Scarcity

Classically value is derived from scarcity and not function. Scarcity is just a parameter of limited distribution. Limited distribution is a symptom of inefficiency. Sometimes it is just not possible to distribute efficiently. Numerous road-blocks present themselves. Difficulty of access, the uncertainty of a potential for transaction and such other factors emerge. Sometimes nodes in the network refuse to present themselves for trade and then the entire network of trade gets broken. To convince individual nodes to trade, negotiation of various types happens. A haggling over value, a negotiation over trade volume, and the percentage of transaction to be rendered as tax takes place. Most nodes want to trade but are looking for the appropriate atmosphere and conditions for trade. Negotiations provide such conditions and they relent and trade.

Because of the negotiation process, only a limited number of nodes are in the trading position at one time. The nodes are ready only sequentially and only a few at a time. A natural scarcity naturally develops and because of this scarcity, value for the exchange develops. The exchange goes not have any value if there are no takers, that is if there is no demand. Demand does not always exist. Sometimes it has to be created by pointing at something that is presently missing. If a demand fails to develop even after a lot of pointing, there is nothing to be done than wait for some alignment by accident or by need. The transaction space has to always be full. If some entities grow too big or if some entities drop-out, they have to be replaced.

A market cannot deal with a vacuum. The desire to buy and sell is consistently manifesting in the system. And these desires are met by the fluctuating pattern of nodes that offer demand and consume supply.

Scarcity is a naturally occurring phenomenon. But in certain cases, it is also mimicked and constructed. When the urge to create value is stemming from a manipulatory force, the perception of scarcity is not absolute. Some can perceive the commodity to be benign in nature and some can sense that the commodity actually is valuable. Artificial creation of scarcity is not entirely successful as a strategy and the scope of the transaction is never fully fulfilled. The commodity is in this case accused of being a mere fetish object which draws from an inflated bubble for its essence. The moment the bubble bursts, there is no demand anymore.

But the bubble never bursts, it just contracts and expands. The tremors of the bubble keep the system in a state of fragility though. And prophecies of doomsday scenarios are found abundantly.

But the doomsday will never come, because the alarm has already been sounded. Fear already has the system in its cold grip and what the doomsday prophets want is already being done to remedy the situation.

So, artificial and natural scarcity are both the same eventually. Everything artificial is mimicking a natural phenomenon. The purpose of the remedy is to reign in the growth of the bubble. Value can escalate but not at such a pace that it destabilises its organic life. Acceleration and braking have to be thought of as simultaneous systems and they are deployed as such.