cover the heavy ongoing costs of hardware, electricity, cooling, facilities, maintenance, etc. (See Part 2: Bitcoin Proof of Waste Mining vs. HEX Proof of Wait).
Whoever gets the inflation first wins. By harvesting the inflation in HEX to the staker class, miners harvest the positive price performance through virtual lending. The value stakers can’t yet claim is effectively transferred to liquid HEX holders who manage the cost of dilution to maintain liquidity. HEX is an ingenious, elegant, and efficient system that rewards both miners and unstaked holders in a balanced exchange.
Inflation Rewards Paid to Staked HEX Miners
Bitcoin has a supply limit of 21 million coins. That’s static scarcity. The supply is capped, but the network’s dynamics don’t adjust based on user behavior. Whether Bitcoin is mined or held, its inflation doesn’t change based on how long people hold it. It just sits in your wallet and gets diluted by miner inflation.
This overlooks dynamic opportunity cost, where the potential for strategic holding to influence value appreciation or to engage in more complex economic behaviors is underutilized, thereby introducing a gap in leveraging game-theoretic strategies for value optimization. HEX solves this.
The staking feature in HEX is a quantitative edge that creates synergy for a boosted network effect by actually removing supply from circulation and rewarding users to take that action.
Dynamic scarcity is created through staking. Every time someone sets up their miner by staking HEX, those tokens are removed from the market — reducing supply. The longer and larger the stake, the more impactful this reduction is and the greater the miner’s rewards. Just like traditional banks offer higher returns for larger and longer-term deposits, HEX rewards users with better mining rewards for larger and longer stakes, providing a strong incentive to lock in value. HEX introduces scarcity that adapts based on real-world behavior, not just a fixed supply number.
In both systems, Bitcoin and HEX, more participants create scarcer supply. In both systems mining is also rewarded. Here’s the difference: in HEX mining removes supply and boosts network effect with dynamic scarcity — miners are incentivized to not sell. This is the opposite of the incentive for miners in Bitcoin. In Bitcoin the miners are incentivized to sell mined Bitcoin to cover the heavy ongoing costs of hardware, electricity, cooling, facilities, maintenance, etc. HEX actively rewards the opposite, incentivizing miners to shrink supply. Scarcity is earned.
This is what real price-positive game theory looks like: a system where the more people participate, the scarcer the supply gets. And unlike Bitcoin, where supply is static and miners are incentivized to sell, HEX’s scarcity is dynamic and competitive. In HEX, you’re not just holding — you’re participating. And that participation drives price growth in a way Bitcoin never could.
Bitcoin mining is proven to consume massive resources (see Part 2: Bitcoin Proof of Waste Mining vs. HEX Proof of Wait), requires fixing its code when it breaks (see Part 1: Bitcoin’s Bugs vs. a Bug-Free Future), and has price-positive game theory stuck in neutral with static scarcity. HEX pushes the market forward. People must ask themselves if they want to sit on the sidelines and wait for Bitcoin’s price to go up — or — do they want to be part of a system that rewards them for participating.
HEXscout for iPhone and Android makes it easier than ever to join over 130,000 users already staking their HEX and mining rewards:
Not financial advice. Past performance is no guarantee of future results.
