I’m a real believer in the technology and promise of blockchain. Access to opportunities, digital ownership, programmable money, credibly neutral platforms… Big fan. Truly. The benefits of the technology are real and yes, there are certainly challenges it faces on the UX and regulatory side. However, the thing that strikes me more than anything are the incentive obstacles. When tradable assets are so easily created, it can very easily overwhelm all other motivations. Speculation drives so much within the space.
NFT Frenzy
My perspective is as someone who got to see the NFT frenzy last cycle both as a consumer and as a project builder. There is a lot of room in the crypto community for people to say they are here for the tech or the art or the community when revealed preferences show, those aren’t the real priority. Surprise, surprise, it’s the money. The other things are just helpful narratives to drive price action. And it’s in these scenarios where consumers get hurt. Speculation isn’t inherently evil. It’s a natural part of the process but in all of these systems, it has to be balanced with a healthy amount of consumption. If no one wants to hold the asset for its own sake, then the speculation will come to a nasty end eventually.
Farcaster Tokens and Incentive Systems
I have a similar concern for the Farcaster network and its assorted tokens. Experimentation with incentive systems that encourage the behavior we want to see is great. But when the attempts to game the system overrun the organic interactions we wanted to encourage, we lose the whole thing. If everyone is moxie-baiting, it can become a space where sincere conversation and interaction gets lost.
The Irony of Meme Coins
I’ve considered meme coins as the worst representation of this but Chris Carella pointed out that it’s possibly not so. When everyone knows the meme coins are based on nothing, everyone is in on the game and it can just be “fun.” (Everyone does know this, yeah?) Just because pump.fun isn’t for me, doesn’t make it bad. Pump your tokens and have fun. No artifice or obfuscation.
The Misleading Influencer Effect
Layer on top of all of that, we still have the influencer dynamics where having a following allows you to inadvertently or intentionally affect these small markets to your benefit. When someone shares with their following how amazing this new fantasy influencer game is or SocialFi app is, it’s easy for everyone to forget that an influencer is inherently early to the party and some part of their following are going to be the last holding the bag. An influencer's experience is not everyone’s experience. Just like the lottery that loves to promote their winners, there’s a lot of people buying tickets that never hit it big.
I don’t know what the answer is or if there is an answer but I do see this as an obstacle for consumer crypto. I worry that the things that could make it great are also inherently a challenge to its success. I am thankful that there are true believers out there trying to build a better system for us all to interact with. The culture of the space, “crypto,” can be at such odds with the success of the tech, “blockchain”.
