Reflection: "Scarcity" Alone is not Enough to Make Something Valuable

Many years ago, I very briefly was the owner of some old collectible postage stamps that were extremely rare.

Issued locally in a former British colony in Africa, they were basically stamps of Great Britain that the local administration took to the only printer in town (aka "the Newspaper") and had typographically overprinted with the name of the colony, and denomination in the local currency.

As a result, only a total of 1440 examples of the one penny and two penny stamps, and 720 examples of the five penny stamp came into being.

Even using the most conservative interpretation of the term, in the world of stamp collecting that few examples of any given postage stamp qualifies it as ”incredibly rare,” given that we are not talking about something with a major mistake, like an upside-down airplane.

Consequently, we might be given to think that these stamps would trade for the King's ransom.

However, they don't. Whereas they are not exactly cheap, they also surpassed in price by thousands of other stamps of the era.

You might be given to wondering why, and the answer serves as an object lesson in the fact that scarcity alone it's not enough to make something desirable and valuable.

How so?

Well, these particular stamps are so far off the beaten track of popular stamp collecting (and in some ways serve as little more than a historical footnote) that whereas they are extremely scarce, essentially almost nobody cares that they exist.

As a further illustration of this point, I'm quite familiar with stamp issues of which there were perhaps 1000 times more copies created that are far more valuable because they happen to be from collecting areas that are very popular and thus are in high demand.

The Whole "Scarcity" Issue...

So why am I bringing this up right now?

Lately, I have been contemplating the whole NFT craze (which I have personally given a "hard pass," to date), along with the obvious excitement that seems to follow the entire concept of ”digital scarcity.”

Meanwhile, I also find myself thinking about the plethora of cryptocurrencies that are being issued, some of which are now touting as their primary point of differentiation the fact that ”very few of these are going to be issued.”

It almost feels like they are capitalizing on going the opposite direction from highly inflationary "meme coins" that get released quantities reaching untold quintillions of tokens... trading at $0.0000000001 each.

That's all fine and good, but ultimately "scarcity" doesn't amount to a hill of beans unless what you have to offer is perceived as desirable to people... because scarcity alone really doesn't have a leg to stand on.

Now, I may not be an expert on NFTs or cryptocurrencies, but I have been deeply entrenched in various "collectibles" fields for a good 40+ years, and so have developed a pretty keen understanding of the psychology and market forces that drive such concepts as "scarcity" as market valuation forces.

And you have to be able to back up that scarcity/uniqueness with something substantive... or you just have a pile of clay bricks, rather than a pile of gold bricks.

And clay bricks just aren't worth very much once the hype dies down... even in a "limited edition" of 100!

Thanks for reading, and have a great remainder of your week!

How about YOU? What are your thoughts on "scarcity" and value? How do you feel about the somewhat crazy world of NFTs? Comments, feedback and other interaction is invited and welcomed! Because — after all — SOCIAL content is about interacting, right? Leave a comment — share your experiences — be part of the conversation!

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Created at 20220329 23:22 PDT
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