The dollar does have backing, and it is backing from the strongest economy, legal structure, and military in the world. It is that stability that provides the backing.
A limited supply of bitcoin does not make it more stable. Just the opposite in fact. If you put an upper limit on any commodity a group of people want to use for currency, the price goes up. The people trading bitcoin could have just as easily said they were trading piles of dogsh-t from Rex the dog, who has a unique DNA. Once that dog dies however, there will be no more Rex dogsh-t so the supply is naturally capped (i.e. illiquid).
If everyone can't have a bitcoin its usefulness devalues as a currency even if the value of the "commodity" continues to increase. Think Furbee dolls, or art work by the masters. Both of those are nice to own if you follow the greater fool theory, but they are not very good as a currency.
I'm guessing the founder knew that in the short run, limiting the supply would increase the value, and the he/she would keep "x" amount of bitcoin and then sell out to the first available sucker ("pump and dump"). The "scam" depended on finding enough fools to buy an electronic projection on a screen. Of course the founder and his buddies "mined" the first bitcoins, which is no different than Rex the dog's owner keeping the dogshit from Rex' first dumps. Ultimately, you own a bunch of dogsh-t.
Last edited: Jul 15, 2019