Digital Scarcity in Web3

Jun 18, 2021·Last updated on Aug 11, 2021

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The introduction of blockchain technology has shattered the supply and demand dynamic of digital assets. 

Until recently, there was valid reason to believe that digital assets like JPEGs and MP3s were virtually worthless. This is not because we don’t value these things, but because there was no real way to limit their supply. Of course duplicating and pirating copyrighted content is illegal, but that has not kept millions of people from doing it. 

Digital scarcity was non-existent.

Insert Web3. Bitcoin showed us that we can distinguish digital assets from one another and keep track of them with a public ledger - the blockchain. As it turns out, that was just the beginning. Files that were once easily replicable can now exist as truly unique items with their own proofs of authenticity. 

From million dollar JPEGs to supercharged domains, let’s break down the new world being built around digital scarcity.

What is Scarcity? 

Before we step into the land of pixelated punks and virtual cats, let’s lay some common ground. For something to be considered scarce, its demand must greatly outweigh its supply. It is not enough for something to simply be rare, there must be real demand for it as well. Gold is a prime example, as it has a finite supply and is difficult to mine. It also has high demand for its use in jewelry and as a store of value. And that’s it, we have everything we need for scarcity - high demand, relatively low supply, and no way to quickly increase the supply.

Why Aren’t Digital Assets Scarce?

Traditionally, it was very difficult to bring real scarcity to digital assets. Copyright laws were largely ignored, and anyone could duplicate almost anything on the web with little effort. Napster may be the poster child for illegal file sharing, but they were just the first in a long line of dominoes. Jump to today, and this has greatly influenced how we perceive digital content. While streaming may have put a band-aid on this issue, we still expect virtual goods like movies and music to cost next to nothing to consume. 

But now, thanks to blockchain technology, that is all changing.

Digital Scarcity Enters the Chat

After Bitcoin, the biggest catalyst for digital scarcity has been the NFT (non-fungible token). NFTs are distinct assets that exist on the blockchain and carry with them their own certificates of authenticity. At their core, they are unique identifiers used to assign ownership of digital assets, similar to barcodes. Unlike bitcoins or dollar bills, one NFT is not exchangeable for another NFT, as they are digitally unique. And because they are stored on the blockchain, they are secure and immutable. 

How does this work?

Through a process called minting, NFTs allow a creator to add their digital signature to an asset they’ve made, similar to an author autographing one of their books. Unlike a physical autograph, though, these digital signatures can be traced and verified by anyone. This ability to point to the original version of a digital asset gives us one of the attributes we need to create digital scarcity - low supply. 

This proof of authenticity then extends to the buyer. When you purchase an NFT, your proof of ownership is also recorded on the blockchain. This makes it easy for others to verify that you are indeed the rightful owner of that specific digital asset. While someone with a skilled hand may be able to forge an author’s physical signature, blockchain technology eliminates this possibility. Anyone can still “right click and save” the image associated with an NFT, but they are not duplicating the digital signature or altering the NFT itself. 

Put this all together, and we are now able to prove the authenticity and ownership of any digital asset.

Why Will Digital Assets Have Demand?

Okay, great, we’ve solved the supply issue. But where is the demand?

Valuing digital goods is nothing new. Even though we may take their easy accessibility for granted, we hold things like films and albums in high regard and we recognize their cultural significance. As our lives move further and further into the digital realm, it is only natural that more of our possessions move online with us. 

Still, all NFTs are not created equal. Just like an author can sign more than one book, it is possible for a creator to mint more than one of the same piece of work. For instance, a digital artist can mint 100 versions of their most recent piece, and a musician can release 1000 copies of their newest album as NFTs. This is true of most NFTs, but there is one that stands apart as being truly one of a kind - the Web3 domain. 

Web3 Domains

These are not your father’s domains. Sure, Web3 domains will still be used to host websites, but they are so much more than that. From sending and receiving payments, to privately storing user data and digital assets, Web3 domains will be major parts of our digital identities. Best of all, there can only ever be one of a specific domain. Once a Web3 domain name, like brad.crypto, has been purchased, it is Brad’s for life. If someone else decides they want that domain name five years from now, they’ll have to purchase it from Brad. And because Web3 domains are NFTs, you have 100% ownership of them with zero renewal fees. Plus, no entity can seize, shut down, or otherwise tamper with a Web3 domain.

As real money continues flowing into the digital realm, investors and entrepreneurs are racing to lay claim to this new digital frontier. Just like those brave enough to venture west during the Gold Rush, many are now finding themselves in this new world with land waiting to be claimed. With the dot-com boom still fresh in our minds, the potential upside of new domains is undeniable. 

While plenty of builders and investors are still wary of this new technology, future fortunes are already being staked. Web3 domains may have limited use cases at the moment, but as their adoption grows, so too will their utility and value. A patch of California dirt didn’t mean much in the mid-1800s, but had you got to it first, you would have watched its value explode in the coming years.

If you’re ready to plant your flag on some digital real estate of your own, Unstoppable Domains can help you do just that. And if you’re looking for Web3’s beachfront property, we’ll be teaming up with to release 150+ never before seen premium domains starting June 23.

Find us today at to claim your own piece of the blockchain.