Scarcity, the idea that some one thing is of finite quantity, has been an unrelatable attribute to the digital realm. Until the arrival of bitcoin, nearly anything that was of digital nature could be duplicated without recourse. Due to the ease of reproducing computer code, the problem of double-spending was the unsolved mystery of viable digital money. However, the invention of bitcoin has added a potent economic function to the equation of online exchange – digital scarcity.

The Introduction of Digital Scarcity

Beyond the realm of money supply, bitcoin has enabled everything from informational products, media, art, and more to be delivered in a manner where ownership is mathematically verified. Because digital ownership can now be determined mathematically, it proliferates a scarce quantity of goods. Digital scarcity marks the emergence of a new cohort of potential business models.

If ownership can be mathematically verified through computer networks such as the blockchain, content creators will regain the necessary attribution rights that have been wrenched away from them in the frenzied online copy & paste culture. Could artists regain attribution rights and increase their ability to monetize creations due to the advent of digital scarcity? Could verifiable intellectual property usher in a golden age of digital creativity?

“Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value.”

– Eric Schmidt, CEO of Google

The attribute of scarcity in bitcoin is not necessarily derived from the actual file information itself, but the method in which the information is stored. The difficulty in reworking the cryptographic proof-of-work which has hashed and timestamped the property with the creator’s digital signature represents the construct of scarcity. The difficulty of reworking this cryptographic chain then, is directly correlated with the degree of digital scarcity, as more hash power would be required to retroactively alter the information’s assigned ownership. Information hashed at the very beginning of the blockchain for example (such as the genesis block), could be viewed as being more scarce than information hashed yesterday precisely because it would take magnitudes more computational power to rework that section of the chain.

New Business Models Arise From Digital Scarcity

Ascribe, a bitcoin startup looking to verify file ownership, is using the blockchain to track the history of digital work. Such a use case is a prime example of the usefulness we are beginning to see emerge with the attribute of digital scarcity. Ascribe is making it easy for creatives to use blockchain technology to assign attribution rights and establish scarcity with their online work.


Factom, a bitcoin startup from Austin Texas, allows businesses to embed data into the global database of the blockchain where it can be accessed securely by authorized parties. This functionality allows data to be mathematically proven to exist at a specific date in time and linked to newer, related documents. Factom claims to “remove the need for blind trust by providing the world with the very first precise, verifiable, and immutable audit trail.”

“We’ve worked hard to build a scalable data layer on top of the Bitcoin blockchain that keeps the ethos of the blockchain community. Factom is a public utility that anyone can use and build applications on. We’ve built it with simple API calls so any developer can jump right in and start building amazing systems that are honest and transparent.”

– Peter Kirby, CEO of Factom

The Digital Economy’s Missing Layer

Scarcity is a fundamental layer of any economic system. Without scarcity, there be no need for money. In a perfectly abundant world, resources would be limitless and money would serve no need because exchange would be entirely unnecessary.

Bitcoin introducing digital scarcity represents a milestone in the development of a totally digital economy, one which has the capacity to stand independent of geopolitical, national economies. In the years ahead, it is likely we will see new business models arise from the potent characteristic of digital scarcity.


Travis Patron

Travis Patron is the author of The Bitcoin Revolution: An Internet of Money, a seminal publication in the digital money space which outlines the basics of the bitcoin payment system. As a public speaking authority, he regularly speaks to audiences on the economics & industry trends of bitcoin.

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