Final answer:
The creation of Bitcoin is designed to be deflationary, with the supply intentionally restricted, thus it will take over 100 years to mine the final portion of Bitcoin's total supply. This design is analogous to the manner in which scarcity increases for natural resources, making them more difficult and expensive to extract over time.
Step-by-step explanation:
The process of Bitcoin creation is inherently deflationary due to the protocol's design, known as the halving mechanism. This mechanism means that the reward for mining new blocks is cut in half approximately every four years. This intentional approach in the Bitcoin algorithm, meant to mirror the scarcity and difficulty of mining precious physical resources, ensures that the total supply reaches its cap of 21 million Bitcoins gradually. As a result, while it may have taken only 9 years to mine the initial 80% of Bitcoin's supply, the remaining 20% will take much longer to mine, extending over 100 years. Therefore, the correct answer to the student's question is that the supply is intentionally restricted (c).
As we extract natural resources from our planet, we experience similar constraints. Historically, easy-to-access resources are exploited first, and as scarcity increases, the remaining reserves become more difficult and costly to extract. The effort required to access these dwindling resources parallels the increasing complexity of Bitcoin mining over time.
The economic implications are significant as well. In a market system, a finite and vital resource like Bitcoin won't become arbitrarily cheap as demand persists while the supply curve flattens. This is akin to geological challenges in the physical world that limit the production rate of essential minerals and resources.