It's possible that someone was so crypto-rich that spending $600K USD just to say they "owned" Nyan cat was worth it for the lulz, or for the flex.
However, paying $600K for a blockchain meme is also the ideal way to manufacture the illusion of demand for blockchain memes. If you're part of a business that wants to make money by selling memes on the blockchain, seeding the frenzy with a very public $600K purchase of an iconic meme is a great way to get the party started.
If you want to take it to the next level, you could re-list the Nyan Cat NFT and then re-buy it from yourself using a second wallet that isn't obviously linked to the first. Now the "price" of Nyan Cat looks like it has gone up, as recorded publicly in the Blockchain, even though nothing changed hands. A well capitalized individual could continue re-selling Nyan cat to themselves from different wallets at increasingly high values to create the illusion of a bidding war: "Nyan Cat value rises 10x in a week!" This creates demand from others who want in on the action.
I guarantee NFT sellers will be using this sale to lend credibility to their ventures. Plenty of people will rush to "buy" other memes with expectations of flipping them to someone else.
With NFT's because the provenance and price history is so easily visible, platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value much easier than fine art collectors or other property holders can.
This alters a lot of assumptions and behavior about the market. Efficient up to the second price history of one NFT and a basket of other NFTs is always available. Removes the need for appraisals and the discretion of lenders. Liquidity pools and dynamic rates are just available.
Obvious rebuttal: "But what if the market dries up and everyone is overlevered and lenders can't liquidate the NFTs"
Okay. No different than any other art and property market. For anyone passing by, don't create a fictional higher standard just because you don't want to respect the existence of this market.
Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?
So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily? And a disadvantage is that I don't actually get to own a painting.
What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork? A physical painting is either in your possession or it isn't, but "owning" Nyan Cat is only valuable so long as people want Nyan Cat AND agree that the chain it's on is a valuable way to represent ownership.
The NFT market is only providing scarcity to digital collectibles. There is no NFT market for physical assets, markets might exist but "the market" is not choosing them because of the obvious shortcomings, so therefore that's not really an argument because we aren't talking about those. The remainder of this post is referring to digital-native collectibles:
> Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?
Because of the structure of that market, the purchasers are not seeking liquidity at the time of purchase. The available lenders are not there as soon as a purchase occurred, and are lending to the universe of fine art not just yours, so the price history is not available. Between private sales, theft, duplicates, inheritances and liquidations, the appraisals are necessary to prove provenance and price history. If you had a banking relationship with the banker right there with you at the auction, you may be able to get liquidity for your purchase very quickly in the matter of a few business days. Such "privilege" is not necessary in the NFT market, making it faster and more efficient.
> So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily?
Royalties to the original artist are accomplished more easily. There are a lot of NFTs coded to pay X% to the original artist upon transfer and other use cases. This is a world's apart better for artists and shifts the incentives of that whole market, and so the "market of artists" is immediately choosing that because its a new century with better options. They are also people more aligned to "support living artists", so the market is forming rapidly as artists get liquid. There are also a lot of other creative people that have been doing other things with their life, that are finding it economically viable to be a creative now.
They all inherit the same financial infrastructure.
> What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork?
The earlier date proves earlier original existence. Consensus can also be managed by the market and the issuer as a fallback. And then of course the courts are a further fallback. The existing art world relies on issuers to not dilute their market and trust of it (if they say its a limited edition, we have to trust that well after the artist is dead). This on-chain world provides efficiencies that don't have to be a cure all, but will function as such most of the time any way.
This whole development of an art/creative ecosystem in coordination with a new financial innovation reminds me of how the development and adoption of double entry bookkeeping in Florence (and the rest of Italy) and the wealth created in that era helped fund and provide the foundation for the Renaissance. Artists such as Da Vinci worked for patrons.
I think this year will be very interesting to see how it adapts and evolves, given the network congestion. Higher value tickets wouldn’t really be affected though and need the immutable provenance more for now
> platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value
Presumably the lenders are aware of the high risk of wash trading in these securities.
If someone takes an NFT and "buys" it from themselves with 100% of their crypto cash, they are now "worth" 2X: They have their original cash, and an NFT that was last priced at 100% of their original cash.
> If you want to take it to the next level, you could re-list the Nyan Cat NFT and then re-buy it from yourself using a second wallet that isn't obviously linked to the first.
Definitely. Blockchain is incredibly attractive for this type of fraud because wallet addresses aren't bank accounts. Anyone can create new wallets or even use tricks to hide the source of funds (send to exchange, withdraw from exchange to different wallet).
Cryptocurrencies are a dream come true for perpetrators of fraud like this. Buyer beware.
It's called wash trading and for securities, it is illegal. I dont think the Nyan Cat NFT is a security. Its more like a commodity. And yes, wash trading and money laundering via art is an age-old practice.
IANAL so I'm probably misusing the term. But it definitely feels like buying and selling the asset secretly to inflate it's market value is some sort of fraud
This is amusing, and has a whiff of grift but if you are familiar with the real estate title business you'll see that NFT's would be a vastly superior and more transparent solution than what happens today. Title insurance is also a needless racket given NFT's.
Once the real-estate title business adopted NFT's DeFi mortgages would become obvious.
Today if you restructure your mortgage you actually have to file paperwork with the county clerk. County courthouses are the gatekeeper to residential liens. The County/District clerk could use a key to sign liens, etc...
There's a company that purchases properties and rents them out, wraps them in an LLC, and then assigns ownership of the LLC via crypto tokens (this ownership is written into the LLC docs). Owners of the tokens then receive monthly payments for rent.
I'm wondering if it would be possible to do something similar to accomplish what you are talking about - advantage being that no laws need to be modified to make it possible. The LLC acts as a thin proxy layer between the US legal system and the NFT that assigns ownership. Essentially there could be a legal service that would allow wrapping and unwrapping of these properties, and once they are wrapped, DeFi mortgages would become possible, split ownership, transfer of ownership within DeFi, etc. I could imagine a whole ecosystem developing around this that people could buy and sell houses inside of.
The missing piece of the puzzle is the cost of recourse for things like non-payment.
If I buy fractional ownership of your rental LLC via traditional means, it's not hard to get those well-understand contracts enforced by courts. Not necessarily cheap depending on your lawyer, but it's well understood.
If I instead buy fractional ownership via some sort of crypto transaction from another country and suddenly the payments stop, it becomes difficult to work with a foreign legal system to understand essentially computer code.
Worse yet, what do you do if someone loses the private keys to their crypto tokens? Or they're stolen? Does the new holder simply get to collect the rent from that point forward? Does a hacker get to own the house because the owner's account was compromised?
This is why you'll need a trusted custodian (with real estate) ie the district/county clerk, with like a "god" token or something that allows them to make any changes necessary in their jurisdiction, including retroactively assigning a new custodian.
All of what I'm discussing has real world precedent, the only difference would be using DApps for simplicity, security, transparency, and thrift.
Content aside - the whole concept and presentation of this website is so futuristic. Like I'm imagining a 90s-00s sci-fi cartoon where rich patrons frequent a virtual museum to bid on very avant garde digital artwork.
If this was a movie, I'd be like "this guy doesn't get how the internet works."
it is always possible that someone with deep pockets, tangentially connected with the creator of Nyan Cat, is injecting money into the site to create the illusion of a large sale. the eBay equivalent of bidding on your own item. there is a huge incentive to do this, because of the hype it creates (large sales = 'art world' news), leading to more people wanting to 'get in on the action'.
Precisely. People have been doing this with plain ol' trading too. But then CMC started cleaning up the volumes and there were transparency reports on exchanges. Before this happened some exchange you never heard of was claiming to be a leader in volume.
There are already so many... call them information games, ranging from ego puffery to outright cons, that I'm surprised bitcoin hadn't infected it already.
Should anyone wish to trade their fungible tokens for my nonfugible, but very pretty, buckets of bits, please hit me up.
The comments in this thread so far, imo, resemble comments at the beginning of dismissing BTC (just an observation, and I was one of those making similar observations in 2011/2012).
At that time the claim was that BTC was a payments solution that would replace credit cards and cash. I feel OK for having dismissed that. It turns out that BTC has little inherent value, and is mostly just a tool for speculation. It's desirable to hold only so long as you think someone else will buy it off you for more later.
I think it's the the same with these NFT art tokens. They are not particularly useful as a thing to own, but if enough people believe they're worth something, then I guess they're worth something.
No it isn't... You can buy just about anything with any of the world reserve currencies. You can also pay taxes in the applicable jurisdiction with any government currency.
Buying something with a currency, and paying taxes, are both other people buying the currency off of you. In one case they're buying your currency with goods and services, in the other they're buying it in exchange for protection. McDonalds gives you burgers because they want your USD. They want your USD because everyone wants their USD. That's how fiat works; the biggest difference between Bitcoin and USD is that Bitcoin is deflationary, while USD is managed by a central bank.
World currencies regularly collapse. What people fear might happen to BTC has already happened to the Zimbabwean dollar, the Argentine peso, and many others. It even happened to the denarius during the crisis of the third century. Even with stable currencies, there is plenty of risk to be had in FOREX trading. So... saying that BTC is a lot like every other fiat currency is not so much a complement as it is a neutral observation.
It isn't about potential for collapse, and even if it was it is far less likely that the USD collapses tomorrow than BTC does...
USD, Euro, Yen, etc. are all far more useful as a medium of exchange than BTC. I would argue that their primary usage is just that - a medium of exchange.
Until you can buy most useful things easily with BTC it is not like fiat.
Lastly, if BTC or any other crypto was to grow to the extent that most people were willing to accept it in exchange for goods or services, I believe that governments would be incentivized to shut it down.
I promise you, if I showed up at my corner store with a EU50 note and said "Would you give me a gallon of milk for this" the dude would take it.
He probably wouldn't give me change, so my effective exchange rate for Euro->USD would be something like 20x reality, but you gotta pay for convenience.
Too much inflation is obviously bad, but it's also bad if the most attractive investment in an economy is the currency itself. If a system actively discourages people from investing or spending their currency, things grind to a halt. The people who benefit the most are those with the most idle cash. The people who suffer the worst are those who are forced to spend their limited cash on basic necessities.
To be clear: I'm not advocating for unchecked inflation or runaway spending. I think the current US inflation rate is too high and excessive stimulus spending is ill-advised. However, investors have been investing their cash in assets and investments to avoid inflation long before Bitcoin was invented.
There's a big difference here in that NFTs as currently implemented are nothing more than an a trend. They don't have any actual value, or function. At least with BTC you could buy drugs.
What can you actually do with Nyan cat other than just sell it on to the next person. I can enjoy the image and I don't even own it.
NFTs are neat, don't get me wrong, but to have any value or use, they require an element of trust behind it.
Hi there - I lead eng at Foundation. The token is minted on Ethereum and and asset hosted on IPFS, so it's free to travel anywhere on the blockchain. We take a cut on the initial sale, but new owners can put it on other marketplaces and do whatever they want with the NFT.
I've long suspected that many high-value art sales are a form of money laundering, so it does not surprise me at all to see the idea become blockchain-ified. I wish I'd thought of it first! I expect it will continue to be a resounding success.
Money laundering for sure. But also just a store of value.
A Picasso is like a savings account. You can hold one for decades and it will preserve value relative to inflation so long as people still value them the same.
Another way to think about rare art, is that it is a game. It's a game of trying to predict (or promote) which art will stick long term in some collective consciousness. The Mona Lisa is valuable because literally everyone in the western world knows it. Nyan cat is a modern example. It's a piece of art that is locked into the consciousness of at least tens of millions of younger people who are now starting to have money. If a piece of popular art exists in a form that is ownable and verifyably original, then it will trade for tons of money.
We don't value a copy because machines (or humans acting like machines) can do that for dirt cheap without thought or creative breakthrough.
We value the original.
We value the thing that represents that initial spark of something brand new in the world that latched itself in our collective consciousness. We value that because everyone else values it. It gives people a sense of awe to learn that you own an ORIGINAL Picasso. It's a display of wealth and power, but also tickles something deep and almost spiritual in the human mind.
I wouldn't be surprised if we learn to treat original NFTs the same way for digital art. Maybe first we need good ways of displaying our ownership of them.
I think the obvious question this raises is what happens when we start embedding someone else's intellectual property or illegal content in the blockchain. Can the blockchain be DMCA'd?
Digital artwork always reduces to an integer, what's the point of buying a number? If you want to give money to the creator, just give money to the creator. Not sure I understand the value of adding a rube goldberg machine to the mix.
The way I understand the appeal is that there is a notion of (virtual) authenticity. It is like paying for the signature. Imagine you own a copy of a painting by Van Gogh, or a painting which cannot be authenticated, then it is suddenly worth a lot less than a painting with a certificate that it is an authentic one and another certificate that you obtained it through legal means.
I still don't understand this. Who is buying art at this ridiculous prices? My only explanation is money laundering but if someone has another explanation please comment
Do you understand art in general? It is valuable because there are people that believe it is valuable. The NFT advancement is that it proves some sort of proof of ownership. Yes, it can be copied, but someone can also take a picture of a famous painting, or buy a cheap print. But they can't claim ownership. Only one person can do that, and people attribute value to that.
Also there are a lot of crypto-millionaires that believe this is the future. So that's why they are going for large sums so soon. I am not one, but I do think they are right.
>The NFT advancement is that it proves some sort of proof of ownership.
It's not even ownership, at least in the classic art collector sense or in the sense of having a meaningful degree of control over the work. Torres retains ownership of the copyrighted work. What he's selling is a transferable limited license that doesn't even include any commercial use rights.
What's a little mind-blowing to me is that the terms of the site don't indicate that the license is an exclusive license. The buyer gets no legal guarantee that Torres won't sell another such license in the future.
Agreed, there are many issues, and I believe that many will be taking advantage of this system. But it will all be sorted in time, and I do think there is a huge future here.
A big dollar sale of an NFT like this makes headlines and is a shot in the arm to the whole concept of NFTs. I wonder if one or perhaps both parties to this sale somehow stand to gain much more than the final sale price if NFTs become seen as a hot commodity.
The idea in general is that you will own some digital asset and then use a smart-contract to license it out in a trustless manner. Reminds me of CryptoKitties where ETH whales were buying cats for huge sums.
I remain bearish on crypto but will shamelessly shill for an artist friend outside of the Silicon Valley tech community who was an early adopter and has been quite successful with NFT, https://app.rarible.com/elfjtrul
No. The original art either has to be gated by a central source of truth (not decentralised), or entirely made public by uploading it in full to the blockchain. There is also not much of a concept of ‘lending’ the data, as owning the token and not owning the token are effectively the same thing, and there’s no ‘proof of deletion’. Opinion, but NFTs are a bubble. As soon as someone publishes a site that makes it easy to download them without paying the market will crash.
The owner of this NFT doesn't own anything other than this NFT.
As far as I can tell, they don't even have any contractual claims to prevent the author from selling another Nyan Cat.
They can, however, show that they were the first blockchain address to have blown $600K on Nyan Cat (if you ignore the previous transactions, which were presumably related to the auction itself?)
Most likely what's happening is that both parties to the transaction have an agreement to return funds after the sale and this is done for publicity reasons.
However, paying $600K for a blockchain meme is also the ideal way to manufacture the illusion of demand for blockchain memes. If you're part of a business that wants to make money by selling memes on the blockchain, seeding the frenzy with a very public $600K purchase of an iconic meme is a great way to get the party started.
If you want to take it to the next level, you could re-list the Nyan Cat NFT and then re-buy it from yourself using a second wallet that isn't obviously linked to the first. Now the "price" of Nyan Cat looks like it has gone up, as recorded publicly in the Blockchain, even though nothing changed hands. A well capitalized individual could continue re-selling Nyan cat to themselves from different wallets at increasingly high values to create the illusion of a bidding war: "Nyan Cat value rises 10x in a week!" This creates demand from others who want in on the action.
I guarantee NFT sellers will be using this sale to lend credibility to their ventures. Plenty of people will rush to "buy" other memes with expectations of flipping them to someone else.
Expensive meme, cheap advertising.