Scarcity doesn't always mean value

[tee-rex]

I have read this theory several times, but I still dispute it. I consider mining costs, if existing, a very minor factor when calculation the value proposition. Why would miners not panic sell if the price of the coins they get falls below their "production costs"? I consider this scenario very likely.

This is a Marxian labor theory of value at its best which had been proven inconsistent even before Marx made it known. In essence, its premises come down to claiming that value of a thing is determined by the amount of labor put into making it (as well as the cost of resources which is also ultimately just a cost of labor at a lower level). But even if this theory were true, it would still be not applicable here as there is no single cost of mining. Ironically, the lack of this cost shows how meaningless such "value" would be even if there were one.

By the way, I agree with your definition of utility as a capacity to satisfy a necessity, and in other contexts I would definitely use something like that myself. But how many people would actually understand that definition?

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[kendra1107]

Well, scarcity is still a factor for value. Just like antiquities and the likes. But question is, are they being utilized? Value is greater if scarcity and utility are combined. As something becomes scarce with utilization, price/value will surely rise.

[r32godzilla]

Yes that's true.Scarcity is just one of the factor which adds value to bitcoin.But bitcoin is not just bought for the reason of its limited supply but it providing a safer means of investment totally out of the control of governments hands and that it could not be hacked unless it's private keys exhibited publicly.

[solkinsolali]

This is true of course. Most people have this believe that if a particular cryptocurrency or commodity is scarce, it will translate to high value. But this is not always the case. There are even some situations although few, where you will have a scarce item, yet still has no high value you would expect.

[Nunii]

Yes you got a point on that. Scarcity does not always mean something will be valuable overtime. That there will be constant increase in price if you hold it and it few number of it will be available outside. However, if something get scarce when in the beginning it is not the case, we can assume that this thing is being used or utilized or someone is using it and well in fact needing it thus, if other parties hold it, it will be valuable. My point is, in the beginning bitcoin is enought or to much for the users however, currently, there's too much users that the need for the price increase is inevitable. And well infact, bitcoin is not yet adopted by the majority or being really utilized in the real world. How much more if it will be?

[triciaa478]

Applying economic principles and theories into cryptocurrency market is a different game all together. There is no systematic way of analyzing the crypto market with  theories like scarcity and demand.

[tee-rex]

Well, scarcity is still a factor for value. Just like antiquities and the likes. But question is, are they being utilized? Value is greater if scarcity and utility are combined. As something becomes scarce with utilization, price/value will surely rise.

This is what I'm telling in the opening post, that neither utility nor scarcity taken on their own can determine the price of an asset. It is their balance that gives you a certain number which you interpret as price. Besides, utility is not (just) about utilizing something, for example, gas in the tank of your car. As the other poster said, utility is about satisfying a necessity, and that necessity can come in many forms and shapes. It can be some physical need like hunger or thirst, but it can also be an emotion or a feeling of a higher order other than simple needs and requirements.

In this manner, antiquities and other such things are not about being utilized as they are about satisfying some particular necessity people might have without being spent (if that was your point). Most people don't give a fuck about this kind of things, but the number of those who do is still pretty big to create a market for them and thus have a price.

[Ailmand]

For me I think scarcity play a good role in the value of any one, think about it, scarcity means people are reluctant to sell, they are hold their cons, and that will make the buyers to bid higher to attract the sellers to sell.

Well, although that can be true in some ways, I think that's it can't be used as a rule of thumb, especially when talking and dealing about this market. I mean, the cryptocurrency market is such an unusual kind of market that doesn't play by the normal rules and standards of similar markets, like the stock market for example. Therefore, even though it is normal to expect that when there is scarcity, and basically, the supply decreases, it helps increase the value as there is not enough to feed the demand. However, in this market, even if there is such a case, there are times that people themselves don't actually sell despite having low supply in the market, and that further hurts the value of the coins in the market.

[tee-rex]

And here comes franky!

price and value are 2 different things.

Did you mean to say that price is what you pay and value is what you get?

All in all, price is a numerical representation of how valuable a thing is to the market participants. The term market is used in a broad sense of the word here. If you buy a can of beans in a grocery store, you are also participating in the beans market since by buying beans you are affecting the aggregate value of beans, however small that influence can be, and consequently their market price. Obviously, different people value things differently since without this difference no commerce would be possible. But for most practical purposes the definition of price as a number reflecting what most people think about the value of something will suffice.

[coinwizard_]

Scarcity and demand will drive up the price but neither will work on its own. The only place for low volume shitcoins is a pump and dump trading exchange like yobit, Low supply makes the price easy to manipulate

[Spring_Butin]

I also believe gadgets are one of the best indicators of value. That's why I always say that for bitcoin to retain value and develop it more, use it. Let bitcoin be a payment system in us and allow it to develop more gadgets to help increase its value. Sometimes scarcity does not mean value. Yes, scarcity is still a factor for value. But the question is, are they used? As something becomes scarce with usage, the price / value will definitely increase. Bitcoin boots are not only bought due to its limited supply but it provides a safer means of investing completely out of the control of the hand government and it can be hacked unless the private key Private exhibits are public. Most people believe that if a particular electronic currency or commodity is scarce, it will turn into high value. There are even some situations where little, where you will have a scarce item, but still not worth the high you expect.

[talkbitcoin]

Scarcity and demand will drive up the price but neither will work on its own. The only place for low volume shitcoins is a pump and dump trading exchange like yobit, Low supply makes the price easy to manipulate

what happens on Yobit and makes it easy to manipulate the market and pump those shitcoins is low "Volume" not supply. which is required for an easy pump and dump but also makes the profit making by the pumpers that much harder.

[tee-rex]

Scarcity and demand will drive up the price but neither will work on its own. The only place for low volume shitcoins is a pump and dump trading exchange like yobit, Low supply makes the price easy to manipulate

what happens on Yobit and makes it easy to manipulate the market and pump those shitcoins is low "Volume" not supply. which is required for an easy pump and dump but also makes the profit making by the pumpers that much harder.

I don't see connection here. Care to explain? Volume shows the amount of coins traded, and you can get the same volume in any market, in a rising, falling, or sideways one. So it is not telling us anything specific as ultimately you can buy and sell the same amount of coins to and fro countless times without affecting the price in any significant degree. The implication is that volume itself doesn't look like a very useful metric, whatever you are trying to assess or evaluate with it.

[fox.dn]

Leaders who have a scarcity-based mindset have what I call a not-enough attitude. They're the ones who typically complain about not having enough time, money, energy or resources to achieve their goals. Typically, they frame their challenges through what they lack.

[Dreamace7]

Yes a commodity been scares does always signify the increase in the value of the commodity so reasons can make a commodity scares even if the commodity is not in so much demand

[Wingo]

Scarcity and utility is a must in order to drive an increase in value in a market. There will be no demand if there is only scarcity and no utility, a coin will just die if it has no use at all. On the other hand, if there is utility and unlimited supply, then the demand is always neutral because the supply will always be enough for the need of the market.

Another big factor is legality, the government can always impose a regulation that will greatly affect the value of a coin.

[FutureToken]

But utility can be measured in its implementation in the market and the range of comunity that it has, and BTC has that.

[kelz1]

Scarcity can also mean that the coin is prone to pump and dump manipulation. It would only take one whale to buy up half the coins and then take command of the pack of sheep. Scarcity + demand + fair distribution makes it valuable

[abojamal]

You reminded me of studying economics in college for years
Your are true
rarity is one of the factors determining the value of the assets
But the most important is the usefulness of these assets.

[Cryptrx]

This is definitely among the best posts I have read on Bitcointalk, it's really educative.