The digital world is getting closer to being a very good simulation of the real world we live in. Features that make the real world unique are now being written into code and are transforming the face of the internet as we know it.
One of those features is Scarcity. Most things in the real world have a limit. Precious metal like gold and silver are scare, so are things like water and natural resources.This is an innate quality of the real world. This quality of being a scarce resource adds value, with its depletion there is increase in its value.
In the digital realm things were always infinite, they are just strings of number or lines of code that could be copied any number of times. Things that are infinite do not poses much value as there is always more of it.
That is where Digital Scarcity comes into the picture.
What is Digital Scarcity?
To understand this we need to take a look into what Digital abundance is. This is a familiar concept as any user of the internet knows how easy it is to copy data from the internet. Although at first it seems like something desirable it creates more problems than it solves .This creates a situation wherein there is no control over the distribution of any sort of data. Someone else’s Intellectual property can easily be stolen likes songs or movies. The internet in a way paved a new path for things like piracy to proliferate.
The ability to control the the amount of a certain good and also how it is exchanged allows for two major things. Firstly value is added to that scarce resource. Secondly ownership of every product entity is identifiable as it will stored in the blockchain.
Yes, the blockchain is a integral part in making this happen. Blockchain technology allows for this artificial scarcity to be staged not only that, it also allows for the control of its distribution.If you are new to blockchain you can wet your feet here.
Where Can We See Digital Scarcity
The biggest entity that leverages digital scarcity to attain value is Bitcoin. Only 21 Million Bitcoin will ever be mined and every four years that number would be halved. Also Since Bitcoin relies on the blockchain for its distribution tracking of ownership can also be done without any fear of fraudulent tactics from any entity.
The blockchain based collectible cat game CryptoKitties that released in late 2017 came into the spotlight just after its release not just because of the cute cats but also because of the underlying technology that made the game profitable for the users as well. CryptoKitties slowed down the ethereum network upon its release and used close to 25% of the networks resources at its peak. You can visit their website here.
The objective of the game is simple,you buy cats which each have a different combination of traits, some traits being more rare than others. If you have a cat that has rare traits then you can sell it at a high value.
Each cat is unique and no one cat is the same as the other. This introduces the scarcity. With each cat being unique there comes the competition to have a cat that has a combination of rare traits. Another element of the game is the ability to breed two cats to create another offspring which is even more rare than the parent cats.Some cats have even been sold over $100,000 . A simple analogy to better understand this would be to think of Baseball Cards or Pokemon cards where there are some cards that are more common, that are not of that much value and then there are some rare cards that have an extremely high value attached to them because of their rarity.
This is how a simple game demonstrated the use of blockchain to create digital scarcity.
What Other Industries Can Use This?
The media and entertainment industry can benefit a lot from using this technology. Using a blockchain based streaming service on the copyrighted media would allow for one to immutably keep track of ownership of every copy of the media and also keep track of the number times the media is viewed so as to create the scarcity which then adds value. Each time the media is accessed the price to stream it goes up creating a profitable market that benefits the user and creator by providing the content in a legal format.
Digital Scarcity Vs Digital Shortage
Digital shortage refers to using things like paywalls and subscription fees to create and simulate the scarcity even when this media or any other entity once gained access to can be copied many times. Paywalls and subscription fees have limitations and has not managed to prevent privacy meaningfully.
Keeping this in mind we see that scarcity in the online world adds and also provides value to both customers and sellers creating a marketplace that is free from fraudulent schemes and also one that is extremely profitable.
Which other industries do you think will be transformed by using the concept of digital scarcity comment down below.