Scarcity is a bad concept, idea, and term for Bitcoin, it needs to go

Giovanni Santostasi
5 min readApr 8, 2024

Note: This article is a placeholder for all my ideas about scarcity and Bitcoin. It will evolve with time and eventually will be a long essay and an essential part of the book “The Physics of Bitcoin”.

Again economists poisoned the well because they taught generations of Bitcoiners that Bitcoin is scarce. It is because the central idea of modern economy (not even classical and ancient ones) is based on the idea of scarcity.

Scarcity was part of the reality, but also a motivation, for endless wars, famines, draconian laws, dictatorships, and a social Darwinian understanding of human nature.

Many Bitcoiners confuse “scarcity” with the fixed total final amount of Bitcoin available (or hard cap) when they are completely different concepts. Why they are different concepts will be discussed in a future article.

We are not advocating for changing the hard cap which is a very important and fundamental property of Bitcoin.

We are pushing the idea that scarcity is a bad concept, idea, meme, and framework to understand any aspect of what Bitcoin is, does, and signifies.

It needs to go. We need new ideas and visions for the future of Bitcoin.

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Why I’m against the word scarcity when associated with Bitcoin.

One day people will not use the words Bitcoin and scarcity together. I’m pretty sure. If it was just a term I would not care. Sure it sucks but that is ok. But:

  1. It leads to bad concepts and frameworks for understanding Bitcoin. For example, people think that cutting in half of the issuance has an effect on price. It doesn’t. Data says so. I made 2 hours video showing that is the case. No correlation at all between issuance and price.

2) People hope for some supply shock that will never happen. They believe in false narratives about the ETFs creating such a supply shock. I showed that to barely follow the power law growth we need an inflow that is actually bigger than the current ETF inflow. Basically 650 M per day. False narratives, lies and bs are fed to people every day.

3) It makes people not understand cycles and how they are created. The all-time HODLER actually dumps on the masses when Bitcoin is at its “scarcest”. Many people panic and never come back. Again, who is perpetrating this lie that scarcity is a good thing? Who is benefiting?

4) People dream of Weimar scenarios (in particular young people) that are damaging to our community in terms of how the world looks at us and create fear, anger, and anxiety in young people.

5) It creates a climate of exclusion towards other adopters because it is like saying we are in and they are out. Scarcity evokes images of “Black Friday” and other rat-like behavior in humans. Not good to have Bitcoin associated with things like Black Friday or the engineered scarcity by blood diamonds peddlers.

6) A future of unimaginable abundance attends us. Most people have no clue of how fast technological progress is advancing and what the outcomes will be.
Presenting Bitcoin as based on scarcity makes it completely incongruous with how the future will be.

Instead, Bitcoin should be pivotal to this abundant future so any description of Bitcoin associated with the idea of scarcity should be abandoned as old and stale and negative ideas from 1800’s economic thinking based on war, supremacy of a nation vs another, and all kinds of terrible ideas.

Q&A

Answer: Why not say hard cap instead if one refers to that?

The main function of the hard cap is to avoid arbitrary inflation created by a central authority. And also to simplify the ledger accounting that is all.

It was not meant to create an engineered fake scarcity.

The problem is that people associate scarcity instead with all sorts of fantasies like the value of Bitcoin is due to us running out of it, or supply crunches, and so on.

It is really a bad concept that leads to a bad culture, way of thinking about Bitcoin and the message we deliver to the world.

Some people even use it to manipulate others and create fear and anxiety.

As a matter of fact, there is no evidence in the data that scarcity plays a role in Bitcoin price or other on-chain behavior.

Bitcoin really doesn’t need scarcity (hard cap is another matter as explained above) and as a concept should not be associated with Bitcoin.

It is very negative and an insult to Bitcoin.

Answer:
Do you mean if the hard cap was not there? I’m not against and of course, it is one of the things that give value indirectly to Bitcoin. So it may drive adoption. But it is not what I’m fighting against. It is how people think that a hard cap means scarcity. It is not semantics they truly believe that it means we are running out of Bitcoin, and that the halving of the issuance has an effect on Bitcoin. That ETFs create a supply crunch and so on and on. This is why I’m so against this term. It has a lot of ramifications in how people think and communicate about Bitcoin. It is a big deal.

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