NFTs hint at something fundamentally wrong with humans Part 2: Dance of abundance, scarcity & NFTs

This is part 2 of a series on NFTs. Read part 1 here

Scarcity and Abundance

One of the defining forces that helped shape evolution was that the natural environment has had certain goods/resources we needed to delay death and survive/thrive (e.g., food, water, mates). Let’s refer to an aggregation of these resources needed to survive as the “List”.

As humans became more complicated & moved beyond basic nourishment, different goods/resources were added onto the “List” needed for survival — i.e., above and beyond the basic ones of food, water and mates. A side-effect of moving beyond basic nourishment was that each person’s List started to look a little different. This makes sense — it’s unlikely that all billions of humans would have the same preference for the same objects. E.g., some people LOVE shellfish while others can’t stand the taste.

Even as Lists grew in size, certain unsaid assumptions were retained. For example, each item on any List was still perceived to be scarce; perhaps a holdover of the basic nourishment List — which truly did deal in scarce resources (i.e., a geographic area couldn’t support a population beyond a certain size).

We now have two things: (a) Lists that dealt with scarce (perceived or otherwise) resources, and (b) an evolutionary hand-me-down urge to survive and thrive.

With an ability to imagine the future, it was only natural that humans would start obsessing about monopolizing access to resources on their List. There exist two strategies to do just that:

Strategy 1: Redistribute the pie — this method centers around trying to secure a higher portion of the perceived scarce resources for yourself vs others within your tribe (or even more importantly vs people outside your tribe)

Strategy 2: Make the pie bigger — this method relies on increasing the total quantity of each item on a List that is available for distribution. In other words, it tries to convert the scarcity to abundance.

Technology has been a great lever in helping us get to our List items using the second strategy. We may not often think about it this way, but the role of technology should be viewed from the lens of converting scarcity to abundance.

It’s not that this is specifically what scientists, researchers or trail blazers set out to do — science still has its roots in curiosity. However — any mainstream adoption of a practical application of science only happens when the application solves a human problem.

And there’s no problem that is more pressing than the problem of scarcity (real or perceived).

Think about the industrial revolution, that converted scarcity of manual labor into an abundance of mechanical labor. Or maybe the telecom revolution that converted scarcity of information relay/exchange into an abundance of information relay/exchange. Currently the hype around artificial intelligence too rests on it trying to convert a scarcity of reliable pattern recognition (done by the most skilled humans) to an abundance of pattern recognition (done by AI programs).

By itself then — technology is simply a means or a tool to help us achieve an end. The end being that of helping us secure access to resources that are perceived to be scarce.

Specifically, technology helps us to do so by creating abundance where scarcity existed.

And much like it would be very odd to only ever use a knife to ensure two objects stick together (maybe in the same way as people use toothpicks for club sandwiches), using a tool to accomplish the opposite goal for which it was conceived is strange — or at least very ineffective.

We come now to NFTs. If NFTs are to be a truly useful technological innovation, they ought to help us bring in abundance where scarcity existed before. However, the current role of NFTs seems to be the exact opposite.

Why do I say that?

There is nothing scarce about the assets that are backed by NFTs. They exist in abundance — and have the property of being replicable to a very high degree of fidelity.

Creating scarcity from abundance is not innovation. At best it’s exploitation, but a better word might be scam.

This doesn’t mean that a scam won’t make one rich. De Beers has been creating fake scarcity around diamonds for decades. But once you find out about it, you get the feeling that De Beers is scamming everyone.

In the case of NFTs, the scam seems even more brazen than what De Beers is trying to do. Here the sellers are not even bothering with creating a fake scarcity (say by storing excess diamonds in vaults to reduce supply).

Instead, they’ve assumed scarcity to be an immutable and universally unchallenged concept. So embedded into the very fabric of the universe that NFT promoters expect buyers to do some mental gymnastics and perceive scarcity where none exists whatsoever.

They go even further and ask buyers to value this perceived scarcity using a scarce medium of exchange (money).

Calling NFTs a scam seems harsh. But I actually don’t have a problem with the innovation — just the use.

To repeat examples, it is similar a knife being used to hold things together. I think using a knife this way is stupid, but I also think the knife is a useful tool. We must be sure we’re using it for a reasonable end.

Similarly, I do think that NFTs are a great innovation, and that they show promise as a progressive tool. But only if they add to our existing tool-kit of surviving and thriving. Specifically, how can we use NFTs as a means to increase abundance, rather than use it for the opposite ends.

The good news is that there are many ways out of this conundrum & they’re not that difficult to think up. Here’s just a couple of them

1. Idea 1: If we’re committed to the scarcity model of ownership, then we should at least ensure that the goods being backed by NFTs are scarce in nature as well. This is just not true of digital art work that can be reproduced without any loss of information.

Instead, a better good to be backed by NFTs should be the artist themself (a real-life human being is naturally scarce, especially an artist with a unique pov). What would this mean in practice? It could mean many things, a few examples could be that holders of an NFT are entitled to

  • Spend a set amount of time with the artist (time is certainly a fundamentally scarce resource)
  • Participate in co-creation of future pieces by the artist, maybe even giving inputs on the direction that the artists career can take (an artists career too is a scarce commodity)

2. Idea 2: If we’re committed to doing something for digital artifacts specifically, then we should AT LEAST choose / design NFTs that have abundance at its core. A medium of exchange that is scarce (money with scarcity built in the design choice) should not be used in conjunction with resources that are abundant.

Ideas of how to do this have been discussed in depth in this article.

Innovative tools that make our lives better come along with regular frequency. NFT & crypto are similar innovations, but for this technology to find a permanent place in humanity’s tool-kit we must use it for a purpose.

Today’s NFTs seem like markers of conspicuous consumption. Conspicuous consumption will always have a place in a society obsessed with hierarchies (perhaps an evolutionary trait in itself). In fact, each innovation that helps create abundance will also likely spawn off a niche with conspicuous consumption at its core (think of clothing vs luxury fashion or automobiles vs high-end cars).

However, it seems important to keep in mind that such niches are just that — niches.

The mark of a good technology is that it will always solve for the problem of abundance. There are many other simpler ways to solve for the problem of conspicuous consumption (aka the problem of signalling your superior place in a hierarchy).

By using NFTs & blockchain technology to solve for the problem of signaling, we run the risk of becoming like brainless zombies — doing things without having a clear reason for it.

And by using one of the most hyped up use-cases of blockchain revolution for doing something that doesn’t truly help society we also show that our love for money (another means) trumps everything else — at the risk of deteriorating our actual odds surviving and thriving.

Let’s not be brainless zombies! Is that too much to ask?

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Vichar Mohio

Writing about topics I find interesting & original. Usually a mix of philosophy, evolutionary psychology & technology