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by wpietri 2026 days ago
It presents a problem for anybody who thinks scarcity will contribute to the value of a digital currency.
1 comments

Bitcoin is scarce. Applying the term scarcity across multiple cryptocurrencies means you have no idea what you’re talking about.
Not at all. From a market perspective, Bitcoin is not scarce in the same sense that gold or diamonds are scarce. If people want to buy into cryptocurrency, Bitcoin is far from their only option. As this whole discussion around Ethereum makes clear, other cryptocurrencies are viable. As I mentioned earlier, other Bitcoins are clearly viable.

Yes, the number of Bitcoins in a given fork has a limit, assuming whoever controls that for keeps it that way. But that doesn't matter much if market demand is such that other forks or entirely new coins become viable.

it's like saying gold isn't scarce because there are other metal compounds. you're not making sense at all. if you want to interpret scarcity this way - feel free, but be informed that pretty much everyone else will look at you weird.
No, it's like saying gold isn't scarce because anybody with a bee in their bonnet can launch "Gold 2.0" and create their own supply. Which is definitely not true for gold, but is demonstrably true for cryptocurrencies.

I grant that crypocurrency fans will look at me weird, which I'm fine with. But economists (and most others) won't, because they understand that substitutability [1] affects scarcity.

[1] https://en.wikipedia.org/wiki/Substitute_good

Well if you believe any fork of bitcoin is bitcoin I have lots of cheap bitcoin to sell to you.

There’s an attribute that you can’t substitute - chain difficulty. I’ll let you figure out the rest.

Again, from a marketing perspective, it's not clear that matters. For a great number of cryptocurrency "investors", they're just buying magic beans. A fine piece of evidence comes from CNN today that digital currencies are effectively substitutable: https://www.cnn.com/2020/12/03/investing/bitcoin-ethereum-xr...

As Bitcoin itself proved, plenty of people will buy into a commodity because it's new and hot, and not because of any fundamental analysis of its value. In that sense, Bitcoin is not in any way scarce.