The more noteworthy you can make your NFT, the more you can convince people that they might be able to make some profit by flipping it, meaning the more you can sell it for.
The high prices are a known gimmick for grabbing headlines. “Useless NFT sells for $100,000” is (or was) a sure-fire way to get your NFT into the headlines. The trick was that you could actually bootstrap these high prices yourself without actually spending the money. If you have $100,000 in ETH sitting around, you didn’t have much to lose by using it to “buy” an NFT from yourself in a transaction with yourself. You keep the money, you keep the NFT, but now you’ve generated a public record of the NFT having sold for $100,000, and now you can claim to hold an extremely valuable NFT. After all, the record is on the public blockchain! No one can deny it “sold” for that high price.
Maybe this kid actually lucked into a trading fad where crypto-rich individuals had so much extra money that they didn’t care about tossing hundreds of thousands of dollars to a kid in exchange for a virtual blockchain receipt for the lulz. Or maybe they think they can use these headlines to further flip the NFTs at a profit to someone else.
But whenever you see a headline like this, it’s important to remember the possibility that maybe nothing actually changed hands at this price at all. If this kids’ dad (who works in finance) wanted to generate headlines hopes of flipping NFTs to someone else, what better way to do it than by getting headlines about your 12-year old making hundreds of thousands of dollars? All he needs to do is “buy” those NFTs with crypto funds, keeping the crypto funds in the family, and then start contacting news reporters about these miraculous, high value NFTs that they should totally write about in every outlet so that hopefully someone else will buy them for an even higher price. Come tax time, you can always argue that you never actually sold anything because you control both wallets, so there wasn’t any profit to be taxed.
You’re only out the transaction fees, so you can buy headlines like this for tens of dollars.
Sounds like the problem is how these transactions escape any sales tax, thus these gimmicks and other forms of money laundering simply have zero cost or oversight.
Truly it's the purest form of Keynesian beauty context imaginable, and everyone who's participating hopes they won't be the greater fool.
Honestly, NFTs will make it into economic textbooks, assuming they haven't already. They've become these wonderfully pure little natural experiments in economic theory, and it's fascinating (and horrifying) watching them play out.
NFTs aren't even that. They're basically a mass-produced print with some unknown artist's signature. And unlike autographed mementos, NFTs require a ridiculous amount of electricity to generate each additional signature.
The whole purpose is to give the “journalist” just enough plausible deniability to write a clickbait headline, which benefits CNBC/BBC and the person selling within their family.
As far as I know, misleading “news” is not illegal.
Idk, I guess I must've been a poor 12-year old, if that's what 12-year olds spend on their hobbies nowadays.
[0] https://etherscan.io/token/0x96ed81c7f4406eff359e27bff6325dc...
[1] https://etherscan.io/tx/0x17654fa3a9b49fc1688df27d195ffb59a1...
I don’t know. 12 is a bit young but I remember having a job at 14 and “limitless money” because I didn’t have any responsibilities. I could have easily justified $900 as “only two pay checks”.
> This time, he drew inspiration from a well known pixelated whale meme image and a popular digital-art style but used his own program to create the set of 3,350 emoji-type whales.
All while coding for "20 to 30 minutes per day".
Seems pretty clear that this is the dad (who works in software in finance) cashing in on the NFT trend and using his 12 year old son to generate the publicity.
I view NFT's with a hefty dose of skepticism, although I have a very talented ex-colleague that has been creating 3d artwork and made a few thousand. My view is that there's a chance his father etc was already invested in bitcoin and wanted to put it to good use...
Define "good." It's literally teaching the kid miracles can happen. There are millions better ways to give the kid the money, like setting up a start-up with him, without actually cheating on him (if the conjecture is true, that is).
"But on eliminating every other reason
For our sad demise
They logged the only explanation left
This species has amused itself to death"
NFTs are mostly used as a ponzi game. There's not enough physical art or exotic cars or other collectibles for the moneyed folks to trade, so now they have NFTs.
This, plus the stories of groups and corps buying up homes, negative interest rates, etc., all suggest that too much money has been concentrated in too few places (hands, people). And those people seem to be focused primarily on just making money, so they need vehicles like NFTs as another place to play. It's just mind boggling where humanity has ended up.
> NFTs are mostly used as a ponzi game. There's not enough physical art or exotic cars or other collectibles for the moneyed folks to trade, so now they have NFTs.
IMHO, it's more likely that the heart of the NFT economy is based on capital flight, money laundering and black money transfers, and outright fraud based on wash trading: fraud that's dressed up to look like a Ponzi scheme so that the buyer thinks they are in on the grift.
The article even mentions that they are keeping the profits as Ethereum, which would be necessary as he can't cash out since the money isn't actually his.
Or what?
The collection is of 3,350 whales, according to this other source:
https://www.cnbc.com/2021/08/25/12-year-old-coder-made-6-fig...
the collection was sold in 9 hours for 255,000 US$, that makes a whale sold for around 76 US$ apiece?
EDIT:
Another question being:
>He then earned an additional 30 ether, worth over $95,000, from the resale market, since Ahmed earns a 2.5% royalty on each secondary sale.
30 ether (so we remain in this realm) corresponds to 2.5%, it should mean that secondary sales were worth 1,200 ethers.
What?
According to the CNBC article, it was sold for 80 ether. Big and important difference than being sold for $255k.
That's an interesting point. It would be interesting to trace those payments to hear back from these customers, or even check if they actually exist at all.
I do not believe anyone is spending millions of actual hard-earned cash on these digital works, let alone just the NFT, which amounts to a 'digital autograph'.
To be clear, nobody is being paid in NFTs: gangsters are 'buying' NFTs from the people they owe money to.
I kind of have the same mental association I have with drug cartels. Except somehow it’s legal.
For now. Heroin was legal too once.
Antiques and art used in money laundering are generally warehoused with custodians for a relatively inconsequential fee. Ownership changes hands over and over, and the item doesn't move an inch.
…we ended up closing shop. We were paying for minting transactions behind the scenes and the market was too expensive in 2018-2019. We made a crucial error there, but we didn’t think people would be willing to pay so much for transactions.
..boy, were we wrong. I just sold a couple remnants of my old Editional wallet for a good chunk of money. I had a…hard time doing it though: transaction fees cost from a minimum of $40 and and a maximum of $160 for those smart contract transactions. Add in the fact that every provider takes a large cut: from Coinbase, to NFT marketplaces, to the 10+ dollar fees to actually complete a successful transaction.
To be honest, I was intimately involved in this space for a while, and I don’t get it anymore. We had this hypothesis that the ecosystem would scale and mature as we went, but we didn’t see much of that at all. It’s all gambling. It’s not even cool gambling: the decentralized prediction markets I was particularly excited to see never really took off.
I got interested in the space because I thought: decentralized consensus is really interesting, how important that’ll be in a world trending lower on trust; but this crypto world is so dishonest that I’ve realized that trust is integral to most effective systems.
The many malicious actors in cryptocurrency are not representative of the many organizations and individual contributors in blockchain technology.
I think the common applications of NFTs now are entirely primitive, and I find understanding the concept of blockchain oracle networks to be hugely influential in framing my perspective of the 5-10 year landscape of IP and digital media. Lex Fridman's interview with Sergey, Chainlink founder, is exceptional, if lengthy.
A blockchain represents a public and immutable* ledger of "things that happened," and smart contracts represent agreements of "things that will happen if [conditions]." If the storage, execution and outcome of those smart contracts occurs on the same blockchain, that's a seriously powerful mechanism. Its primary limitation is that it cannot GET data from outside the blockchain, because that would compromise system integrity.
Oracle networks are simply another layer of distributed consensus. Weather is a straightforward and common example. Let's say there are a dozen entities that all operate as oracles in a weather network, and they report certain meteorological data at 24hr intervals. Should entity A report inaccurate or fraudulent data, the network would reject that and entity A would be penalized in some way. The number of oracles, or nodes, in the network is relative to the significance of value reliant on their data, so a handful of nodes is fine for early stages, and at larger scale, more nodes are incentivized to participate in data collection and validation to strengthen the system integrity.
There's a rapidly expanding body of research surrounding all of these concepts, but I find oracle networks to be the infrastructure required to begin standardization of the bridges between traditional, legacy agreements, comprised of legally binding contracts and IP / patents / copyright licensing, and smart contracts executed autonomously based on conditions and outcomes that are universally knowable and agreed upon.
With those bridges in place, we unlock a lot of efficiency by dis-intermediating the fulfillment of contractually obligated outcomes that are contingent on enforcement from a legal structure, which may not exist in developing nations. A smart contract for crop insurance that pays a claim if there is no rain in a region for a year will GET weather data from a smart contract provided by an oracle network (which already has its standards for validation published and verifiable) and simply pay out claims if those conditions are met.
A traditional insurance company might simply be bankrupt.
NFTs, conceptually and somewhere in the future, will represent a vast majority of the management of digital assets and probably many real world assets as well, because they are represented on chain. Maybe an oracle network formed of real estate title search companies offer a homeowner verification function and provide it as a zero-knowledge proof to a larger protocol that assesses some future form of creditworthiness. Maybe not in the next few years, but certainly in the next few decades, all titles, deeds, and other legal documents that represent ownership of an asset will have a primary digital representation on some sort of blockchain.
They probably won't even be called NFTs, but who cares, I'm sick of hearing about them anyway.
* there's a lot of discussion around finality but most implementations of blockchains have a strong degree of immutability
p.s. I sent Editorial an email
"Benyamin Ahmed is keeping his earnings in the form of Ethereum - the crypto-currency in which they were sold.
This means they could go up or down in value and there is no back-up from the authorities if the digital wallet in which he is holding them is hacked or compromised."
was the most jarring part
https://upvotetracker.com/blog/beware-of-NFTs-promoted-on-r-...
What a former Christie's auctioneer thinks on this (as quoted by the BBC here) is _especially_ irrelevant, as they are of course partially disrupted by the NFT hype. Like asking a telco company in the 90s about the internet.
Strong Demis Hassabis vibes (DeepMind founder who did Theme Park at the age of 17)
I mean, in which way is it different from US kids selling lemonade?
Strange addition, a little defensive there BBC? Something something coal miners and programming
