Pokemon Cards, Tokenization and Scarcity

Posted by Unspector Blog on Wednesday, May 26, 2021

A Pokemon cards “shortage” is impossible. Yet here we are.

To be blatantly clear: Pokemon cards are - in essence - imprinted 6.3 cm by 8.8 cm pieces of cardboard. Any real shortage would be traceable to a shortage of either cardboard, color or printing capacity. Though this may seem clear to most consumers, the nefarious house of cards (pun intended) and the implications for perceived value of many other tokens of value are much larger than anticipated.

I collected Pokemon trading cards religiously throughout most of elementary school. Therefore I can somewhat remember the appeal of collecting your favorite Pokemon.
In theory trading cards aren’t a new concept and go back to baseball cards (or panini football stickers), which - too - had no inherent value. Their perceived value was created through articial scarcity: often trading card “editions” are only available for a limited time and different trading cards are printed and supplied to the market with differing frequency. When the time is up, no additional cards of this edition are supplied to the market (which could raise the value of all cards of this edition) and during their run a few cards stay ultra rare.

Additionally trading cards based on sports or real life events have an inherent scarcity, since the pool of really good (and therfore sought after) players or events is limited. Trading card games based on fantasy franchises like Magic the Gathering or Pokemon don’t really have this limitation and can - in theory - invent unlimited cards to be distributed in arbitrary batch sizes. Though distributing unlimited cards would dilute the perceived value of everyone holding trading cards (and possibly influencing their friends to hold trading cards as well).

This bridges the gap from Pokemon cards to the topic of good monetary policy and further on to crypto currencies and NFTs.

Realistically there cannot be more demand for “Pokemon cards” (or printed banknotes for that matter) than can be produced. So why is anyone believing or accepting the story of a Pokemon cards shortage?
On the other hand: There are crypto currencies or NFTs (which could represent a Pokemon card), which cannot be minted or dropped more often than a defined batch size or for a limited amount of time. Sure some alt-coins are simply a scam and many NFTs are probably a scam, as well. But in theory it is possible to create pokemon cards with inherent scarcity on the blockchain - and it is no stretch to assume that there are people willing to accept this as being valuable, since there are people who are accepting perceived value printed on a piece of paper, with no inherent scarcity at all.

In the end inventing new Pokemons and therefore diluting my perceived value was, what drove 7-year-old me to leave Pokemon behind and buy into the Yu-Gi-Oh! trading cards market. In my mind there are only 151 real Pokemon, but Nintendo decided to invent hundreds more, in turn making my 151 less valuable. Blockchain could be a way to mitigate this perceived value dilution in the future.