What is digital scarcity?

Digital scarcity is a new concept that addresses the limitation of resources in digital format and that is closely related to blockchain technology and the maintenance of its decentralized economic system.

Ehe term of scarcity is nothing new for our society, but if we say escasez in digital, surely almost nobody knows what it is. Digital scarcity refers to control over the abundance and existence of digital assets or resources. A situation that can allow us very positive advances in the digital world.

For example, you can allow us to regain control of our digital information and everything associated with it. At this point, regain control over our data and what can be done with it in one big step. Additionally, you can allow us to increase the value of any digital asset by limiting its number and existence.

Think about it a little and ask yourself this question: How much can a digital asset be worth that can be easily duplicated and of which there can be an infinite existence? The truth is that such an asset would be worth very little or nothing, because it would be easy to create and accumulate.

A good example to explain the positives of the scarcity of certain items is fiat money. While not a digital item, the fiat money it has a limited existence. This is because banks do not print infinite amounts of money, although they can. The reason for this is very simple, Printing infinite amounts of money leads to it losing value.

Well, this same principle also applies in the digital world and we have verified them in the Bitcoin, for example. Of course, the practice has also led us to discover positive and negative aspects of it. That is why this article will explain in the simplest way the different aspects of digital scarcity and its impact.

Digital scarcity, revaluing digital resources

Until now, digital resources had the property of existing without limitation. To do this, all that remains is to make an exact copy of them. In this way, a resource that was unique at first, grows in existence exponentially until it reaches infinity. Due to this, at the end of the growth chain the resource ends up losing that value.

This situation is negative both for the resource and for whoever created it. For example, a writer can create a digital book and in principle sell the book for a price of $ 1 USD. But once the resource starts copying uncontrollably it starts to lose value. In the end, there will be so many copies of it that the theoretical value of the book would be 0. An unfavorable situation for the author who could see his effort without paying for this circumstance. “Digital abundance”.

Well, digital scarcity can help us improve this. For this, the well it must have a limited existence. This guarantees that access to said book cannot be infinite, guaranteeing an appropriate value for it at all times. Achieving this has generated lengthy debate and research on technologies that were trying to achieve this goal.

Use of technologies and techniques to generate digital scarcity

Since the appearance of the first commercial software, one of the main concerns of companies was to control unauthorized copies of them. This led many companies to create techniques to avoid illegal copying, and which were aimed at creating this digital shortage that we are talking about.

• Do you remember serial numbers from the installers of Office, Windows and other softwares? Well those were rudimentary ways to avoid unauthorized copying and create digital shortages. These methods progressed when companies included anti-copy protections on their CDs or DVDs. As is known, these protections were easily circumvented.
• Another common way to generate scarcity is by calling versions. A company can have a product with different versions and different properties for each version. Thus, the simplest and most limited are cheaper and the most complete are more expensive. Now you know the reason why Microsoft presents 14 different versions of Windows 10. There is also the so-called Bundling o "Packaged whole". By this means, the company forces you to purchase a whole set of tools even if you only need one.
• More recently the DRM (Digital Rights Management - Digital Rights Management). This later became the pinnacle of control techniques in different industries. However, this latest creation would be the most controversial of all of them. This because it violates the primary rights of consumers. For example, DRM "Legalizes" that the production companies can spy on you. This in order to know if you respect or not the agreements to access DRM-protected content.

Despite everything, recently a new technology which includes digital scarcity techniques from a whole new perspective. Technology blockchain It has among its advantages, the management of the digital assets that it generates in a limited way, preventing malicious duplication.

Blockchain technology and digital scarcity

Blockchain technology is closely related to the concept of digital scarcity. In fact, decentralized digital scarcity is a fundamental part of its operation since the birth of the Bitcoin.

When Satoshi Nakamoto brought to light the whitepaper of Bitcoin, this highlighted that the cryptocurrency would have a limited existence. Bitcoin would be limited to the existence of a total close to 21 million coins. In this way, Nakamoto ensured that the value of each bitcoin did not decrease over time but would increase.

But this is not the only case of digital shortage on the blockchain, in fact, emission limitation is present in almost all cryptocurrencies. And while some of the cryptocurrencies don't have one "Hard limitation", if they have a limitation in their inflationary emission, as in the case of Ethereum o Monero.

On the other hand, the digital shortage in blockchain is a fact that helps cryptocurrencies have a value and make that resource unique. A property that can be applied to everything. From collectibles, books and music to any tokenized digital asset.

In this sense, blockchain technology and its vision of decentralized digital shortage transform the field of digital data as we know it. Not only for creating scarcity with it, but also for turning it into a tool that benefits all of us. Both to creators who see their paid effort, and to consumers who have access to the asset with respected rights at all times.