I genuinely don’t understand how one can claim that BTC is truly scarce. Sure, there won’t ever be more than 21 million.
I accept that idea that one can’t simply reimplement BTC separately under another name. No one will want the copycat.
But what exactly prevents others from creating another cryptocurrency that basically mimics BTC, but with a small improvement? If you’re slightly late to the new, improved one, you might be left holding the BTC bag. To my knowledge, there are already distinct cryptos that take the BTC idea and improve on it (faster trading times, lower fees, etc.).
Whereas if you take precious metals, to take one example, gold is truly unique. Silver is truly unique. And barring nuclear fusion/fission, the supply is finite and fixed.
The same idea also applies to real estate. There is never going to be more land on this earth, and nothing could really be created to mimic or replace real estate.
So I don’t really get the BTC scarcity argument. Am I missing something?
Is there any validity to the BTC scarcity argument?
byu/Excellent-Seesaw-516 inbtc
Posted by Excellent-Seesaw-516
8 Comments
pay no attention to the man behind the curtain
It’s marketing
It’s scarcity is man made and can be changed if needed
It’s like a generic car maker purposely limiting the number of cars they produce and marketing them as special and unique and super valuable, in fact 100x more valuable than other similar and even better quality cars due to the fake limited supply and people going out there buying the generic car becuase it’s very scarce
The scarcity of bitcoin isn’t due to some natural limitation of the supply or some hardware limitations, it’s due a code that just say max supply = 22 000 000 and that’s it
That “max supply =“ can be altered if needed and the reason it haven’t is because it serves the current narrative that scarcity on its own = value
Tons of other coins with fixed max supply have already changed their max supply to serve their creators agenda, Bitcoin will do so as well as no one will be paying thousands of electric bills to keep the Bitcoin ledgers working without getting paid
Either max supply will be increased or Bitcoin will die as the only other way for these ledgers to run is increasing transaction fees to astronomical levels which would totally make Bitcoin use case useless. No one would be buying Bitcoin and paying 1000$ fee for 1000$ transaction which would mean less transactions which would mean miners will have to increase fees even more etc etc
The scarcity argument is just a catchphrase to feed a narrative until people stop buying into it then a new narrative will come out
The problem with the scarcity argument is that it’s a bug, not a feature and a large reason why there’s been a forced narrative shift from “it’s a currency” to “it’s a store of value.” Currency needs to be elastic in order to provide for (ideally moderate/minimal) inflation that supports economic growth.
Short answer, if it were possible you could inflate all other assets. You can always dig deeper for gold. You can always find new places to build houses. But you can’t inflate the amount Bitcoin. You could indeed start a copy of bitcoin (like Bitcoin Cash) and where the limit would be 42 million coins. Just no one would care because bitcoin is scarcer and already adapted and has pretty perfect features everyone wants. Also smaller features can be updated if needed and if something is really important and a big change you could still do a hardfork (copy) and have a second Bitcoin with the new feature, that people can decide to use (your btc will be still there. on both now). Hope that answers it
There are plenty of coins that are “better” than bitcoin at various things but none yet that as good as BTC in all the things BTC excels at. Even if such a coin were to emerge, it would have to overcome BTC’s network effects and first mover advantage.
There are plenty of things that are scarce and transferable that don’t have value. NFTs, other shitcoins, the post-it note on my desk…
Let’s just make the standard precious metal be something besides gold because I don’t have enough gold and those guys do! I declare that Rhodium is the new standard store of wealth. Gold is dead.
See how that works?
Other cryptocurrencies exist. There is no limit to it. There can be an infinite number of them. All fundamentally worthless.
With precious metals, they are a commodity, and all of them have some value simultaneously. People may have a sentiment that they prefer gold vs platinum and that sentiment can change. But there is always a finite market for all of the commodities because they are useful.