Bitcoin can be understood through an analogy with real estate.16 Michael Saylor, Executive Chairman and Co-Founder of Strategy (formerly MicroStrategy), has compared investing in bitcoin to buying real estate in downtown Manhattan during the early stages of its development. As population, commerce, and cultural activity concentrated in the city, demand for limited land surged, dramatically increasing property values. Many of the world’s wealthiest families built their fortunes by owning scarce real estate. When something limited is in high demand, its value rises. As the saying commonly attributed to Mark Twain goes, “Buy land—they’re not making it anymore.”
Scarcity plays a central role in determining value, which is why real estate in densely populated areas is more expensive than in sparsely populated ones. Real estate has utility value—it can be used for living or production—but its price is largely driven by the limited supply of land in prime locations. There are only so many properties that can be built in Manhattan, London, Shanghai, Mumbai, Paris, Beijing, Tokyo, or Venice. What ultimately makes these locations valuable is what occurs on top of them: the people, the capital, the creativity, the energy. As a city flourishes, whether through rising population, growing business activity, or cultural relevance, demand for that scarce land surges.
The value of land does not rise in a vacuum; it rises because it captures an expanding layer of economic activity that cannot be easily replicated or relocated. This dynamic is further amplified by fiat monetary expansion, which channels ever more liquidity into real estate, raising nominal prices well above what utility and income-generating capacity alone would support. Market mechanisms such as speculation and the widespread expectation of rising prices reinforce this scarcity and deepen that perception.
