NFTs, an abbreviation for non-fungible tokens, are a type of counterfeit digital property deeds for digital things, such as art. They are popular and lucrative: last year, 36 billion euros are said to have been spent on trading in NFTs. There seems to be something strange going on with NFT trading, Reuters reported among others. NFTs are traded for millions between just a few accounts.
Although owners of the NFTs are anonymous, it is publicly visible in the blockchain between which crypto-wallets an NFT has been traded. The most expensive NFTs are exchanged between just a few of these wallets, data from DappRadar shows.
The 27 most expensive NFT sales on the popular platform LooksRare were worth $ 1.3 billion in January. And these sales were traded between only two crypto-wallets. “There’s a lot of activity between a couple of wallets – for example, purse one seller to purse two who resell it. It is very possible that it is not a real demand that this trade is not organic,” said DappRadar’s CFO .
Artificial inflation of the price
The 100 most valuable NFT trades on the LooksRare platform were worth $ 2.3 billion in January, trading between just 16 wallets. One of the most valuable was a so-called Meebit, a blocked figure, which was sold on January 12 for a value of 44.2 million euros. Five minutes later, the NFT was sold back to the original seller for just under $ 1 million less.
A form of market manipulation, believes John Egan, CEO of L’Atelier, a subsidiary of the bank BNP Paribas. Egan talks about so-called “wash trades”, where a buyer sells something to himself for a high price to make the demand seem much higher than it really is. Such practices are prohibited in traditional markets such as the stock market. However, NFT trading is designed to be unregulated and anonymous – one user can easily own multiple crypto wallets.
Fallon and Hilton have dual interests
NFTs also recently starred in comedian Jimmy Fallon’s popular Tonight Show. Guests Paris Hilton and Fallon discussed their Bored Apes: digital images of cartoon monkeys changing hands for tons – Fallon bought his monkey for about $ 216,000, Hilton paid over $ 30,000.
Such NFT celebrities have a dual interest in the price increase of their digital images. Journalist Mark Read mapped how Hilton, Fallon and other celebrities with NFTs like Ashton Kutcher and Reese Witherspoon are strikingly related to the popular marketplaces where these NFTs are sold.
For example, Jimmy Fallon is represented by the company CAA, which also invests in the NFT platform OpenSea. Such a platform earns a percentage commission on NFTs traded there: The higher the price, the higher the commission. Journalist Read has put the connections between the well-known NFT owners in a comical way, but questions how pure it is that stars use their fame to pump up the value of volatile NFTs.
Duo behind Bored Apes obsolete
The much talked about Bored Apes NFTs have since been researched by BuzzFeed News. This site found out the identities of the folks behind Bored Apes Yacht Club, the full title of the series of digital monkey images. These include 32-year-old author Greg Solano, known online as Gargamel, and 35-year-old Wylie Aronow, better known as Gordon Goner.
The duo came up with the concept with their monkey images and then hired freelance artist Seneca to create the images.
on your profile
More and more companies are also joining the NFTs. For example, Twitter users can set their NFT as a profile picture: exclusive with a hexagonal border. NFTs are expected to grow in the metaverse: the shared virtual reality that companies like Meta rely on. For example, users in metaverse digital Nikes, which can be distinguished from counterfeits with an NFT. Nike recently filed another lawsuit against another company that sells NFTs of their sneakers.