Hey folks,

This is a matter I often find quite infuriating but I find that in discussion the matter often boils down to a "You think this, I think that"-situation, and I find that unacceptable.

A friend of mine is very much buying into the whole crypto-thing and he can of course do anything with his money as he pleases, but he often tries to engage me in discussion about cryptocurrency's usefulness as currency. His position is that something gains "value" (as he puts it) from being scarce. That he blends together with the notion that that is the "best" currency which is scarcest. When his dubious arguments become a bit less foggy, he usually resorts to arguing that it is "best" because it ensures currency stability (unlike those evil central banks) even in the absence of government. In his mind, an innately stable currency will prevent e.g. hyperinflation if governments collapse / vanish due to humans having an innate demand for whatever is scarcest and that will develop as the optimal currency. Hence the need for bitcoin (which he ironically would never use as currency due to its high transaction costs, only as investment) in his view. I should mention that he by the way does not seem to accept the preservance of value as an important feature of money (although that again seems to motivate his desire for scarcity, I'm at a loss).

Notwithstanding my tentative arguments that e.g. my fingernail clippings are fairly scarce yet people have no positive willingness to pay for them, I usually try to argue that scarcity is a supply-side argument in the determining of market prices (usually as a proxy for difficulty or cost of producing a unit of a good) and there is in principle no reason to assume that humans have an innate demand for scarcity, thereby scarcity only affects the supply side of the market, not the demand-side unless in some exceptional cases (art, collectibles, etc.). I try to reason that scarcity is historically a good instrumental value of a currency because it limits exogenous money supply shocks due to e.g. discovering tons of precious metals or pearls but that that is it.

However, I wonder how to argue against the principal point. In the end, he and I both just posit different underlying preference structures of humans. Does anyone have experience arguing this position? I'm tired of arguing with him about this (and much else) yet the main point still infuriates me. I'm not really in the monetary side of economics so I have little experience discussing this point.