NFTs NFI?
Last night I watched Dan Olson’s Line Goes Up - The Problem with NFTs which is a two and a quarter hour critique of Nonfungible Tokens (NFTs) beginning at first principles - which starts at the GFC. I have heard so so many explanations of the mortgage backed security crisis yet I never get sick of it. The causal chain driven by greed and wilful ignorance for which we are still experiencing the fallout is still as grimly thrilling as a slomo plane crash.
What is fascinating about Olson’s docco is that it depicts crypto and the NFTs as a continuation of that same mentality where it was presented as a solution. The GFC is narrowly diagnosed by crypto proponents as: too much power and money invested in banks which grew too large. Such concentrations of wealth, the opacity of their operations were the seeds of unchecked corruption that had infiltrated the government, ratings agencies and the reserve bank who all looked the other way as the stakes grew with the full comfort that they would be bailed out by the taxpayer when it all collapsed.
Crypto is positioned as a solution via its distributed nature - it is the democratisation of finance away from a corrupt centralised banking model. Furthermore, rules defined in code via smart contracts would make the system immune to corruption and nepotism that lead to the GFC. Subtract the powerful individuals and concentrations of power and you will have a tech driven alternative to conventional banking.
So what could go wrong?
Without giving too much away it becomes clear that technology alone can never be a solution to social and human problems. In practice people are greedy whether they work in banks or not. Bitcoin and the entire crypto market has become a vehicle for speculation.
It is also not really being used as currency. Olson explains, despite the widely publicised “bitcoin accepted” PR stunts which were either non-existent or quietly and quickly rolled back, crypto remains largely insulated from rather than entwined with the regular economy. Plus there are hundreds of alt-coins all vying for attention and subject to their own boom bust (or simply bust) cycles. This means that the entire market is little more than an expression of the same human greed that fed the GFC but crowd sourced and hype driven via social media. Such an unholy marriage between social media, memes and speculation is wildly unstable and vulnerable to misinformation and fads. Imagine the trending lines of a hashtag yet it represents real money. Another firm disincentive from it being used as a currency.
Tech is not just a new economy but a new religion. What is deeply satisfying is to watch the crypto-penny drop. The lesson that we have to learn again and again and again is that technology does not exist independently of society and humanity - it is contained within it and built from it and so retains the same human flaws baked in. Olson makes this point eloquently - hammering the same theme because it is so deeply relevant.
He looks at the societies that surround crypto not as ancillary or supportive but as the key driver of market - yet because of their social media character far more extreme and prone to misinformation that regular markets. Here greed, corruption, toxic positivity (wilful ignorance) all feed the bubble in the exact way it did the GFC.
By the time Olson finally starts discussing NFTs we’re in a grim place. As usual technology presented as liberating becomes a new form of bondage. In this case, NFTs were promised as a way that artists could profit from their work via royalties, a high-tech solution to the risks posed by the gig economy. In reality NFTs themselves became another vehicle for social-media driven speculation. What’s more Oslon notes that here as with crypto the tech is actually not fit for task - NFTs usually just point to a publicly hosted digital copy so prone to link rot, they also provided a convenient trojan horse for malware that could steal the coins from one’s wallet. Again the problem is far less the tech than the people swarming around it. Tech can be fixed but people will always remain people driven by the same impulses - our intellect has not the escape velocity to tear itself from the evolutionary impulses that got us here.
What we are left with is becoming an old story: the realities of a tech revolution will never live up to its utopian promises. To go off script a bit: because innovators revel in disruption, with egos fed by the illusion that this era is unprecendented they exist in a historical vacuum. This feeds the dream that complex social problems have simple technological solutions. There is the frequently cited belief of transcendence through innovation: the economy, society, history can all be transcended with the right algorithm. Ironically there is even precedence for this. Watch any Adam Curtis doco and you can see in the 60s and 70s similar dreams that machines would liberate us from our mortal coils. Hubris was punished then as it is now - cos we always will be human, all too human.