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Crypto Enthusiasts Insights Investing

Scarcity – A Recipe For Failure?


Do we really require our currency to have some predetermined level of scarcity?

I find it curious that so many people, particularly crypto ‘experts’ seem to be quite hung up on some specific, yet arbitrary number of total supply.

SO focused on the supply side of economics/tokenomics.

So worked up about scarcity.

The feeling seems to be that without excessive scarcity, there is very limited potential for value in an asset.

That idea holds up on the surface. Certainly scarcity is one driver of value, historically. 

It stands to reason that something becomes valuable if many want it, but few can obtain it easily. Those who want it (and can pay for it) will pay for it.

But believe it or not, the idea that scarcity is the primary driver of value can actually be shown to be completely backwards and unhealthy!

Shocked? Dismissive of the idea? Angry at my ‘ignorance’?

You wouldn’t be the first.

A fair question is:

How can something that everyone HAS be something that everyone WANTS?

How can it possibly retain significant value?


Because it can be used for everything. And with everyone.

Trust me, it’s not only possible, but the model surrounds us and involves us every day.

We’ll explore a couple of examples which describe this:

First, let’s imagine a world in which all 7.5 Billion of us on earth had at least $50,000 per year in income. This is not an enormous sum to many, but is an absolute dream for billions.

Regardless, most would agree that anyone could survive most anywhere on earth with that, and in many places, thrive.

Anyway, that’s 393 TRILLION dollars of value to power the world’s economy. Per year.

Ill say that again:

There is comfortably room for 393 TRILLION dollars worth of something in our world’s economy. Per year!

Why not a few trillion Pi?

Or a few hundred billion at least?

Is it really that hard to imagine?

Here’s another example:

This one is very real and applicable to all of us at this very moment.

Think about your shoes for a second.

Easily 6.5 Billion or more people have at least two shoes in this world.

Call it 12 Billion shoes, for a round number, ‘in circulation’. (The true number is several billion more, almost certainly).

Surely your shoes are valuable to you!

You need them.

Perhaps you need more than one pair.

Perhaps you want more shoes.

Some without shoes would do desperate things to get shoes.

Even though there are so many produced, and almost everyone has them, shoes are maybe worth $10 on average, per shoe, worldwide. 

Shoes are used for everything. Daily. By effectively everyone.

You’re saying that you’re worried about the value of shoes?

Because there are 12 billion and more constantly being made?

And that you don’t want yours for free? 

Are you sure about that?

Think about the value of Pi not as the value of your single pair of shoes.

Think of Pi as the value of shoes generally.

The value of shoes as an idea, and also as a global staple with both baseline and widespread, varied, utility.

Does Pi have the Potential to be Worth $1,000?

The ‘requirement’ for a cryptocurrency -or any other asset- to be scarce in order to be considered ‘successful’ has become a standard expectation among investors in crypto.

To see this, just look into the Pi Network app chat on any given day. You are very likely to find at least a few different people asking “Total Supply…?” or, “Does anyone know what the total amount of Pi will be?!”

Many, (indeed perhaps you, dear reader!) have before, and may continue to flatly deny the viability of any new currency if it is not sufficiently scarce.

Scarcity - A Recipe For Failure? 1

I aim to challenge and expand your perspective on this point. I hope that process has already begun! Either way, please read on…

“There are only ever going to be 21 Million Bitcoins!”

“And look at BTC! $10k+ Per!”

-You? (certainly someone!)

How can I then dare to suggest that scarcity isn’t a great attribute for an asset!?

I mean, just look at the exemplar!

The Godfather!

Bitcoin itself!

Here’s the truth:

The scarcity of BTC indeed is a large driver of its realized value.

Perhaps the biggest part.

But have we stopped to consider that perhaps the scarcity of BTC is the only driver of its value?

And that this is a PROBLEM?!

Q: What will happen when a vast majority or all of the BTC are mined? When all the oil in all the world’s wells is pumped dry?

That’s a question for another day. I’ll leave you to ponder that. But ponder it we all should!

Think about this:

A 1952 Topps Mickey Mantle baseball card or a Superman #1 comic are other examples of items that in the real world are individually incredibly valuable due primarily to rarity or scarcity.

But they are also nearly totally useless in a day to day manner, and therefore, in actual terms, are utterly worthless to 99.9999% of the people on this planet.

These items will certainly NEVER be adopted as a medium of exchange for anyone more than a tiny fraction of holders of said items. And the volume of trade within that .00001% of people is hardly anything to get worked up about for the rest of us.

Sorry to break it to you, but you and I are not those people.

There are simply not enough 52’ Topps Mantles and Superman #1’s to go around.

Bitcoins, while not quite as rare, can be seen as much like those items, and will increasingly be seen as such as the world wakes up to the power of the blockchain that Bitcoin enabled, but cannot sustain or drive forward.

Pi, as a counterexample, provides the opposite of a rare, nearly impossible to get, highly manipulated store of value for a tiny few, incredibly lucky group of individuals.

Pi provides an opportunity to participate freely and immediately in a global, decentralized economy wherein each member is evaluated on the level and quality of their participation in that economy.

Pi is available to all the world and is quite easily accessible. It is currently in the hands of hundreds of thousands of people, and will eventually be in the hands of hundreds of millions or more.

At its best, arbitrary scarcity is unnecessary, and is the result of a massive misunderstanding of what a currency should be, and how it should be valued.

At its worst, arbitrary scarcity is a conman’s tool to artificially pump up the alleged value of his speculative vehicle in an attempt to profit off of those who will be left holding worthless, minuscule amounts of it.

Pi rejects this for what it is. An unnecessary manipulation.

Pi provides the opposite. 

True utility. A staple. 

Something that can be used by all, and accepted by all, because it can be obtained by all.

Truly: A currency.

For the first time, a cryptocurrency has been introduced that will emphasize the word currency and will be brought not simply into existence for a few fortunate and rich investors, but also into widespread use for ALL of us.

One Comment

  1. Great article.

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