Investors Pump Millions into The NFT Market, Analysts Debate – Good Or Bad Investment?

  • Non-fungible token (NFT) markets are quickly catching the eyes of venture capital firms.
  • Critics claim investment in NFTs is akin to “gambling in a casino.”
  • Are NFTs being used for money laundering?

Over the past few months, there’s been a boom in demand for non-fungible tokens (NFTs) in tandem with the growing cryptocurrency market. However, this rise in demand has not gone unnoticed as venture capital firms have poured over $90 million in NFT projects so far this year representing a sharp 150% increase from NFT projects’ investment last year, a CNBC report states.

According to Pitchfork, Sorare, a blockchain-based football digital collectibles game, has raised the most from VCs this year, $48.8 million, including Accel, Benchmark, and former Manchester United F.C. defender, Rio Ferdinand.

Andrei Brasoveanu, a general partner at Accel, labeled the expansive growth of NFTs as “one of the most exciting tech developments” shortly after the “record-breaking” investment became public. Brasoveanu further stated,

“It’s one of those developments that have mass-market appeal and could potentially impact a world outside the crypto niche.”

Notwithstanding, reports have linked popular NFT marketplace, OpenSea, which has previously sold some of the top-selling NFTs, with a possible $250 million raised at $2 billion valuations. The DApp creator, Dapper Labs, raised $23 million in a seed funding round for OpenSea led by Andreessen Horowitz in 2020.

Dapper Labs is well-known for its NBA Top Shot application that creates and sells to users NBA players’ NFT collectible cards. However, the funding rumors were quashed by Roham Gharegozlou, CEO and founder of Dapper Labs, who said the rumors were “baseless.”

A Critical Stand Against the Booming NFT Market

Despite VCs opening up their checkbooks to invest in NFT-related firms, some critics believe the NFT market is a fad in the crypto world. CEO of L’Atelier BNP Paribas, John Egan, compares buying NFT collectibles to gambling in a casino. “I think it’s probably akin at this stage to going into the casino,” he said.

In the past week, Beeple, a digital artist, made huge waves in the crypto world as his collection of NFTs sold for $69 million, making this art the third most expensive art from a living artist. Elon Musk, Jack Dorsey, and athletes such as Ron Gronkowski have all offered their unique NFTs to the public amidst the surging demand.

Despite his skepticism, Egan stated the NFT world possesses highly risky assets, but he believes the ecosystem will play a key role in the future. He stated the unique and cryptographic secure nature of NFT provides “the bedrock economic infrastructure within the virtual economy.”

The Path to Darkness – Money Laundering?

Apart from an ensuing “bubble” that most critics have prophesied, others claim NFTs are headed to a regulation path, similar to the cryptocurrency assets preceding them. One of the most practical dangers lingering above NFTs is money-laundering, which is also a grave issue in the crypto field.

According to Jesse Spiro, the chief of government affairs at the blockchain analysis firm Chainalysis, NFTs present a harder challenge to single out money laundering. Spiro said,

“One of the ways to identify trade-based money laundering with [traditional] art is that [an appraiser] comes up with a fair market value for something, and you’re able to measure that fair market value against the pricing that’s involved [and flag] over-invoicing or under-invoicing.”

“This is either selling that asset for less than it’s worth or for more than it’s worth.”

While noticing money laundering patterns in well-established markets such as the NBA Top Shot is easy, random or one-off NFT sales is much more complicated, he explained.

“All that’s needed is two parties that are involved to execute that [transaction] successfully effectively.”

However, a former Deutsche Bank and Credit Suisse fund manager argued that money laundering using NFTs “does not make sense.” The fund manager stated,

“I certainly see the potential for money laundering here, but given that there are lots of assets out there on the blockchain that people can use for that, [NFTs] may not be best-suited.”

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Author: Lujan Odera

A Single Red Pixel Is Selling As An NFT for $800,000 – That’s Not A Typo

A Single Red Pixel Is Selling As An NFT for $800,000 – That’s Not A Typo

After all, ‘beauty is in the eyes of the beholder’ who has the money to appreciate it, of course. The NFT market is definitely frothy and “very speculative,” according to Beeple but also in the “very early days.”

In the world of non-fungible tokens (NFT), artist Unhomed is selling three digital artworks on NFT marketplace OpenSea, for more than $800,000 each.

What’s interesting about these digital artworks is they involve 1x1px in three colors; green, blue, and red, named Digital Primary G, B, and R, respectively.

All three of the digital artworks have received hundreds of views which could have been propelled by YouTuber Marques Brownlee tweeting, “A single red pixel selling as an NFT for $900,000. Hm. Right. Got it.”

So far, despite hundreds of views, not a single offer has been made on any of the NFTs.

However, if they do get hefty bidding, even that wouldn’t be out of the ordinary, not just in the NFT space but also in physical artwork. People were quick to point out that Yves Klein’s “Le Buffle,” which is a splash of blue, was sold for $12.4 million at Christie’s New York in 2010.

After all, ‘beauty is in the eyes of the beholder.’ And of course, the beholder needs to have tons of money which the ongoing bull run has provided many digital assets participants.

This has helped NFTs explode into popularity this year, with overall NFT sales volume exceeding $220 million in Feb., up from the $250 million transactions recorded in the entire last year.

According to Pitchbook, so far in 2021, investors have poured $90 million into NFT, and digital collectibles companies, about triple the $35 million NFT start-ups raised last year.

“It’s one of those developments that has mass-market appeal and could potentially impact a world outside the crypto niche,” Andrei Brasoveanu, a general partner at Accel, told CNBC, which was part of the $50 million investment in Sorare, a blockchain-based fantasy football game.

“Very Speculative,” But  In The “Very Early Days”

This week, a New York Times columnist Keven Roose also joined in and sold his article titled “Buy This Column on the Blockchain” in the form of an NFT for $563,000.

Twitter CEO Jack Dorsey also sold his first-ever tweet for $2.9 million this Monday.

Even the humanoid Sophia joined in on this NFT craze by co-creating a physical “self-portrait” and an attached 12-second MP4 file showing how the work evolved.

“We wanted to explore the possibility for humans and robots to collaborate not only on operational tasks but also on creative efforts,” said Andrea Bonaceto, an artist and partner at blockchain investment firm Eterna Capital who co-created the artwork.

According to digital artist Beeple, who became the third most valuable living artist by selling his NFT digital artwork for $69.3 million, there is “definitely some froth” in the market, but there is a lot of excitement as well.

Some people are definitely putting money into things that are “going to be worthless,” Beeple told The Associated Press via a Zoom call and likened it all to the Internet (dot-com boom) bubble, which burst, but that didn’t make people stop using the Internet.

Although “it’s very speculative,” he said, “It’s very early days.”

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Author: AnTy

Tesla CEO Now Sets His Eyes on DeFi, But The Elon Effect on Price Is Absent

Tesla CEO Now Sets His Eyes on DeFi, But The Elon Effect on Price Is Absent

Tesla CEO Elon Musk continues to get deeper and deeper into cryptocurrencies, having covered Doge, Bitcoin, NFT to now DeFi.

On Thursday, Musk took to Twitter to announce “Don’t defy DeFi.”

This obviously sent the Crypto Twitter (CT) into euphoria and, of course, to Musk’s comment section with their memes and shills.

“Replacing banks with code,” commented David Gokhshtein.

Arthur_0x of DeFinance Capital took this as an opportunity to propose adding support for fiat-backed cryptos as well. “Do allow us to pay for Tesla in stablecoins as well,” commented Arthur.

Bitcoin Fork or Doge?

Just yesterday, Musk announced that the electric car maker would now be accepting Bitcoin as payment. Adding to this bullish news is the fact that any BTC received will be retained as Bitcoin and not converted to fiat currency.

The company’s supporting documentation clarified that any crypto asset other than Bitcoin, name mentioning the forks BCH and BSV, isn’t accepted. “Our Bitcoin digital wallet is not configured to detect or receive digital assets other than Bitcoin,” the company said.

Internet entrepreneur Kim Dotcom argued that Bitcoin transactions involve high costs compared to its fork Bitcoin Cash (BCH). BCH -0.21% Bitcoin Cash / USD BCHUSD $ 478.21
Volume 2.43 b Change -$1.00 Open $478.21 Circulating 18.69 m Market Cap 8.94 b
8 h Tesla CEO Now Sets His Eyes on DeFi, But The Elon Effect on Price Is Absent 1 d Free Crypto Trading App Robinhood Files S-1 Paperwork With SEC to Go Public 4 d Fortress Investment Offering an Early But Discounted Payout to Mt. Gox Creditors

“Try and buy a Soda with Bitcoin,” Dotcom tweeted while sharing that Bitcoin’s median fee is $8.92 while BitcoinCash’s median fee is a mere $0.001.

“Over half of all cash payments worldwide are under $10. BCH is serving the mass market, not just the 1%,” he said. “That’s why Bitcoin Cash.”

Musk responded to Dotcom’s argument with “Fair point.”

Musk also responded with the emoji of a pair of eyes to one Twitter user, suggesting that Dogecoin DOGE -1.30% Dogecoin / USD DOGEUSD $ 0.05
Volume 1.09 b Change $0.00 Open $0.05 Circulating 128.91 b Market Cap 6.62 b
8 h Tesla CEO Now Sets His Eyes on DeFi, But The Elon Effect on Price Is Absent 1 d Free Crypto Trading App Robinhood Files S-1 Paperwork With SEC to Go Public 6 d Robinhood Is Working Fast on A ‘Wallet’ Feature; CEO says Might Add New Coins Too
would rather be the best choice with “fast speeds and low fees,” making for ”an actual spendable cryptocurrency.”

Not Effect on Price

Musk’s announcement sent the price of Bitcoin higher above $57,000, only to lose all the gains the same day. Today the BTC price fell even lower to $50,350, down 18.5% from March 13 all-time high shy of just $62,000. BTC -2.33% Bitcoin / USD BTCUSD $ 51,579.86
Volume 66.93 b Change -$1,201.81 Open $51,579.86 Circulating 18.66 m Market Cap 962.71 b
5 h Coinbase Selected By Meitu For $90 Million Crypto Purchase and Custody 5 h CBOE Now Wants Back In, CEO says ‘Haven’t Given Up’ on Bitcoin Futures & We ‘Need’ to be Here 6 h $1.2 Billion Liquidated on Binance, Taking the Lead like Always, on Bitcoin’s Drop to Nearly $50k

As we started to see with DOGE, Musk’s tweets about crypto, which has been increasing in number, have been losing their effect on prices, or they soon get reversed as in Bitcoin’s case.

As for the DeFi market, the prices have been declining since yesterday in tandem with Bitcoin and that continues today with DeFi coins down 10% to 20%.

This week, the DeFi sector has wiped out about $15 billion from its market cap, which currently stands at $82.8 billion, as per CoinGecko.

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Author: AnTy

Grayscale Amasses 552.5k Bitcoin and Almost 3 Million ETH with Latest Big Accumulations

Grayscale Investments continue to gobble up more and more Bitcoin, and now it has its eyes set on Ether as well.

All this buying has Grayscale Bitcoin Trust amassing 552.5k BTC so far, worth more than $10 billion. GBTC currently has almost 3% of Bitcoin’s circulating supply.

As per the company’s Dec. 3rd filing with the US Securities and Exchange Commission (SEC), they added another nearly 14,592 BTC worth over $280 million to its holdings.

GBTC is currently trading at a premium of around 15% to BTC price, cut down in half since last week. The premium started trending up in early October along with the jump in the price of Bitcoin but has been keeping under 30% throughout 2020 except for a handful of occasions.

This premium is a function of “exposure to bitcoin in a regulated vehicle without having to deal with the challenges of custody, eligibility to some tax-efficient schemes, strong distribution through regular brokerage accounts, lack of alternatives such as an ETF,” noted data provider Skew in its report.

Source: Grayscale Investments BTC Holdings

However, it is not just Bitcoin that Grayscale’s institutional investors have their eyes on. Grayscale’s ETH stash is ready to hit 3 million, currently at 2.94 million ETH worth nearly $1.7 billion.

This Ether accumulation actually saw a big spike on Wednesday, which means this week institutional investors bought the dip on ETH.

Ether is currently trading at $560, up from yesterday’s low of $530, while Bitcoin is around $18,240, has managed to recover from yesterday’s drop to $17,650.

Grayscale Ethereum Trust (ETHE) is trading at a premium of a whopping 127%, down from 900% in June.

Grayscale Investments ETH Holdings

Institutions are coming into the cryptocurrency market at a fast pace in 2020 as the market enters into another bull cycle.

Bitcoin is gaining attention as digital gold and inflation hedge this year, while Ethereum blockchain is becoming the most actively used with its token Ether solidifying itself as an asset class.

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Author: AnTy