Rising from its modest minting price of 0.08 Ether (ETH), Bored Ape Yacht Club (BAYC) has climbed to nonfungible-token (NFT) stardom, competing with one of the earliest examples of Larva Labs CryptoPunk NFT.
Given its steady but amplified growth, BAYC has many crypto natives speculating that its collection will eventually “flip” CryptoPunks, and there are several reasons to back it.
Tip-toeing around which collection is the top NFT contender, the competition between these two collections is driven by several factors. With an existing divide between mainstream media adoption and the IP rights granted to its owners, the BAYC and CryptoPunks collection also have a disparate amount of unique holders. This is important because the amount of unique holders is often indicative of a wider spread of owners, meaning it’s less at the mercy of a single sale dictating the projects overall or floor value.
Let’s take a look at some of the factors NFT advocates and traders are talking about in regards to the BAYC project flipping the floor price of CryptoPunks.
Two different labs and visions
The stagnation of CryptoPunks in comparison to the dynamic marketing nature of BAYC leaves many speculating that a “flippening” is inevitable. To add fuel to fire, although there are many copyright options given to creators, the “no rights reserved” option is not one given at LarvaLabs.
As such, many have taken to Twitter to comment in support of the speculation. One particular now-former CryptoPunk #4156 was sold for 2,500 Ether on principle and contention regarding Larva Labs’ stance on Creative Commons 0 (CC0) — otherwise known as “no rights reserved.”
it’s not entitlement, it’s activism. happens all the time in public markets. large stakeholder believes they can unlock additional value, tries to plea their case. if it doesn’t work out (as seems to be the case here) they sell and move on https://t.co/dZBErq07A4
— 4156 (@punk4156) December 5, 2021
Beyond issues with intellectual property (IP) rights, it appears that groups of individuals are rallying around the “flippening” because BAYC has seemed to have mastered its overall marketing and strategic partnerships.
Launched April 20, 2021, the funny, but bored-appearing Apes were minted for 0.08 ETH, valued at $300 at the time. Not long after more notable names like NBA star Stephen Curry began switching their Twitter profile pictures to Apes did the market begin to surge, solidifying the collection as an apparent “blue chip.”
Gaining the attention and adoption of mainstream media and celebrities alike, BAYC seems to have a different trajectory than CryptoPunks. More than individuals, BAYC is strategically partnering with other brands like Adidas and, most recently, announced its partnership with Animoca Brands, a Hong-Kong based software company focused on blockchain games for its future play-to-earn (P2E) games.
In confirming its partnership with Adidas, BAYC alludes to its potential interoperability — the ability to exchange data in different systems or, in this case, Metaverses.
— adidas Originals (@adidasoriginals) December 2, 2021
CryptoPunks were first generated for free on June 23, 2017, for anyone with an Ethereum wallet. The only fee was the price of gas to mint. Although at the time, many considered CryptoPunks to be the first “NFT,” the token itself is not an ERC-721 token. While built on the Ethereum blockchain, it turns out that the CryptoPunk pre-dates the ERC-721 standard and is closer to being an ERC-20 token.
According to Larva Labs, it no longer has any control over the code utilized to buy, sell and trade the CryptoPunks over the blockchain. By surrendering over its control, it gave the code more credibility through transparency, assuming that it would provide all it was promised to do.
Whether that is what the community anticipated is a different story.
Creators control the IP or bust
There seems to be a climate shift regarding where value is placed in an NFT collection. The ongoing contention within the NFT sphere is who owns the rights: the creator or the owner?
Many are questioning projects who are granting their owners limited rights. However, very few NFT projects align themselves with a CC0 mentality where “no rights are reserved.” The few NFT projects operating in this way are CrypToadz and NounsDAO — a project dear to @punk4156.
it’s not about copyright vs no copyright, it’s about making the pixels as censorship resistant as the token they’re attached to. if you don’t assign the token and the image the same rights, what’s the point of binding them together eternally on a blockchain?
— 4156 (@punk4156) December 5, 2021
Not satisfied or content with the limited rights granted to CryptoPunks owners caused renowned CryptoPunks Ape Punk #4156 to change their tune. Despite the rather embedded relationship to CryptoPunks — particularly the one behind their “brand” Punks #4156, placed one of the rarest types in the collection for sale. Their Ape punk up was listed for sale at 2,500 ETH, valued at $10.26 million. As the third-highest valued CryptoPunks sold, many have taken to Twitter to comment on this historical sale.
Copyright issues are what drove one of the leading community members out, and given its reputation, many are turning their eye toward the left-facing CryptoPhunks. Phunks supporters claim to align themselves on the “right side of history” since they allegedly give its owners IP rights.
Despite the rights declared and given, there is something to be said about figures — there is no denying the numbers the BAYC collection has pulled.
Power in numbers
For the last 30 days, the BAYC collection has amassed a trading volume of nearly 44 Ether, according to data from OpenSea. Impressively, in November alone, the floor price of BAYC surged over 50% and the average price is roughly 56.5 Ether, suggesting its floor could easily inch closer to that of Punks.
Comparatively, the Crypto Punks collection’s locked in 32,005 Ether in the last four weeks. Since the sale of Punk #4156, its floor price has steadily been decreasing and is down 7% from last month, according to data from Dune Analytics.
With so much emphasis on floor prices, the number of unique holders in an NFT collection often gets overlooked. Placing laser focus on the amount of liquidity being exchanged, one loses sight of the number of individuals who hold the token.
One could argue that the higher the number of unique holders, the more indicative the collection is to be successful. This is because it’s widely adopted and is less at the mercy of a small group of individuals who could easily set the gas to fire with a single sale.
When comparing the two collections, BAYC has nearly 6,000 unique holders, whereas CryptoPunks has less than half the number of unique holders at 3,273. According to Larva Labs, the top 10 CryptoPunk owners have over 100 CryptoPunks in their wallets with the top wallet holding 410.
According to Dune Analytics, the top percentage of Apes owned is 1.05%, meaning that no wallet owns more than 105 Apes. Since fewer wallets in the BAYC collection take up a large percentage of ownership, it means that there’s a larger number of individuals in the community who not only won a majority of the collection, but share a sense of collective value. The Bored Ape Yacht Club community members that will protect the value the brand has seemed to capture through its partnerships and are “diamond handing.”
A potential “flippening” — but does it matter?
Great emphasis is placed on “will/when BAYC flip CryptoPunks?” Perhaps the bigger question is, does it matter?
Regardless of Apes flipping Punks, many argue that Apes would never outprice premium tier punks like Aliens or the CryptoPunk version of Apes. Some say that the BAYC collection lacks a range of visual “stratification of status,” making them harder to value.
Only time will tell whether Apes flip Punks. However, the narrative could shift and focus less on the market caps and floor prices of both collections and more so on the value both collections capture over time, regardless of copyright limitations.
After all, there is always another potential “blue chip” on the horizon.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Wait, what? Former Bitcoin bull Raoul Pal only owns one Bitcoin?
Former Goldman Sachs hedge fund manager and cryptocurrency bull Raoul Pal claimed in a tweet that he now only owns a single Bitcoin.
As the claim was made in the heat of a Twitter fight with self-proclaimed “Bitcoin Strategist” Greg Foss it’s not entirely clear whether it’s an exaggeration or an accurate statement about his holdings. Pal is the founder and CEO of Real Vision and Global Macro while Foss is an executive director at Validus Power Corp.
The revelation of his apparently small holding certainly caused uproar and angst among Bitcoin true believers, who’ve looked at Pal askance ever since he started calling Ethereum “the greatest trade” and predicted that ETH and altcoins will eventually outperform BTC.
Fascinating to see that since inception ETH has outperformed BTC by 250%. It only fell below its initial price in BTC for the first 5 months of its existence in 2015.
Let that put rest to the idea that all other tokens trend towards zero in BTC terms. pic.twitter.com/ulCpsjG8up
— Raoul Pal (@RaoulGMI) April 7, 2021
Pal first purchased BTC in Nov 2013. He sold for a 10X profit in the so-called “fork-wars” of 2017 (missing out on an even bigger gain later that year) before adding to his collection in 2019 through 2020. In May 2021, he confirmed that he owned more ETH than BTC. At time of writing, Bitcoin (BTC) is worth $40,925.
The barney was instigated by Foss, who tweeted “Raoul is soft” followed by another intellectual tweet, “Raoul sucks and blows” shortly after. After some back and forth between Pal and the Bitcoin maxi, Pal posted that people like Foss and the Bitcoin community’s exclusionary ideology are why he only holds one Bitcoin.
And that is your issue. I don’t share your philosophy, so you attack me? Really? This is why I hold only one bitcoin, the community has lost sight of inclusion and you sir, are helping reduce the network effects by excluding people who dont share your view from the network.
— Raoul Pal (@RaoulGMI) January 20, 2022
This upset the Bitcoiner community, many who claimed he had let emotion cloud logic. “His feelings are hurting his future,” commented one user Emanuel in a reply to Bitcoin Meme Hub tweet. “I knew when he started to sip Vitalik’s coolaid he was a goner,” added another user, Jalan Foster.
The founder of Synaptic Ventures Marc van der Chijs complained that the fact Pal only owns one BTC based on the makeup of the community and not on the potential return “goes totally against the gospel he preaches on RealVision.”
However, some defended Pal, pointing to his impressive track record and reminding followers that he is in fact a trader, not a holder. Crypto analyst and founder of Crypto My Way “Coach T” wrote that he appreciates Pal’s “diverse views and intelligent thinking.”
Foss vs. Pal: a Twitter feud
It appears that the argument was in response to a disagreement on Pal’s stance on inflation and bonds as a trading vehicle. Foss explained that he didn’t support Pal promoting his trading strategy to others who don’t entirely understand how it works.
Pal disagreed, explaining that his views on bonds are “a trade, not a philosophy.” Despite this, in a following comment on the thread, Pal claimed that he doesn’t own any bonds.
Ok, lets do math. If Im right and bonds can rally 20% in 12 months (just use TLT) that is faster than the balance sheet expansion, thus its a net win to your purchasing power. If you hold bonds to maturity you lose. Issue?
— Raoul Pal (@RaoulGMI) January 20, 2022
Three hours after posting the original tweet attacking Pal, the argument eventually culminated in Foss tweeting an apology saying that he “regrets his actions,” adding that he “made a rookie error” and that he has “bigger battles to fight.”
Just weeks ago, Pal said that he believes there is a “reasonable chance” that the crypto market capitalization will increase 100 times by the end of this decade. Hoping he’s right about that is perhaps something on which we can all agree.
Cointelegraph reached out to Raoul Pal via Real Vision and will update the story with any response.
Multichain hacker returns 322 ETH, keeps hefty finders fee
Owing to a security vulnerability in six tokens, Multichain users lost more than $3M over the week. A white hat hacker returned 322 ETH, but in excess of 527 ETH is still exploited.
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In a dramatic twist, one of this week’s Multichain hackers has returned 322 ETH ($974,000 at the time of writing) to the cross-chain router protocol and one of the affected users.
However the hacker kept 62 ETH ($187,000) as a “bug bounty”, and a total of 528 ETH (worth $1.6M) remains outstanding after the exploits.
Earlier this week, news emerged of a security vulnerability with Multichain relating to the tokens WETH, PERI, OMT, WBNB, MATIC, and AVAX, and $1.43 million was stolen. Multichain announced on Jan. 17 the critical vulnerability had been “reported and fixed.”
However, publicity about the vulnerability reportedly encouraged a number of different attackers to swoop in, and more than $3 million in funds were stolen. The critical vulnerability in the six tokens still exists, but Multichain has drained around $44.5m of funds from multiple chain bridges to protect them.
Yeah, bridge contract need pause function. https://t.co/lPjLsE5EtR
— Zhaojun (@zhaojun_sh) January 20, 2022
One of the hackers, calling himself a “white hat” has been in communication with both Multichain and a user who lost $960,000 in the past day or so, to negotiate returning 80% of the money in return for a hefty finders fee.
According to a Jan. 20 tweet from ZenGo wallet co-founder Tal Be’ery, the hacker claimed they hadbeen “saving the rest” of the Multichain users who were being targeted by bots, in an act of defensive hacking.
The funds were returned across four transactions. On Jan. 20 the hacker returned 269 ETH ($813,000) in two transactions directly to the user he stole it from and kept a bug bounty of 50 ETH ($150,000).
The relieved user responded to the hacker:
“Well received, thank you for your honesty.”
Overnight, the hacker also returned 50 ETH ($150,000) across two transactions to the official Multichain address, and kept a bug bounty of 12 ETH ($36,000).
Multichain (formerly Anyswap) aims to be the “ultimate router for Web3.” The platform supports 30 chains at the moment, including Bitcoin (BTC), Ethereum (ETH), Avalanche (AVAX), Litecoin (LTC), Terra (LUNA), and Fantom (FTM).
In a tweet on Jan. 20, the Co-Founder and CEO of Multichain Zhaojun conceded that Multichain bridge contracts need a pause function to deal with similar incidents in future..
Cointelegraph has contacted the project for comment.
Australia’s plan to create a crypto competitive edge in 12 steps
In October 2021, the Senate Committee for Australia as a Technology and Financial Centre released its much-awaited recommendations for how cryptocurrency should be regulated. The 168-page final report boils down to 12 recommendations aimed at striking the right balance between creating legitimacy without stifling innovation.
This is a landmark report that demonstrates Australia’s clear efforts to put itself at the forefront of crypto investment globally. The chair of the committee, Senator Andrew Bragg, believes that “Australia can be a leader in digital assets” and is confident that it can particularly “be competitive with Singapore, the UK and the US.”
Four key recommendations
First, the introduction of a range of new crypto-specific licenses and regulations. For too long, regulators around the world have been trying to put square pegs (cryptocurrency) into round holes (traditional financial regulation). This approach underestimates the fundamental differences that exist as well as the potential that digital assets have to transform the world. This report acknowledges crypto’s potential and calls for a range of bespoke cryptocurrency licenses in Australia. It recommends a specific market licensing regime for digital exchanges as well as a bespoke custody regime for digital assets. Details will still need to be fleshed out but if we get these frameworks right, then this will create the legitimacy that the sector needs to take off into the mainstream.
Second, the introduction of a decentralized autonomous organization (DAO) entity type into Australian corporate law. This recommendation is a very big deal, as it shows that the Australian government is open to decentralized finance (DeFi) as well as crypto innovation. Wyoming is the only region I have heard of that has something like this in place, so this could put Australia on the front foot. If approved, DAOs could provide a unique utility that may bring the Australian economy a decade ahead into a decentralized future. However, this will also be the hardest thing for the Committee to get approved, as changes to the Corporations Act are infamously rare in Australia. If anyone can do it, it’s Senator Bragg though.
Third, improved tax rules for crypto-to-crypto transactions. Recent Finder research shows that over 17% of Australians own cryptocurrency — the third-highest rate of adoption in the world. However, this growing group has had to grapple with tax rules that are confusing at best. Historically, crypto-to-crypto transfers have been considered a capital gain by the Australian Tax Office. The new recommendation calls for tax only when there has been “a clearly definable capital gain or loss.” Again, the devil will be in the detail on this one but active Australian crypto users could be the real winners.
Fourth, new tax incentives to encourage green crypto mining. The Committee recommends a 10% company tax discount for crypto mining businesses that use renewable energy. This looks like a smart move to support two high-growth Australian industries: renewable energy and cryptocurrency. This will be especially important as the Committee tries to get these recommendations signed off against a backdrop of COP26 and rising concerns about climate change.
Three tough issues
- Timelines for turning recommendations into law. Right now, these are all just recommendations, and are worth as much as the political will that exists to enact them. As with other countries, politics in Australia moves slowly and this will be no different. Senator Andrew Bragg is bullish that he can get all the recommendations passed in 12 months and I back him to get it done. His cause could also be supported by a growing view that crypto innovation could be a vote-winner with young Australians in a looming federal election, as nearly a third of Generation Z already own cryptocurrency.
- Implications for crypto businesses during the pre-reform period. If it takes a year to introduce new laws then there are still questions about what crypto businesses can do in the meantime. Many submissions called for a “safe harbor” against regulation until rules had been finalized but this was not explicitly recommended by the Committee. However, the direction of travel has been set and there is clear support for crypto innovation and an acknowledgment that new rules and licenses are needed. I would be surprised if we saw much in the way of regulatory action until then.
- Specifics for the licensing and tax proposals. Many of these recommendations were light on detail and it looks like the Australian Treasury will now lead on these matters. The industry will be very interested to know what the requirements for being a custodian or digital exchange will be, particularly when it comes to capital requirements. If there’s too much regulatory burden, then businesses will move offshore. Likewise, consumers will need more clarity on what a “clearly definable capital gain or loss” is for tax purposes. In many ways, the work starts now.
Learnings for governments around the world
The crypto industry is ready to talk policy. It’s fair to say that this Select Committee was inundated with engagement from crypto businesses, academics, peak bodies and regulators. More than 100 written submissions contributed and there were three full days of public hearings. It’s not often that an industry is asking for more regulation but that is what is happening here. The crypto industry around the world wants clarity and is ready to have a conversation about policy.
Broad reviews are more effective than siloed approaches. One key reason that this consultation had so much engagement was that it looked at the digital asset industry holistically rather than from one angle only. A problem we’re seeing around the world is regulators interested in looking at crypto assets from their specific regulatory view, but broad innovation shouldn’t be assessed through such a narrow lens. This consultation managed to look at the industry holistically while still getting into the specific issues. I welcome more reviews like it around the world.
Bespoke digital asset policy approaches will be needed. Digital assets have hit critical velocity and the revolution can no longer be ignored. Piecemeal changes to legacy financial services policy will not work. We need policymakers around the world to work together to create bespoke policies that are fit-for-purpose. Coinbase captures this well in pillar one of its Digital Asset Policy Proposal (DAPP). The DAPP calls for “a new framework for how we regulate digital assets” that “will ensure that innovation can occur in ways that are not hampered by the difficulty of transitioning from our legacy market structure.” These recommendations in Australia are an attempt at doing exactly that which many can learn from.
What is clear is that the world is changing. This Senate Committee in Australia should be applauded for taking a holistic approach and recommending bespoke policy instruments. It’s time for policymakers around the world to follow suit and take a broad look at their approach to digital assets.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Fred Schebesta is an Australian-born entrepreneur and early-stage investor, founder of global fintech Finder, now worth over half a billion dollars. Fred recently launched blockchain investment fund Hive Empire Capital and co-founded Balthazar, a DAO platform for NFT gaming. With 22 years of experience in building businesses, Fred just released a Number One Amazon Best Selling book, Go Live! 10 Principles to Launch a Global Empire.
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