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I know that in Economics, supply scarcity drives the price upwards as demand increases. Is the same concept applicable for cryptocurrencies? Not sure which of the two coins (Bitcoin and Ethereum) are more scarce, but Bitcoin's value is much higher than Ethereum's at the moment.
asked in Cryptocurrency 81 points

1 Answer

1 vote
The same economic concept applies; in Bitcoin's case since its creation in 2009, it has generally enjoyed demand rising much faster than supply, hence price has soared. The assumption is that bitcoin will derive its value both from its use as a medium of exchange and as a store of value, and it should be stated that bitcoin's utility as a store of value is dependent on its utility as a medium of exchange.
answered 73 points
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