1) De Beers manufactured diamond scarcity, and is now exposing its own lie by peddling synthetics.

For centuries, societies around the world have ascribed great value to diamonds—a stone with little innate value that become icon of wealth and love. Though perception continues to reinforce the belief that diamonds are rare, they have been prevalent since the late 1800s when enormous mines were located in South Africa. Instead, the financiers behind these mines—led by the company De Beers—manufactured false scarcity. This concept, reinforced by the media and internalized in consumers, has normalized diamonds’ high prices for decades.

Established in 1888, De Beers held a monopoly over diamond mining, trading and retail from 1938 until the 21st century. The centralized management of the diamond industry meant that De Beers could continue to raise prices for the stone at the same time that it indoctrinated the idea into the consumer psyche that a purchase diamond could not be resold with the slogan “a diamond is forever.” Even today, Tiffany’s and other diamond sellers offer discouragingly low buyback prices.

Between 1939 and 1979, the value of De Beers diamond sales grew almost one hundred times. Meanwhile, the company has taken pains to protect its ideology, as well as its large inventory, to fend off the depreciation of a diamond’s value. As recently as 2015, De Beers launched a marketing campaign called “Real is Rare” to combat the rise in the synthetic diamonds.

Since then however, De Beers has moved on to produce artificial diamonds with Lightbox, a consumer brand for fashion jewelry that retails synthetic gems at $200 to $800—about 75% the cost of its artificial diamond competitors, and wildly cheaper than the average $6,351 spent on a diamond ring. The synthetics come in different colors, and account for 2% of the contemporary diamond market, which analysts predict will rise to 10% by 2030.

This business opportunity direct conflicts with De Beers’ decades-old philosophy. Sixty-eight percent of respondents in a survey said that they do not consider artificial diamonds to be “real.” However, given the availability of literature on the diamond industry’s history and changing perceptions of marriage in modern society, naturally-occurring diamonds are decreasing in value.

It’s unclear as to whether lower prices for synthetics, which defy the boundaries of scarcity as they can be produced indefinitely, will appeal to consumers. Will synthetics carry the same meaning as authentic diamonds? Are diamonds on the decline in society regardless? Does the artificiality of a diamond simply not matter at all because of De Beers’ manipulation of supply and demand for decades? If De Beers can divorce diamonds from a one-time purchase for “true love,” perhaps their artificial stones will sell, but there’s also a chance that the company will cannibalize decades of advertising work and tight control of supply and demand by making the artificial diamonds an “anyday” purchase.

Bitcoin’s decentralized market fueled consumer hype and increased the value of the cryptocurrency.

When it comes to the consumer economy, product scarcity is almost always a form of manufactured scarcity: most companies act as centralized systems like De Beers, which calculated how to pit supply against demand in order to reap the highest sell-through on diamonds. Similarly, a brand like Supreme will intentionally create a small number of each SKU, knowing that the inventory will sell out, even though it will continue to feed the secondary market.

However, digital decentralized systems illuminate a different side of the consumer economy—what happens when all the power rests in the hands of consumers. Looking at the rise and fall in the value of bitcoins illuminates the entire premise of the cryptocurrency as an exercise in manufactured scarcity.

Central to any currency is the value society attaches to it, whether it is dictated by a centralized agent or not. Though the U.S. dollar became an entirely faith-based mechanism when the federal government left the gold standard, gold was also an arbitrary marker of value—just as diamonds or silver. Some might argue that bitcoin’s value is anchored in math, but this too is ascribed rather than innate.

Instead, it was the manufactured scarcity of bitcoin that made it valuable. At the digital currency’s launch in 2009, a single bitcoin was practically worthless—amounting to pennies. But from the outset, there were a finite number of bitcoins available—about 21 million. Unlike a centralized system, which could decide to produce more inventory, decentralization of bitcoin made the cryptocurrency a scarce resource. Supply would not meet demand.

The fixed number of bitcoins on the market influenced consumer behavior, and as more consumers snatched them up, their value rose to new heights. At the time of writing in July 2018, one bitcoin is worth $6,701.00. But at its peak in December 2017, a single bitcoin was valued at a whopping $19,180.25.

Though many consumers have held onto their bitcoins, waiting for the right time to sell, other early adopters have misplaced or damaged their hard drives, forget their private keys or overwrote their files. In January 2018, analysts estimated that these lost bitcoins number somewhere between 2.7 and 3.7 million—more than $22.6 billion worth of cryptocurrency that cannot be retrieved and will not be replaced by a bank given the decentralization of the currency.

2) Kate Spade’s death highlighted the finite supply of products designed under her direction, inflating the value of her brand.

Other events outside of a company’s or society’s control can also affect scarcity. A fashion designer’s death, for example, often leads to a spike in sales. Although Kate Spade sold the last stake in her company to Tapestry in 2006 and hadn’t designed for the brand since 2007, the day that she passed away in June 2018 saw an uptick in sales and prices.

Tradesy, a peer-to-peer resale marketplace, saw sales of bags and other accessories from her eponymous brand jump 800%—on the secondary market, once $50 bags increased in value to $300. Likely, some of these items were older styles, not currently available outside of the resale market, which made them even more precious. But Frances Valentine—Spade’s second company specialized in apparel and accessories that has not yet well-known—also witnessed similar price jumps on its site, which experienced technical difficulties because of high traffic. Multiple products sold out by the afternoon and two days later, all SKUs on the site’s “new arrivals” section were gone.

Though fashion design houses see creative directors come and go, and though their founders name successors, each comes with their own vision. While Kate Spade named Deborah Lloyd her successor after stepping down in 2007, and current creative director Nicola Glass replaced Lloyd in 2017, Spade’s death infused newfound value into her namesake brand and its products. Similarly, after designer Alexander McQueen passed away in 2010, one British wholesaler saw a 1,400% rise in sales—in 2017 one collector auctioned off his bounty of Alexander McQueen jewelry for $2.6 million at Sotheby’s. As fashion historian Valerie Steele writes, “Just as the value of artists’ work often goes up after their deaths, so does the value of some designers’ work—and for the same basic reason: There is no more work being produced so it will become more rare.” Kate Spade is a popular brand and a forerunner in accessible luxury, but despite the company’s democratization of high-end accessories, prices still peaked after her death, knowing that the founder would never create another design.