web3/concepts/artificial-scarcity.md

Artificial Scarcity

The abstract notion of creating an asset whose supply is artificially determined and set by the issuer instead of by its physicality or underlying whose demand curve would be generated by a use value or income cashflows.

Products like crypto asset, NFTs and sometimes art are artificially scarce.

Financial instruments like bonds, stocks and derivatives are not artificially scarce because of their underlying cashflows. Commodities are not artificially scarce because of their physicality and intrinsic value.

There is an infinite number of non-physical artificially scare assets that can be created, thus leading to a paradox where unless demand is also infinite their market value should trend towards zero.