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Comment by ur-whale | Hacker News Reader

>they are determined by supply and demand

You are correct, but only in theory: this requires the precondition that people are rational economic actors.

In practice, people are weird, and the scarcity of supply creates a demand.

There is therefore a weird feedback loop between the supply and the demand, and scarcity alone is enough to create "value".

Examples:

    - Beanie babies

    - Magic the gathering cards

    - Pokemon cards

    - Baseball cards

    - DaVinci paintings (where anyone can have an 8k x 8k exact reproduction, but the original is worth a fortune)

    - etc...

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> There is therefore a weird feedback loop between the supply and the demand, and scarcity alone is enough to create "value".

Yes. Temporarily. And a much less weird feedback loop is enough to annihilate all of this “value” at some later point in time (the “crash”).

A good example of this is stamp collecting. A grandparent carefully collected stamp albums for his grandchildren. They are now pretty much worthless, because the fashion for stamp collecting has gone. I hope he enjoyed the process of collecting.

Is that true? Time to buy the dip in stamps!

Then, I can issue NFTs for my old stamps.

Scarcity alone is definitely not enough to create value. The one piece of artwork I've made in my life is a scarce resource, but that doesn't mean I have people buying it up like its an NFT.

This is true, you need demand too. But NFTs make scarcity possible in a domain in which it was not possible before (digital art, for example). You have demand from collectors and speculators who want to create a market for "scarce" digital art. You have supply from creators who are quite happy to meet that demand. And you have NFTs, a way to make digital art scarce (for some definition of scarce.)

No, the scarcity alone isn’t enough. There has to be some existing interest to make the “exclusivity” something people actually care about.

Each one of my paintings is completely unique and there are very few. Nobody cares and wouldn’t pay any premium for them.

> DaVinci paintings

And there's the demand -- money laundering and smuggling ill-gotten gains (nazis had a lot of paintings)

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