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This CryptoPunk NFT just sold for $530 million. Kind of

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This CryptoPunk NFT just sold for $530 million. Kind of
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CryptoPunk #9998, part of a collection of 10,000 NFTs, “sold” for $530 million on Thursday. 


OpenSea/User 0xef764bac8a438e7e498c2e5fccf0f174c3e3f8db

It’s the most expensive NFT ever sold, at least on paper. On Thursday, someone bought a CryptoPunk NFT, or nonfungible token, for 124,457 ethereum — about $532 million. However, as is often the case in NFTs and cryptocurrency, things aren’t exactly what they seem.

Whoever is behind the transaction, they bought the Cryptopunk from themselves. Like cryptocurrency, NFTs are held in digital wallets. There’s no limit to how many wallets one person can create. This person transferred the NFT from Wallet A to Wallet B. Then, Wallet C bought the NFT for $532 million from Wallet B — and immediately transferred it back to Wallet A.  

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Why use three wallets instead of just simply selling it from one wallet to another? It’s because the buyer didn’t pay for the transaction himself but instead was loaned the money from others via a “flash loan.” Flash loans are a complicated decentralized finance tool, but the gist of it is they allow you to loan huge sums of cryptocurrency only if the criteria of a smart contract are met. Imagine if you would buying a $1 million house using a loan, but only if you already had another buyer lined up, who was willing to pay enough for you to make a profit and pay back interest from the lenders. This person did that, except he was both the buyer and the seller.  

NFTs, am I right?  

Twitter and Discord, the platforms where most NFT discourse happens, quickly discovered the sale and speculated on the motives behind it. The smoke on the street is it was a publicity stunt, with the owner probably trying to drive up the price of his CryptoPunk. 

There are broadly two types of art NFTs. One type is a one-of-its-kind, where an artist creates a piece of digital art and then sells it, just like what happens in real-world art sales. Then there are NFT collections, like Cryptopunks. These are when artists and developers create many — usually 10,000 — NFTs that have the same template with different characteristics. The Bored Ape Yacht Club, for instance, features 10,000 apes all wearing different articles of clothing, with different backgrounds and facial expressions. The rarer the properties, the more valuable the NFT — think Pokemon cards. In the case of Bored Apes, the “floor” price is $152,000, but rare ones sometimes sell for millions. 

CryptoPunks is considered the original NFT collection, starting in 2017 when much of the world was just beginning its infatuation with Bitcoin. There are 10,000 Cryptopunks in the collection, with the cheapest starting at 100 ethereum, or about $400,000.

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Ethereum

TerraUSD (UST), Tether (USDT) Not as Stable and Cannot Guarantee Their Peg at All Times – ECB Crypto Asset Report

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TerraUSD (UST), Tether (USDT) Not as Stable and Cannot Guarantee Their Peg at All Times – ECB Crypto Asset Report

Summary:

  • The European Central Bank has published an informative new article on digital assets titled ‘Decrypting Financial Stability Risks in Crypto-Asset Markets’.
  • The informative article describes the stablecoins of TerraUSD (UST) and Tether (USDT) as not being as stable as their names suggest and cannot guarantee their peg at all times.
  • The article also concludes that the volatility of crypto markets could pose risks to financial stability.

The European Central Bank has published an article on digital assets amidst the current debate on their future, particularly in the European Union. The article, titled ‘Decrypting Financial Stability Risks in Crypto Asset Markets’, takes a deep dive into the crypto industry’s current developments, including the recent depegging of stablecoins such as UST and USDT.

Stablecoins Such as UST and USDT as Not as Stable As Their Names Suggest

According to the ECB, the risks to financial stability in the EU stemming from crypto assets were limited in the past. However, there is a need to discuss the risks and developments in stablecoins ‘as shown by the recent TerraUSD crash and Tether de-peg.’ These stablecoins ‘are not as stable as their name suggests and cannot guarantee their peg at all times.’

The Crypto-Verse Has Grown Dramatically Since 2020

Furthermore, the article by the ECB points out that the crypto-verse has increased dramatically in size and complexity since the end of 2020 and expanding beyond Bitcoin.

The crypto market capitalization has grown by roughly seven times than it was at the start of 2020. The article points out that trade volumes of cryptocurrencies have sometimes exceeded those of traditional exchanges such as the NYSE. It states:

Trading volumes for the most representative crypto-assets (including Bitcoin, Ether and Tether) have at times been comparable with or even surpassed those of the New York Stock Exchange or euro area sovereign bond quarterly trading volumes.

There are now more than 16,000 crypto-assets in existence (ten new crypto-assets are launched every day on average), although only around 25 crypto-assets have a market capitalisation comparable with that of a large cap equity.

Crypto Markets are Evolving Rapidly And Might Cause risks to Financial Stability

In the concluding segment of the article, the team at ECB made the following observations about the crypto industry.

  • The nature and scale of the crypto markets continue to evolve at a rapid rate. If the current trend continues, cryptocurrencies could pose risks to financial stability.
  • The interconnectedness between the traditional financial sector and the crypto markets means that systemic risks will increase with the use of leverage and lending activities.
  • Regulation of cryptocurrencies should be a priority by the European Union.

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Ethereum

Fear in the Bitcoin and Ethereum Derivative Markets Points to More Pain Ahead for 3 to 6 Months – Report

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Fear in the Bitcoin and Ethereum Derivative Markets Points to More Pain Ahead for 3 to 6 Months – Report

Summary:

  • Bitcoin’s value has been declining for a record-breaking eight consecutive weeks.
  • The ongoing pullback has put a notable dent in the entire crypto market performance.
  • Fear in the Bitcoin and Ethereum derivatives markets indicates that downside selling pressure will continue for the next three to six months.
  • However, bear markets eventually usher in bull markets down the road.

The crypto markets have somewhat come to terms with the depegging of UST, the downward spiral of LUNA that followed, and both events affecting the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the team at Glassnode, the Bitcoin market has continued to trade lower for eight consecutive weeks, thus becoming ‘the longest continuous string of red weekly candles in history.’

Fear in the Bitcoin and Ethereum Derivative Markets Hint Suggests More Pain for the Next Three to Six Weeks

The report goes on to highlight that the fear currently in the Bitcoin and Ethereum derivative markets, could point towards a scenario where the outlook is further downside at least for the next three to six months. The report explains:

Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low.

Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds.

Bitcoin and Ethereum’s Correlation Remains Strong

Furthermore, according to the team at Glassnode, Bitcoin has had an average return of -30% in the last month, implying that BTC lost 1% of its value every day in the last 30 days. In the case of Ethereum, the number two digital asset has been hit harder by the ongoing drawdown, experiencing a -34.9% return in the same period.

Consequently, the ‘correlation of performance between these two assets remains strong, despite numerous differences in their fundamental properties.’

Bear Markets Have a Way of Ending and Author the Bull that Follows

In its concluding remarks, the report by Glassnode pointed out that the current bear market has taken its toll on crypto traders and investors. Additionally, the team at Glassnode cautioned that bear markets often get worse before they get better. But there is some hope at the end of the tunnel as ‘bear markets do have a way of ending’ and ‘bear markets author the bull that follows’.

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Coinbase Wallet Embraces Swaps on Ethereum, Polygon, BNB Chain and Avalanche

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Coinbase Wallet Embraces Swaps on Ethereum, Polygon, BNB Chain and Avalanche

Summary:

  • Coinbase Wallet has integrated swaps on the BNB Chain and Avalanche in addition to Ethereum and Polygon.
  • With an in-app Decentralized Exchange, Coinbase Wallet simplifies the process of swaps and will integrate other networks in the months to come.

The team at Coinbase has announced that the platform’s wallet has integrated swaps on the BNB Chain (formerly the Binance Smart Chain) and Avalanche, in addition to swaps on Ethereum and Polygon. According to the official announcement by Coinbase, the integration will allow users of the wallet to ‘swap a greater variety of tokens than most traditional centralized exchanges can offer.’

Furthermore, Coinbase Wallet’s in-built decentralized exchange will simplify access and trading of tokens on the four blockchains. The wallet’s efficiency is boosted by the Ox API that compares rates across multiple exchanges, saving users’ time along the way. The additional networks of BNB Chain, Avalanche, and Polygon are also ideal for trading due to their affordable network fees, faster speeds, and abundance of tokens.

Coinbase Wallet to Integrate Other Networks in the Coming Months

Concerning future plans, the team at Coinbase Wallet explained that they were planning on integrating other blockchains in the near future. They said:

We want to make it easier for you to engage in the world of decentralized finance (DeFi) and web3.

In the months to come, we’ll be making it possible to conduct swaps on an even greater variety of networks.

Not only will trading expand, but we’re also planning to add support for network bridging, allowing you to seamlessly move tokens across multiple networks.

Coinbase Wallet is a Self-Custody Wallet Distinct from Coinbase.com

To note is that Coinbase Wallet is a different platform altogether from Coinbase.com. Private keys on Coinbase Wallet are the responsibility of its users which means that it is a self-custody software wallet. Additionally, you do not need a Coinbase.com account to use Coinbase Wallet.

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