I see it as both being necessary, and, as with chicken<->egg, I don't know which must come first. But I really want both.
The fallacy of the digital gold crowd is believing that scarcity alone creates value. They're missing half of the equation: demand = value ; demand + scarcity = high value.
A thing can be scarce and have yet little or no demand, and therefore it fetches no value. Demand is created by utility. Utility can be lots of things. The utility of art or gemstones is beauty, and beauty makes us feel a certain way. Same with the utility of illicit drugs. We place high value on a feeling.
But the Bitcoin blockchain is just bits on a hard drive and the network is just packets being passed back and forth. The utility which drove it's adoption and rise in demand was it's utility as a permissionless and trustless method of exchange. Over the years it proved this utility again with again and so adoption grew.
As far as a long term store of value, for that to be true you must be able to extract value from it in the future, which means people must still value its utility as a method of exchange enough to accept it in trade for goods and services. You cannot discount the utility which originally created the value and you should not accept expansions of functionality which take scarce block space away from this utility.
A thing can be scarce and have yet little or no demand, and therefore it fetches no value. Demand is created by utility. Utility can be lots of things. The utility of art or gemstones is beauty, and beauty makes us feel a certain way. Same with the utility of illicit drugs. We place high value on a feeling.
But the Bitcoin blockchain is just bits on a hard drive and the network is just packets being passed back and forth. The utility which drove it's adoption and rise in demand was it's utility as a permissionless and trustless method of exchange. Over the years it proved this utility again with again and so adoption grew.
As far as a long term store of value, for that to be true you must be able to extract value from it in the future, which means people must still value its utility as a method of exchange enough to accept it in trade for goods and services. You cannot discount the utility which originally created the value and you should not accept expansions of functionality which take scarce block space away from this utility.
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