Before I forget I really just need to get this message out there...
Have you guys seen this story circulating around?
Early CryptoPunk Digital Collectible Sells for $762K in Ether
Guys...
Guys...
Guys...
GUYS!
GUSY!!!!11
Girls
A single pointless NFT just sold for three quarters of a million dollars on the Ethereum blockchain. What world do we live in?
Some rudimentary pixel art just sold for 605 ETH, or $761,889 at purchase.
605 ETHEREUM!!?!?! WHAT?!!?
Do you know how much Ethereum is in the
ENTIRE WLEO UNISWAP POOL?
AKA NOT 605 ETH
Seriously though who's ready for some napkin math? Imagine 605 ETH got dumped into the wLEO pool... that 605 ETH becomes 58% of the entire pool. Therefore, because 58% was added to the ETH side, 58% must be taken out of the wLEO side and given to the buyer.
1 NFT buys 670,040 wLEO
Not sure if that's 100% correct but close enough... so the final totals come to this:
- 482,871 wLEO in the Uniswap pool...
- 1,041 ETH in the Uniswap pool...
Giving us a ratio of 464 wLEO to 1 ETH.
AKA 464 wLEO = $1400
AKA $3 per LEO...
Yep, if the same amount of ETH that was used to purchase this one single worthless NFT was instead pumped into the wLEO pool, the token price goes x6. How insane is that?
Surely, the NFT must do something.
Oh yeah, my mistake... let me show you what it does.
Only nine such “Alien” punks exist in the CryptoPunks universe, which pioneered non-fungible tokens (NFTs) in 2017 and are the “Holy Grail” for an emerging class of Ethereum-based art collectors.
That's right bro! This is art!
“It’s understandable for folks to be skeptical about NFTs, but in our view, NFTs are the future of not just digital art, but all digital property,” FlamingoDAO said in a statement. “It’s the tip of a very large spear.”
LOL...
The CryptoPunk in question last sold in July 2017 for 8 ETH, or $2,127 at the time. That represents a 75x return on investment in ETH terms (and even greater in USD).
“People see it as a collectible that is pretty significant in the history of NFTs,” said Desai.
Uh huh, okay...
So let's see the art then!
Must be amazing!
https://twitter.com/cryptopunksbot/status/1353058374816944134
- cryptopunksbot
You... cannot... be serious... right now...
https://www.larvalabs.com/cryptopunks/search?query=Alien
OMFG they are serious...
https://www.larvalabs.com/cryptopunks
The CryptoPunks are 10,000 uniquely generated characters. No two are exactly alike, and each one of them can be officially owned by a single person on the Ethereum blockchain. Originally, they could be claimed for free by anybody with an Ethereum wallet, but all 10,000 were quickly claimed. Now they must be purchased from someone via the marketplace that's also embedded in the blockchain. Via this market you can buy, bid on, and offer punks for sale. The zoomable image above is connected to the Ethereum network and has been colored to show you the status of every Punk in the market. Punks with a blue background have been claimed. Punks with a red background are available for sale by their owner. Finally, punks with a purple background have an active bid on them. You can click to zoom in on a Punk and reveal its details.
Alright guys... mind officially blown.
I just can't right now. How is this possible? I am thoroughly intrigued, especially now that I've learned that these NFTs predate cryptokitties in addition to every single one of the 10k... 'icons' shall we say... were free in the beginning. Now some are trading for almost a million dollars? More than all the ETH in the entire wLEO pool? Like... what?
Predictions
You know, I was worried that I was overestimating the value of NFTs, but I have clearly massively underestimated them if this is any metric to go by. These idiotic NFTs don't even do anything (yet). Imagine if someone created a game where you could only play if you owned one of these characters. Do we realize how hard that would pump the value of these things? Gaming and gamification is the answer to adding value to NFTs... not... "art".
Sword of a Thousand Truths
Apparently it could cause 120 damage per second with an instant mana burn, and an enchantment that boosted stamina +80!.
Like seriously though.
I do not think many of my dear readers can see where this is going. Because if you were to ask me just yesterday how much the Sword of a Thousand Truths would sell for on the open market place... I would have given reasonable numbers... $100? $200? $1000? Maybe $10k if things got really out of hand.
Ask me again, I dare you.
$10M is my new best guess. If some ETH whale is willing to spend a cool mill on some ridiculous pixilated bullshit that doesn't even do anything? They are certainly willing to spend ten times that on the Sword of a Thousand Truths guaranteed.
Why is that?
Because, with the Sword of a Thousand Truths, you can equip your in-game character and become super badass and slay dragons and whatnot. The dragons that you slay using your investment will then potentially drop even more phat lootz. And you could then theoretically sell those phat lootz to other players in the game and potentially even turn a profit even though you just burned $10M on the sword. Depending on game mechanics, you might even be able to sell the sword back on the market at a profit or loss depending on supply/demand.
RMAH
I saw this go down first hand when Diablo 3 launched and they opened the Real Money Auction House. It was insane. If you got lucky you could find an item that someone else would be willing to buy for $255 (maximum allowed for one transaction). Now, why would someone be willing to spend astronomical amounts more money for a blockchain sword then a Diablo 3 one? Simple: Centralization vs Decentralization.
Centralization.
You see, technically, Blizzard entertainment could create any item and sell it on the open marketplace at a profit, and everyone who plays their games knows this. Also, everyone that plays their games knows that bots are crawling across all servers unfairly farming items without a real person even having to take the time to do the work. This undermines the economy.
Blizzard entertainment, along with every other game company, is a corporation, and they do not have the time or the money to pay a ton of employees to make sure these bots are removed in a timely manner. So what they do is hire a few people and create systems that identify the cheaters, who eventually get banned during the next banning wave.
Banning wave.
So when Blizzard catches a cheater... they don't just ban them outright... they get added to a shitlist to be banned later. That way the community of cheaters won't realize what's going on and defend themselves accordingly.
If Blizzard banned a cheater the second they realized cheating was happening, that cheater would relay that information to the community and the community would take steps to mitigate the vector that was used to detect the cheating. By lumping a ton of cheater accounts into a big pile they can all be banned at the same time and they don't have time to fight back or change their cheating strategy. It's an ugly and inefficient system, but it works well enough (I suppose). Kinda like crypto itself.
Speaking of crypto...
When you have a community that owns and governs itself, guess what? Every player in the game has a financial incentive to report cheaters and get that ban-hammer swung at them instantly before they have a chance to game the system. Unlike a corporation, a crypto community can pay users a tiny amount to keep the platform clean, and that will be plenty.
Networks don't actually have to pay real employees who do it for a living. A community can pay enthusiasts, hardcore gamers, casual players, or anyone else just a tiny bit of inflation to monetize a healthy system that regulates itself... rather than asking HR to hire a person for a living wage who may or may not stay with the company after you train them. Are we seeing the difference between Web2 and Web3 yet?
The darkness!
It's also easy to see how child labor will be exploited from these systems. We can't stop kids from playing these open-source borderless games, and we can't stop them from earning crypto. I can see the headlines now: "Blockchain game capitalizes on child-labor." "Millionaire 8th grader doesn't know how to pay taxes... Parents jailed for tax evasion." Seriously though... don't be surprised.
Insanity
So when I see this kind of craziness on the ETH blockchain: tens or hundreds of thousands of dollars being spend on pixilated hammered dogshit, I can't help but realize how much crazier this is actually going to get. Mark my words: $10M for some badass in-game item (maybe even on the Hive blockchain). Considering Hive has a market cap of like $50M currently, it's hard to even take that prediction seriously... but just wait. Craziness incoming.
Back to CryptoPunks
The actual images of the punks are too large to store on the blockchain, so we took a hash of the composite image of all the punks and embeded it into the contract. You can verify that the punks being managed by the Ethereum contract are the True Official Genuine CryptoPunks™ by calculating an SHA256 hash on the cryptopunks image and comparing it to the hash stored in the contract.
Hm yeah, I don't know what they are actually doing over there at Larva Labs, but I can't believe people are willing to spend so much money for an asset that shouldn't even be on the Ethereum blockchain to begin with. I bet a Hive dev could build this entire system within a week... lol.
Despite my salty jealousy, this is really a clear example of people not really knowing to spend their money on after they make it big. Like... fuck it I'll just spend a million dollars on a cryptoKitty! Really? lol.
Giving these NFTs actual utility will skyrocket their already inflated prices. Again, it's all about gaming... most likely role playing games and other forms of farming games. Many would rather pay other players to grind out the work for them rather than do it themselves. And when all parties know that there is no centralized entity that owns the entire system, and is rather community owned, regulated, and developed... that's when things get really interesting.
Conclusion
I am still reeling from this revelation and need to come back to it later. Sensory overload for sure. Truly, the implications of NFTs being valued this highly with so little intrinsic utility is worth revisiting another time. Mind blown.
I'll just end it here by saying the current run is being fueled by institutional investment and DeFi, but I'm fairly certain the next run in four years is going to be fueled by NFTs and the gaming sector.