Digital scarcity

Digital scarcity is the ability to limit the supply of a digital asset in a way that can be verified by users. Before blockchain networks, digital files could usually be copied indefinitely. Crypto introduced a new system in which ownership and supply are tracked on a public ledger. Bitcoin is the best-known example because its protocol limits maximum supply to 21 million coins. Digital scarcity depends on code, network rules, consensus, and user confidence that those rules will be respected and enforced by the project.

Bitcoin’s 21 million maximum supply is an example of digital scarcity. Users can verify the supply rules through Bitcoin’s open-source code and blockchain history.