i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.
BTC is backed by electricity, that is a scarce good. The reason to have a limit of 21 one units is to add even more scarcity to the currency. It could have been any limit. It could have been just 1 unit and it would haven’t been the most convenient limit, but it would have worked. In any case, it seems to me that what you don’t understand is the concept of money.
Start with this interview to Saifedean Ammous:
https://podverse.fm/es/episode/m3jJcVzOl.
Try to understand this concept also: all and any currency used as money, based on multiplication of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends to cero. This is the pathetic case of fiat currencies (include ETH on this type of currencies). On the contrary, all and any currency used as money, based on the subdivision of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends mathematically to infinite (this is hypothetically and meanwhile nobody demonstrates this statement to be false, where wealth created by humans tends to).
If you understand the mathematical concept of limit, you’ll understand this. If not, maybe you should also study this concept first.
You can also download Ludwig Von Mises “The Theory of Money and Credit” from this link: thihttps://mises.org/library/theory-money-and-credit.