Who let the bears out? What is happening in the NFT market?
In late August I was interviewed by a prominent journalist from the Boston Globe about my affinity for Unstoppable Domains’ products, NFTs and vision of the entire decentralised, blockchain Metaverse. The man is a legend in the realm of big tech reporting, but is somewhat sceptical, unable to get his head around the long-term viability or usefulness of decentralised domains and, in particular, the evolution of digital art into a thriving NFT movement. Or so he said. For I, too, am a sceptic and suspect that he was playing devil’s advocate, as he peppered me with a barrage of questions most laymen might ask. It was an exhilarating experience to speak with someone who knows so much, but feigns ignorance to get to the heart of the story.
I shall now paraphrase some of these important questions, which must be put to bed before Web 3.0 can truly awaken.
Is the NFT space ballooning too quickly and, perhaps, becoming reminiscent of the dot-com bubble?
Indeed, it is. Will there be washouts and knockouts? Indubitably. Is that a reason to run for the hills? Absolutely not. Progress is only possible through change. Yes, the current price discovery mode is unsustainable, a reality check will dawn and an inevitable fatigue will set in to winnow real artists from hobbyist journeymen and imposters… but shaking out of the amateurs is a positive, cleansing purge, that will foster the long-term health and longevity of the market.
As we saw with the indomitable resolve displayed in the creation of Beeple’s “Everydays: the First 5000 Days” piece, which was auctioned off by Christie’s in spring 2021 for over 69 million dollars. There is simply no substitute for time in the market—it always beats trying to time the market, as the saying goes. Apart from a few anomalies, who hit the jackpot, it is people who have been grinding away for years, polishing their craft, who stand to benefit the most long-term and who will rise to the top. As Warren Buffet famously put it: “Only when the tide goes out do you discover who's been swimming naked.” The reckoning is coming, but true artists have nothing to worry about. Fair-weather hobbyists and happy-go-lucky apes will likely find their dreams shipwrecked and move on to the next shiny thing, or ape off to paddle around in shallower waters post-reset.
Without a doubt, a black swan event could significantly set back the advent of a freer, fairer world. It was unnerving to learn, in September, about Palantir ploughing 50 million dollars into physical gold (an asset notorious for its poor performance as a hedge over the past decade), reportedly, to insulate themselves against such an eventuality. Perhaps this is the canary in the mine? But few worthwhile endeavours are easy to accomplish or void of risk. As in every revolution there will be volatility and a violent surge in the collective consciousness, as the status quo is obliterated by change.
Still, the torrent of bullishly glad tidings marches on unrelentingly and with giant corporations, such as the Binance Exchange, heavily investing in the NFT space, this bull parade will continue for quite a while yet.
What may seem like a black swan event through the contemporary lens, could easily be construed as a windfall, with the enhanced optics of hindsight. Take the C-19 pandemic. Setting aside its tragic toll on human life, we know that it also caused panic to peak in the markets. In the media it was touted as a market-crushing unforeseen event, and the markets, predictably, crashed… but they bounced back very quickly, as in reality, the pandemic brought enormous positive energy to the markets and a deluge of new blood into the crypto space. The pandemic also clearly demonstrated to the world that many people can work just as—if not more—efficiently from home, as they are better rested and happier, since instead of wasting away on dreary, pointless commutes, they get to spend more time with their families. This happiness translated into a huge leap in productivity and energy savings, as companies were able to reduce their office space and slash energy usage, which, in turn, preserves the environment.
With their daily routines disrupted, the world population, trapped in lockdown mode, found time on their hands and turned to the Internet in search of answers and knowledge, no longer able to hide their heads in the sand, resigned to sleepwalking through their daily routines of sleep-work-repeat. Do you see? Disruption can be creative and bring about positive change.
As the old adage goes: necessity is the mother of invention. Growing pains are inevitable in this space and evolution is not ushered in by conscious choice, rather, it is triggered as we scramble to tap dance on the hot, shifting sands of reality. When conditions become unsustainable and untenable, behavioural patterns change and are, eventually, hardwired. The watershed moment for mass adoption will likely be the successful launch of Eth 2.0, within the next year, as this upgrade will speed up the network and bring the gas fees crashing down, allowing mass adoption to spread its wings. Gas fees, paid in ETH, are required to process changes on the Ethereum blockchain, most of these revolve around managing smart contracts, or algorithms that enable trustless transactions between participants, the benefits of which include rendering middlemen, such as banks, obsolete.
Is the crypto market perfect and is it too big to fail already?
Absolutely not on both counts, but the genie is, most certainly, out of the bottle for it is impossible to unknown freedom, as it were. Still, we must be mindful of the fact that at the time of reporting the entire crypto market is worth just a hair under 2.4 trillion dollars, hence, wild price swings are not uncommon, because it takes a relatively small amount of money to move the market, as was made painfully evident in May by the market manipulators, like Elon Musk and the big banks. Fortunately, Michael Saylor was deliberately careful not to influence the markets, when making his gigantic purchases of Bitcoin.
Despite all the fears and maniacal manipulation by engorged whales, the privacy, authenticity and ethical business practice problems cryptography solves, greatly outweigh the current paucity of regulation and oversight, as well as other growing pains. These issues, too, will be organically resolved along the way and volatility will ebb, as it does in the wake of every major industrial revolution.
- Vitalik Buterin on ETH 2.0
- Bankster parasites compared, by Teeka Tiwari, to leeches on the neck of humanity, sapping our life-force
- Beeple’s 5000 days
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