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We just got Crypto Punk'd

 So I am currently writing a bit of a longer piece on Facebook/Meta and that whole metaverse business that Mark Zuckerberg is trying to get his grubby hands on. But yesterday I saw a small piece of news that I just could not ignore. Now I know it seems like I might be turning into an NFT page, but here's the thing. I'm not, but the next few pieces are going to focus on NFTs and crypto but that's because that's what's in the news! It's all I see so what can I do! Anyway, this is less of an actual piece and more of a quick grumble.

So many of you probably remember that back in early 2021 Beeple sold the most expensive NFT at $69 million. Well, by all technicalities, that was just beat on Oct 28th by Cryptopunk 9998. This NFT, which as far as Crypto Punks go isn't even that rare, sold for an absolutely mindblowing 124,457 Ether. In USD, that's a total of roughly $532 million. Imagine that for a second. Half a billion dollars in crypto. And not just any crypto, not like Litecoin or Dogecoin. In Ethereum, a relatively stable cryptocurrency. For that image. And yes I know "it's not just an image blah blah blah". I do not care, I know that there is nuance but good lord half a BILLION for that?

Well, no. I said technically earlier because it seems that according to Larva Labs, the original creator of the NFT, the buyer and the seller are one and the same. What happened is this. On August 11th, 0xef764b (part of the wallet address, this format will be used to differentiate accounts) bought the NFT for $346,575. Then on Oct 28th, they transferred the NFT to 0x8e3983. That very same day, 0xe8983 sold the NFT to 0x9b5a5c for $532 million. And then, still on Oct 28th mind you, they transferred the NFT back to 0xef764b who has put the NFT up for sale yet again. And before I get into some of the specifics, guess how much they put as the selling price? 550 million? 600 million? 900 million? The correct answer is 1.07 billion USD in the form of 250,000 Ethereum. Let that sink in.

Is the transaction making sense now? What the seller did was transfer the NFT to a different wallet (one they still owned because that is allowed) and then they used a flash loan to instantly buy the NFT from a third wallet, repay the loan, and jack up the price. By the way, a flash loan is a loan that uses a smart contract to ensure the terms have been met. So in a matter of seconds, the loan is made, the contract is met, and the loan is repaid and hopefully, the person taking out the loan made a profit. If the conditions are not met, the transaction is reversed and it is like the loan was never given. No collateral, no lengthy written contracts, just a loan in a flash; flash loan. In this case, they used a flash loan to buy the NFT at an insane price in hopes of driving up the value to resell it even higher. But they may have overstepped, because one, the bid is being called invalid by Larva Labs in the sense that while it did happen it will not count as the most expensive NFT sale, and two, everyone knows it's essentially a pump and dump. The NFT is obviously not worth close to even 1 million much less 1 billion USD.

What gets me is the fact that this is commonplace. These transactions have happened before and will happen again. NFTs are not that amazing. They are horrible for the environment, they are classist, and much like the stock market are becoming a rich man's game or a way for influencers and celebrities (more on that next week) to get a quick cash grab. This in particular is egregious because it seems like NFT sellers and enthusiasts think the rest of the world is stupid. Like they are some mega geniuses who idolize the Wolf of Wall Street and can "manipulate the masses" to get rich. This wasn't illegal, but good lord, give people some credit. It irks me because NFTs used to be called the future because anyone can get in on it. It can be fun for everyone, people who cant put thousands or millions into a classic hedge fund can invest here, all that jazz. And this to me is proof that those days were never going to last. NFTs are dominated by the rich and privileged. Yeah, they used a flash loan to buy the NFT for 532 million, but they had to have had the initial capital for the initial 432,000 purchase before all of that. Besides, go to the seller's page on Larva Labs. They are not hurting for money. Anyway, I have to mention here at the end that the views regarding NFTs and their owners are nothing but my opinion. My opinion is ever-changing based on news and new evidence. There is no lesson here or anything, I was just annoyed and wanted to explain and complain about a crazy situation. 

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