There is a level of distrust and disdain in the non-NFT exposed community that shouldn't be mistaken for complacency. It's not at all obvious to everyone that we're moving towards a huge and paradigm-shifting realignment in economic relations. A core reason is that over-inflation and bubble-like behavior stemming from overaccumulation seems like an obvious and difficult problem for the ecosystem, leading many - both seasoned analysts and the general public - to view the space as an impending Hindenberg.
Surpluses, dumping, idle capacity, lack of useful or tangible investment utility, and community demoralization can result from overaccumulation and contribute to the perception of a bubble. All of these problems are interconnected, and all can cause or exacerbate each other.
We are at a critical juncture right now, with the entire NFT industry at risk of being either irreversibly damaged by bad actors and their actions or growing and flourishing as a result of our collective responses.
The NFT market is precarious and fragile, prone to instability due to its immaturity, and the extreme convergence of traditional market forces, which occupy a small and intensive spatio-temporal reality. There are movements in the NFT space that happen infinitesimally faster than in tradmarkets and their impact is felt instantly and keenly. Concentrated overaccumulation becomes an immediate problem.
For example; a surplus in capitalism occurs over time when there is more production in society than people's wages can afford; in NFTs, that surplus can occur overnight, with greater intensity due to both the ease of deployment that NFTs themselves represent and the relatively small size of the buying market.
Overaccumulation in NFTs signals a crisis in the accumulation process; it is an indication that profitability is too low to continue normal levels of investment. This may result in idle capacity where creators stop producing because they cannot find profitable outlets for their tokens. Communities may also stop investing because of low profitability, or if they fear that there will not be sufficient secondary trading demand for their products (overcapacity).
A core characteristic of NFTs is that there are only so many in the world. This rarity combined with low supply is why they can command such high prices - they're difficult to obtain at any price, even when fixed-supply assets (like gold) skyrocket in price due to demand.
But while individual supplies may be limited, the overall supply is endless and boundless. A number of projects have been long on hype, short on utility - seemingly built for speculation rather than any kind of productive purpose or any artistic value. This has exacerbated already existing problems within blockchain communities stemming from reliance on highly ideological market romanticism.
Overaccumulation is not occurring because NFTs are bad investments, but because there are just too many to choose from.
Even if stratospheric appreciation occurs, you can't herd more cats into the space without innovative new mechanics.
The capitalist system fixes these problems by developing new (temporal) sites (spatial) that can absorb surplus labor and/or capital. In NFTs, spatio-temporal expansion can only happen through contrived or artificial stabilization (building in mechanisms to create cooling-off periods for token trades), and through the acquisition of new users and their effective onboarding into the space.
The biggest spatio-temporal bottleneck for NFT production and consumption is human capital. Cryptocurrencies as payment, cryptocurrencies as sources of liquidity/reserves for other assets, and projects that can interact with traditional finance still need a wider userbase in order to support their growth.
The drive to acquire new users is what leads to widespread adoption eventually. If cryptocurrencies can effectively serve as stores of value and payment, they don't need any kind of "use" case to justify their existence - but this isn't where we're at.
There's too much money around right now, and it's easy for market forces to just create new assets rather than invest in the old ones. This is why stablecoins are so massively important at this moment - they allow for huge stores of value that can be manipulated by speculators, but are also likely to be adopted as actual currencies by huge populations of economic agents.
NFTs can be viewed as a direct reaction to the centralization of ownership and wealth inequality in the modern capitalist marketplace. However - and I say this as someone who is incredibly bullish on the NFT market - they may also represent an extreme and unsustainable development in their current format, formula, and context. The market and the community at large are still struggling with establishing real-world value to match our elegant and immersive digital promise.
The question remains: Can we develop mechanisms for ownership, trade, and transaction that can adequately represent NFTs and allow for us to sustain market growth, consumption, and accumulation? What do we need—and what would be effective—to create a reliable infrastructure of trust, transparency, and accountability within the decentralized and trustless NFT landscape?
What is the relationship between ownership, value, and tangibility in a digital marketplace? What does or should that look like to ensure stability while retaining NFT features of individualization and scarcity? How do we build an economy that aligns with our values and doesn't strip away aspects of what makes NFTs so unique and exciting?
There are many possible solutions, and in my opinion, most of them must come from the grassroots level, from the buyers, builders, and makers in the space who need to find a decentralized way of addressing spatio-temporal concentrations of overaccumulation.
The blockchain space is currently in the grips of an information war with potentially dire economic repercussions. There's an urgent need to address these challenges and develop solutions that will allow the space to grow sustainably. Even if "information warfare" sounds conspiratorial or dramatic, it's important to remember that this sort of conflict has transpired throughout history with great effect - from Sun Tzu and Clausewitz to modern-day cyber warfare.
What happens in the next few cycles is critical for the future of not only NFTs but blockchain-based economic models in general. Much depends on public perception - how this collective society decides to address these challenges will decide whether or not we fall prey to attackers, manipulators, and outside forces who seek only to exploit us all.
Finding ways to better solve spatio-temporal obstacles is important, but finding ways to improve information flow about those obstacles, as well as the opportunities they represent, is equally important.