Money Talks
An Oversupply of NFTs Is Going to Kill the Golden Goose
Welcome to the new tragedy of the commons
In the 1950s, the Grand Banks off the coast of Newfoundland was, as it had been for centuries, one of the richest fisheries in the world, home to a massive and endlessly replenished population of cod. The fishery provided food for people across North America, and jobs to tens of thousands of fishermen and fish plant workers. But new technology — radar, sonar, electronic navigation systems, and massive drift nets — was allowing trawlers to fish for longer, and to take more fish with every trip. The result was that cod were being pulled from the ocean faster than they could replace themselves. In the early 1970s, the cod harvest collapsed, and while it rebounded temporarily, by the early 1990s the Grand Banks were effectively fished out. The Canadian government shut the fishery down, putting more than 35,000 people out of work.
What happened to the Grand Banks fishery was an example of what the ecologist Garrett Hardin famously called “the tragedy of the commons.” If there’s a common resource that everyone has an individual incentive to exploit, it will eventually be used up in the absence of regulation or communal norms. It’s a problem that’s not unique to fisheries. It helps drive deforestation and the depletion…
