Why crypto has a fundamental design fault

xuanling11
Coinmonks
Published in
4 min readDec 18, 2022

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Photo by Markus Spiske on Unsplash

Scarcity is the fundamental economic problem of having unlimited wants and needs, but limited resources to fulfill those wants and needs. In other words, it refers to the limited availability of a resource, whether it is a tangible resource like water or oil, or a intangible resource like time or attention.

Because resources are limited, people must make choices about how to allocate those resources in order to satisfy their needs and wants. This often involves trade-offs, where one must give up one thing in order to obtain another. For example, an individual may have to choose between buying a new car or saving money for a down payment on a house.

Scarcity is a fundamental concept in economics, and it affects every person and society. It shapes the way that people make decisions, and it drives economic activity as people try to find ways to satisfy their needs and wants in the face of limited resources.

Does crypto has scarcity

Cryptocurrencies, like many other forms of money, can be thought of as having a certain level of scarcity. This is because most cryptocurrencies have a limited supply that cannot be exceeded. For example, the total number of bitcoins that will ever exist is capped at 21 million, and as of December 2021, around 18.7 million bitcoins have been mined. This limited supply is designed to mimic the scarcity of gold and other precious metals, which are also widely used as money because they are relatively scarce and difficult to produce.

However, it is important to note that the scarcity of cryptocurrencies is not the same as the scarcity of physical resources like oil or gold. Cryptocurrencies are digital assets that exist on a decentralized network, and they are created and transferred using complex algorithms and encryption. While their supply may be limited, they do not require the same level of resources to produce as physical goods.

In addition, the value of cryptocurrencies is not based solely on their scarcity. The value of a cryptocurrency is determined by a variety of factors, including its use as a medium of exchange, the level of demand for it, and the stability of the network on which it is based. As with any asset, the value of a cryptocurrency can fluctuate significantly over…

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