Scarcity: Too Much Is Never Enough
aquae ductus
A city without water will eventually cease to be city. A reliable source of water is simply essential to sustain human life.
Being at the mercy of the seasons or local water sources makes a city fragile and naturally limits its growth. The ancient Greeks, Romans and Egyptians recognized this as a problem of engineering.
By constructing miles of aqueducts to transport vast volumes of fresh water to serve their populations and industries, they reduced such dependencies and could turn their focus to other pursuits.
"When the well is dry, we know the worth of water."
Scarcity → Abundance
Scarce resources incite competition over their possession, reflected through market price signals. This tells producers that the market wants more of something, if it can be discovered or produced.
Through the process of innovation, many previously scarce things are now abundant- calories, textiles, information.
But there's one thing that you'll always want to possess the property of scarcity, and that's money.
In order to retain its purchasing power and reliably store your work throughout time, money must be free of unexpected or arbitrary inflation.
“The first lesson of economics is scarcity: there is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
Abundance → Scarcity
The emergence of computing gave us the ability to duplicate digital items at zero marginal cost. Today, Bitcoin represents the birth of absolute digital scarcity by imposing an infeasible cost on duplication.
Through a clever combination of proof-of-work and game theory, we now have a tradable asset with a fixed terminal supply, independently verifiable by all participants on the network.
The beauty of Bitcoin's difficulty-adjustment means that no matter how much hash power is directed at mining it, its rate of issuance will not impacted. Digital scarcity is now a reality.
This of course doesn't mean that everyone now intuitively understands the role that scarcity plays in a money.
We're sure to continue to recycle the same faulty-logic that has toppled countless socities throughout history under the guise of new branding (QE, MMT, stimulus). Do not be fooled.
Further Reading
Stuff (2007)
I have too much stuff. Most people in America do. In fact, the poorer people are, the more stuff they seem to have.
