A scarce commodity is something that has a limited supply; it isn’t easy to create, copy, or otherwise access.
Physical stuff can be scarce (like we’ve seen with gold), but digital things are an entirely different matter. A byte is very easy and cheap to copy, as the music and film industries have painfully discovered in the early days of the internet.
That’s why digital money, such as cryptocurrency, isn’t a file you keep on your hard drive; that would be impractical as anyone with a computer would then be able to just infinitely copy it around.
Instead, all forms of digital currency – both fiat and crypto – rely on an accounting system based on digital ledgers. A ledger being an organised record of debits and credits against account holders, providing a running balance.
You may be surprised to hear that 97% of all fiat money only exists digitally. So all the money in your bank account, for example, are just entries on your bank’s accounting system. Even the 3% physical banknotes and coins are accounted for as entries on a central bank’s digital books.
Bitcoin is also based on a digital ledger. The crucial difference between Bitcoin and Fiat is the way rules are created to govern if/when/how much new money is added to the system and how the ledger is maintained.
And it just so happens that these differences change everything.
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