NFT Scarcity - Why Scarcity Matters When It Comes To NFT Marketplace

When it comes to trading NFTs, many NFT collectors focus primarily on rarity. While rarity is important, it is not the only factor that determines value. NFT Scarcity refers to the amount of a specific project that is available at any given time. It all comes down to supply. And if supply does not meet demand, it can lead to a rapid price increase.

NFT Scarcity In Marketplace - A Case Study

Here is a brief case study of two of the many projects currently available on Internet Computer.

Poked Bots

COPYRIGHT_MARX: Published on https://marxcommunications.com/nft-scarcity/ by Keith Peterson on 2022-06-03T10:06:41.249Z

This was one of the most anticipated drops in the Internet Computer ecosystem, and it proved to be one of the most successful. That makes sense given the incredible artwork in the collection. In fact, Dominic Williams himself commented on John Ball's artistic talent (designer at Poked Studios) in this Medium article back in 2016.

Anyone who purchased a Poked bot in the public sale for 4 ICP will notice that the floor price is now 3.7 ICP - a 7 percent decrease. It has nothing to do with scarcity. The most expensive Poked bot ever sold for an Internet Computer record of 3,000 ICP! However, bots are not in short supply. Currently, more than a quarter of the collection is available on the secondary market

ICPBunny

ICPBunny is at the polar opposite end of the spectrum. While the project is exciting and earning carrots is enjoyable, few people use bunnies as their profile pictures. The 8-bit art is nostalgic but simple. The all-time record price for a single bunny is 10 ICP. Almost every project on Internet Computer has a single sale that is larger than that.

When the floor price (currently.80 ICP) is compared to the public sale price (.35 ICP), collectors are up more than double what they paid for their bunnies. What's the story? On the secondary market, less than 5% of the bunnies are available This type of scarcity raises the floor price. There simply are not that many bunnies available, so people are willing to pay for them.

So Which Is Better, Scarcity Or Rarity?

It is not a question of which is superior. Poked bots, for example, have twelve times the volume of sales as ICPBunny. In fact, the top bot sale of 3,000 ICP is nearly equal to the total volume of bunny sales. That rarity must have meant everything to the person who sold that bot. However, scarcity is the key to long-term gains for bunny holders who refuse to part with their NFTs (which accounts for more than 95 percent of them).

When the bunnies announced a partnership with MarsPool, the number of bunnies on the market fell by about 40%. (from a little over 500 to a little over 300). That demonstrates the power of scarcity. The less of something there is available, the faster it can disappear with just one big announcement. As you can see, that offers the power to benefit an entire project.

Open Scarcity

The exciting thing about NFTs is that you can give everyone access to the media while granting one person ownership of the NFT that represents the media. This is similar to video games: your friend may have unlocked a specific skin that is purely cosmetic and has no effect on gameplay. You can enjoy this skin while playing with your friend, even if they paid for it.

In similar dynamics, NFTs can be used. They are sometimes used as crowdfunding vehicles. They have the ability to create media (or culture) that would not otherwise exist. One patron and one NFT And a jpeg or mp3 for the enjoyment of millions.

If you define 'NFTs' as works of art (music, visual, or both), then they create an incredible situation in which content no longer needs to be locked behind a paywall on a platform like Patreon. Instead, the proliferation of media associated with the NFT, such as a song, will increase the NFT's value. This affects the perceived value of future NFT drops as well.

Ownership is exclusive, but media is plentiful. There is open scarcity.

How To Create Scarcity

Pick A Layer At Which You Want Scarcity

Community Level, Role Level, Channel Level, Category Level, Reward Level, Token Level (if you have tokens).

Find A Way To Gate Access Level

A full-fledged instruction page on what is available and why people should strive for or purchase it Excellent design is always beneficial in this situation (probably the reason why NFTs seem attractive from the outside).

Here's an excerpt from the Fortnite Battle Pass page:

Create Competition For This Access

It could be as simple as an entrance exam used by schools to gain access to their community and campus, or as complex as staking NFTs to gain access to private channels in a Scene or Discord server.

Celebrate And Advertise The Scarce Object

Swinging the prize in front of everyone's eyes while creating an artificial bottleneck has always worked. People's rain will always want what it cannot have, but it must first recognize that it exists and is desired. A cohort-based course displays the number of people who have taken the entrance exam. A real estate platform will show you how many units are available and how many people have "seen" the unit in the last 24 hours. It's something that everyone does.

People Also Ask

What Makes An NFT Scarce?

If a well-known artist creates a new work of art that is in high demand, they can program the NFT attached to it as a limited edition piece with only a few copies available. In this case, the NFT would be extremely scarce because there is sufficient demand to sustain the value.

What Does Scarcity Mean In Crypto?

The concept of digital scarcity is that a digitally native asset can be programmed to have an immutably (permanently) limited supply. Though other digitally scarce assets exist today, Bitcoin was the first to introduce the concept of digital scarcity by limiting its code to 21 million bitcoins.

Which Crypto Is Scarcity?

Bitcoin's fixed-supply scarcity is most highly valued because it is coupled with accelerating demand, proven use cases, and recognized desirability. The supply of Bitcoin is limited to 21 million coins. (At the moment, there are between 18 and 19 million bitcoin in circulation.)

Conclusion

You live in the digital age, which brings with it digital scarcity. Understanding digital scarcity is important because it can add value to digital assets. NFTs are a prime example of this, and they will only grow in popularity in the future.

Even in digital form, scarcity creates value. This has been seen with bitcoin, the world's most popular cryptocurrency due to its digital scarcity.

Each cryptocurrency and NFT has unique characteristics that make them valuable, but digital scarcity is one of the primary reasons they have gained mainstream adoption. Keep an eye out for digital scarcity as it evolves and creates value in the digital world.

About The Authors

Keith Peterson - I'm an expert IT marketing professional with over 10 years of experience in various Digital Marketing channels such as SEO (search engine optimization), SEM (search engine marketing), SMO (social media optimization), ORM (online reputation management), PPC (Google Adwords, Bing Adwords), Lead Generation, Adwords campaign management, Blogging (Corporate and Personal), and so on. Web development and design are unquestionably another of my passions. In fast-paced, high-pressure environments, I excel as an SEO Executive, SEO Analyst, SR SEO Analyst, team leader, and digital marketing strategist, efficiently managing multiple projects, prioritizing and meeting tight deadlines, analyzing and solving problems.