NFTs, short for Non-Fungible Tokens, are a type of counterfeit digital property titles for digital things, such as art. They are popular and lucrative: it is said that 36 billion euros were spent on trading NFTs last year. There seems to be something strange going on with NFT trading, Reuters reported, among others. NFTs are traded in the millions between a few accounts.
Although the owners of NFTs are anonymous, it is publicly visible on the blockchain between which crypto wallets an NFT has been exchanged. The most expensive NFTs are traded between some of those wallets, data from DappRadar shows.
The 27 most expensive NFT sales on the popular LooksRare platform were worth $1.3 billion in January. And those sales were exchanged between just two crypto wallets. “There’s a lot of activity between a couple of wallets, let’s say wallet one sells to wallet two, whoever resells it. It’s quite possible that it’s not real demand, that this trade isn’t organic,” said DappRadar CFO .
artificially inflated price
The 100 most valuable NFT transactions on the LooksRare platform were worth $2.3 billion in January and were traded between just 16 wallets. One of the most valuable was the so-called Meebit, a block figure that 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, thinks John Egan, CEO of L’Atelier, a subsidiary of the BNP Paribas bank. Egan talks about so-called “wash trades,” in which a buyer sells something to himself for a high price so that the demand appears 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 appeared on comedian Jimmy Fallon’s popular Tonight Show. Guest Paris Hilton and Fallon discussed their Bored Apes: digital images of drawn monkeys changing hands by the tons: Fallon bought her monkey for around $216,000, Hilton paid more than $30,000.
These NFT celebrities have a dual interest in price inflation for their digital images. Journalist Mark Read traced how Hilton, Fallon, and other celebrities with NFTs, like Ashton Kutcher and Reese Witherspoon, are surprisingly related to the popular markets where those NFTs are sold.
For example, Jimmy Fallon is represented by the CAA company, which also invests in the OpenSea NFT platform. Such a platform earns a percentage commission on the NFTs traded there: the higher the price, the higher the commission. Journalist Read has presented the connections between well-known NFT owners in a comical way, but questions how pure it is for stars to use their fame to increase the value of volatile NFTs.
Duo behind obsolete Bored Apes
Since then, BuzzFeed News has investigated the much-discussed Bored Apes NFTs. That site uncovered the identities of the people behind Bored Apes Yacht Club, the full title of the series of digital images of monkeys. They are writer Greg Solano, 32, known online as Gargamel, and Wylie Aronow, 35, better known as Gordon Goner.
The duo came up with the concept for their monkey images and then hired freelance artist Seneca to create the images.
in your profile
More and more companies are also getting into NFTs. For example, Twitter users can set their NFT as their 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 the metaverse wear digital Nikes, which can be distinguished from counterfeits with an NFT. Nike recently filed another lawsuit against another company that sells NFTs from its shoes.