An NFT is worth the ownership stake of the server that it points at. This is a huge problem. Jacob Kastrenakes writing for the Verge details the problems, the solutions, and the problems with those solutions. Basically, as long as an NFT is corrected backed off a distributed server infrastructure, and the people running that infrastructure do a good job, and someone keeps paying for all of this, your link will keep pointing to your asset. That is really what an NFT is: a promise that someone will maintain the infrastructure for you to keep accessing your file on a distributed network.
Underlying NFT are Etherium coins. Since the beginning of this particular burst of NFT interest, the price of each coin has risen by roughly $400. While some platforms offer free to begin options for NFTs, the key is the price of gas, Etherium. The argument for the entire NFT enterprise not being a churn operation for Etherium is that a strong art market seems to exist around the product. Of course art too is very much subject to bubble dynamics.
Bubbles, while a very useful concept, are tricky. In the old sense, the are tricky because they are hard to detect and that undetectablity for folks like Eugene Fama would indicate that they may not even be a thing, conversely there are clearly speculative feedbacks that reach escape velocity from all other market dynamics. I tend to subscribe to the rational bubbles theory: bubbles are real, but people often participate knowing that they are in a bubble because they tend to think they will get in and get out before it collapses. Outside economics, Goodnight and Green’s network theory of bubbles holds that they are an indication of two distinct discourses running side-by-side, which means bubbles are not irrational — they just exceed a very narrow set of assumptions about how and why people buy stocks. At the same time it is clear that traditional bubbles exist, but that they are processes, rather than bursts. As such the interesting question is how do bubbles function in everyday talk.
In the new sense, and likely much more dangerously, bubbles are tricky because they can’t collapse. For some bizarre reason, big time hedge fund folks seem to think that they will get to pile-drive short GameStop into the ground. News flash: the GME to the moon crew are like alligators at the edge of the watering hole — they will always be waiting. Meme stocks, also known as stonks, were never tied to anything resembling technical or fundamental analysis. With so much of the market constituted by copy-cats and robots, reflective bubbles are so shiny.
FOMO is now an investing strategy. From NFTs to the stonks, even stonks for helth, investors rationally don’t want to be left behind. The core claim of Dow 36,000 which is really a book is that if all people decided that stocks were intrinsically risk free all money would flow into stocks, which would then increase in value until they stored all value. If you don’t buy in now, you will be left behind in the final rise of the market, or so the story goes. A market can fail low, but it can also fail high. Let’s be clear: stocks that can’t meaningfully move because their prices are set by external factors, such as a broad community of meme makers, are not incorporating new information.
What we see now is gold rush of gold rushes. Every scam, even selling exclusive rights to a jpeg, works now. At some point, even meme stonk advocates will need to cash out. This point at the deeper story of over-capitalization — which is really the story about when social reproduction processes are shut down because if you have enough money you can buy the end outcomes of the social. That disconnection, things not working, markets not making sense, only makes the gold rush gold rush more rational because it is your only chance.