NFT, full name non-fungible token, translated as non-homogeneous token, is a virtual asset with blockchain as the background technology. You may have seen reports of celebrities buying NFT works and entering the meta-universe.
Recently, the NFT circle has made big news again.
Last year, twitter founder Jack Dorsey's first tweet in 2006, "just setting up my twttr," was bought as an NFT by a cryptocurrency entrepreneur, Sinai Estavi, for $2.9 million.
Last week, Sinai Estavi announced on Twitter that she was going to sell the NFT and list it for $48 million. He said he would spend 50 percent of the proceeds on charity, which he had thought would be more than $25 million.
However, the week's public auction deadline was over, with only 7 people bidding, with prices ranging from $6 to $277. On the NFT trading platform OpenSea, the highest bid was only $15,000, and the NFT work depreciated by 99%.
Is the bubble of NFT art going to burst so soon?
The NFT auction frenzy that was ignited by celebrities,
10 million an electronic avatar
The time goes back a year. In March 2021, when Sinai Estavi had just purchased the tweet, he excitedly posted a post celebrating, "This is more than just a tweet!" I believe that years from now people will be able to see the true value of this tweet, like "Mona Lisa's Smile".
At that time, it was also when the NFT concept was hyped up, and the Internet was filled with news that the avatar of so-and-so had once again set a new high and sold millions. Maybe you remember one day last year, the circle of friends was full of strange and looks like the same series of avatars, including mosaic style, fashionably dressed large-billed monkeys, cute and cute blue kittens, and round little penguins.
Boring ape Bored Ape NFT
That's the wonder of NFTs. In the face of these auctioned off sky-high headshots, many people shouted, "I can't understand", but this did not prevent them from silently replacing their avatars with the hottest patterns in their hearts. It's just that most of the avatars in your circle of friends are JPG, not NFT works.
Each NFT can be permanently stored in the blockchain, with indivisible and immutable uniqueness. When unique digital tokens and art are combined, NFTs can be bundled with a wide variety of collectibles to determine ownership, eliminating the possibility of piracy while guaranteeing scarcity. As a result, it has become a unique asset in the digital world and has collectible value.
Last year, artist Beeple's series of digital art auctions earned $69.3 million, a hefty price that not only broke the record for digital works in history, but also made mike Winkelmann one of the three most valuable artists alive.
Subsequently, countless celebrities and rich people entered the NFT. Before elon Musk, Jack Dorsey sold his own tweets on the trading platform from time to time, after Sun Yuchen bought Beeple's works for 6 million US dollars, Curry bought a boring ape head for 180,000 yuan, and so on. Domestic and foreign stars such as Jay Chou, Yu Wenle, Lin Junjie, Xu Jinglei, Jimmiy Fallon, Brtiney Spears, Justin Biber have also bought well-known NFT avatars, and even participated in the issuance of NFTs, proficient in NFT trading operations and so on.
The faster the fire, the more problems there are
But with the explosion of NFTs, there are more and more scams associated with them.
On April Fool's Day just after, Jay Chou posted on Instagram that his boring ape NFT had been stolen by a phishing website. According to public trading information, this NFT work was transferred several times within one hour of the transfer, and the last transaction price was equivalent to about 3.2 million yuan.
Although all the transaction records of the NFT are open and transparent, it is a cryptocurrency after all, the privacy is extremely strong, and the thief will not be stupid enough to transfer the NFT to his real-name account, so it is almost impossible for Zhou Dong to recover this money.
This is not an exception. In the past year, the number of NFT-related fraud cases has increased by 400% in the UK, and UK financial crime investigators believe that fraud in the NFT field will continue to surge this year.
The list of fraudulent practices is endless. Some fraudsters sell fake or non-existent NFTs to individuals; some defraud users' private keys through third-party phishing websites (that's how Zhou Dong was scammed); and some artificially fabricate purchase histories by changing hands to their accounts multiple times, thereby increasing the value of tokens. According to blockchain analytics firm Chainalysis, scammers defrauded $8.9 million last year through this "money laundering" transaction.
This kind of up-to-date fraud can be fooled even by veterans of NFT, let alone the inexperienced investors who have watched the extensive coverage of the NFT boom and been attracted to it.
Buy NFT at a high price,
Isn't it a big injustice?
While Jack Dorsey's first tweet was difficult to get around, the fact is that NFTs have indeed been moving from an obscure term to the mainstream over the past year. In 2021, the NFT market will trade more than $17 billion, up 21,000% year-on-year.
As mentioned above, the uniqueness, scarcity, and non-reproducibility of NFTs are one of the reasons why people are willing to pay a high price. A collection of digital art is like any out-of-print painting, an ancient manuscript. Last year, when Katsushika Hokusai's work was exhibited at the British Museum, 200 of the same NFT collection were also unveiled, including "Kanagawa Surfing Lane", which is usually seen with good luck at the museum. It is said that it will start at a price of 4,000 euros (about 27,000 yuan), and like all NFT works, the original owner can also receive a considerable royalty when the NFT changes hands.
Screenshot of NFT digital collection trading site La Colleciton
Even if the frequency of use of NFTs bought now is very low, the application of NFTs has gradually penetrated into all corners of music, drama, film and television, and games. If you take a longer-term view, buying NFTs at a high price is also in line with the original intention of investors, that is, potentially greater value in the future. Chen Xu, chief consultant of NFT China, said that "the value realization of NFT points to the metacosm", and when the metacosm develops to a certain mature stage, the value of NFT will be revealed.
In addition, the internet environment also makes the social value of NFTs play out to the fullest. In the digital age, avatars have also become an ever-expanding demand for people to socialize, and the most widely used avatars have naturally become the carriers of virtual identities.
Taking CryptoPunks as an example, this mosaic-style villain series, which was first launched in 2017, has become a digital avatar of the elderly level, becoming a Rolls-Royce in the NFT world, the most expensive more than 20 million US dollars, and the cheapest price can also sell for tens of thousands of DOLLARs.
In the eyes of ordinary people, it is just a picture that can be kept at hand, but in high society, it is more like a unique ID, representing the social status and financial strength of the elite. Only people with avatars in the same series or at the same price series are colleagues in this circle who have the opportunity to communicate on social media.
So people see that the high-priced and unique NFT has gradually become the representative of celebrities' identity on the Internet, after all, people who have unlimited wealth symbols in the real world, how can they lose in the virtual world?
The real injustice is
Blind entry of small white creators and investors
With the blessing of celebrity "ability to carry goods", NFT is more attractive to ordinary people. Between January 2021 and February 2022, the number of NFT collections surged from 39,800 to more than 1.97 million, and a large number of creators are still in the circle.
However, a survey by blockchain analytics firm Nansen shows that in such a large number of NFTs, a third of NFTs are dead coins, and there is almost no trading activity. The NFT that appears in the news at a sky-high price may only be a survivor bias. The data shows that on OpenSea, the largest trading platform for NFTs, 75% of NFTs are sold for less than $15, and only 1/5 of NFTs are profitable in the process of minting.
After Beeple's set sold for tens of millions of dollars, such success stories easily lured young artists into becoming the promoters of this get-rich-quick program. Many NFT training institutions have emerged in the market, and dozens of them can be issued on the trading platform. However, when there is no more standardized NFT industry foundation, excellent creators may also be fooled into creating on non-compliant channels, quickly enter the game and then easily lose money.
In addition to art creators, more people hovering in the NFT arena are investors.
Some senior NFT buyers believe that the focus of user attention at home and abroad is not the same for the purchase behavior of NFTs. In the foreign NFT market is more mature, buying NFTs is more like a trend, and there is also a higher penetration rate in the population. But domestic NFT players are more concerned about its investment attributes.
It is true that there are some people who are buying NFTs for short-term speculative gains because they have the money and can easily ride the wave of price increases.
Thailand NFT Exhibition
But Qin Qing, director of blockchain products at Tencent Cloud, said, "In the context of speculation, whether the supply of NFTs is based on scarcity or based on the demand that already has functionality, whether the demand falls in the currency circle or the traditional circle has begun to flock to it." The last thing we should think about is who pays for NFTs and who wants to pay for them, these are all important parts. ”
The NFT circle is still growing wildly, with bubbles, greed, speculation and intertwining. Senior market analysts believe that those who invest in NFTs should think more about whether the collections they start with have long-term benefits. Despite the many stories of buyers getting rich on NFTs, it's unlikely that everyone will become millionaires.
After the frenzy, market volatility persists and assets may disappear altogether. At that time, the bamboo basket is likely to be a novice who blindly enters the game.
Resources:
OKLink: Stars pile up in the NFT, who is the real "gold digger"
Tencent Research Institute: How should we view the NFT fire today?
New Weekly: Jay Chou's stolen NFT, what is it?
Fast Company：NFT bloat results in a lot of dead mints, says new blockchain data
Infosecurity Magazine：NFT Fraud in the UK Soars 400% in 2021
CoinYuppie: From Punks, Apes to Penguins: How Avatar NFTs Become a New Cultural Paradigm
Edit: Grapefruit
Image source Network and Visual China
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