Digital scarcity occurs when a digital asset, such as an NFT (non-fungible token), is intentionally limited in supply. While digital goods can be replicated infinitely, mechanisms are put in place—like blockchain technology—to create proof of ownership and limit supply. This scarcity can drive value, similar to how limited editions work in the physical world. Digital scarcity is crucial for the market dynamics of digital art, collectibles, and other digital goods, encouraging uniqueness and fostering value appreciation over time.