Small Group of Insiders Reaping Most of the Gains on NFTs, Study Shows (bloomberg.com) 43
Non-fungible tokens are one of the hottest things in cryptocurrencies right now, with the prospect of big gains should the latest collection rise in value. But a new study from Chainalysis shows that a small portion of participants reap most of the gains. From a report: Investing frequently in a wide array of collections appears to lead to the highest profits, Chainalysis said in its report. It added that whitelisting -- the practice of allowing a certain set of followers or others to purchase new NFTs at a much lower price than other users during minting events where a digital file is turned into a digital asset on a blockchain -- helps those people significantly.
Users who make the whitelist and later sell their newly-minted NFT gain a profit 75.7% of the time, versus just 20.8% for users who do so without being whitelisted, Chainalysis said, citing Opensea data. The data suggests it's nearly impossible to reap outsized returns on minting purchases without being whitelisted, the study said. "A very small group of highly sophisticated investors rake in most of the profits from NFT collecting," the study said. "This is especially true in minting, where the whitelisting process gives early supporters of collection access to lower prices that result in greater profits. We also see possible evidence of the use of bots by investors looking to purchase during minting events, which could shut out less sophisticated users, and even result in failed transactions that cost them in fees."
Users who make the whitelist and later sell their newly-minted NFT gain a profit 75.7% of the time, versus just 20.8% for users who do so without being whitelisted, Chainalysis said, citing Opensea data. The data suggests it's nearly impossible to reap outsized returns on minting purchases without being whitelisted, the study said. "A very small group of highly sophisticated investors rake in most of the profits from NFT collecting," the study said. "This is especially true in minting, where the whitelisting process gives early supporters of collection access to lower prices that result in greater profits. We also see possible evidence of the use of bots by investors looking to purchase during minting events, which could shut out less sophisticated users, and even result in failed transactions that cost them in fees."
That first group of insiders (Score:5, Insightful)
is called "scammers". The other groups they sell to down the pyramid are called "suckers".
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Funny for some today, insightful for others... in a year from now.
Pareto Principle anyone? (Score:3)
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How is this in any way remotely surprising?
Ask a cryptocurrency enthusiast and find out why this is a clever advantage that will make you a billionaire. That it is not a scam, that you should invest all your money in cryptocurrencies and convince all your friends to do the same!
Re: Pareto Principle anyone? (Score:2)
This is essentially the NFT version of what cryptocurrency enthusiasts call a pre-mine. It is considered one of the "features" of a shitcoin with no value. So, no, most people involved with cryptocurrency will not make excuses for that type of behavior and will actually point to pre-mined cryptocurrencies as an example of how to avoid blockchain scams.
Re: Pareto Principle anyone? (Score:2)
Everything is a surprise when you have the mentality of a small child.
I remember I had a brilliant idea when I was about 3 or 4 and got a set of colored pencils as a present: I was going to draw my own currency notes and be rich! rich, I tells ya! And to get around those pesky counterfeit laws, I was going to scrawl myself a permission slip from the bank that said my LittleRightwingNutjobBucks were just as good as the real thing.
It was flawless.
Plus ça change... (Score:5, Interesting)
plus c'est la même chose.
Is this reminding anyone of the bond markets of the 1980s - memorably chronicled in Liar's Poker by Micheal Lewis?
A market of securities nominally open to all but actually controlled by insiders who, by being in control of the intermediary for the sales, were able to massively exploit the naive buyers who thought they were participating in a transparent market?
NFTs are nothing (Score:3)
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NFTs *COULD* actually serve a purpose if they were applied to a physical item to prove provenance.
Example: someone catches a game ball. Everyone knows that person caught a game ball it was televised and recorded so that isn't up for dispute. Now if that person wishes to sell that game ball he could conceivably sell 5 balls and secretly tell all 5 buyers they are the authentic game ball. That's where a certificate of authenticity comes in. But those can be faked too. If it's registered on a blockchain a
Re:NFTs are nothing (Score:4, Insightful)
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I think the idea is that rather than telling you which ball is the real ball, it tells you who should be the owner of the only real ball. It's basically a certificate of authenticity that's much harder to fake.
Re: NFTs are nothing (Score:3)
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The NFT should always be sold along with the ball - if you buy a ball without the associated NFT, you're being scammed. Selling the NFT without the ball would be...bad for the value of the ball so the owner should have an incentive not to do it.
Re: NFTs are nothing (Score:2)
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True, yes a professional burglar could sneak into your house, take the real ball and replace it with a convincing fake, and you would be none the wiser, possibly selling the fake ball to someone else without even knowing it. But if the real ball is known to be associated with an NFT, then the stolen real ball would have little to no value on the black market, which now would be a suspected fake - maybe the burglar could sell it alongside a video of the real ball being stolen, but that would still not be wor
Re: NFTs are nothing (Score:2)
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It's not perfect but it is an improvement over the previously available options, a notary service is one of the few practical applications of blockchain technology. If it contained a hash of a digital file, there would be nothing to stop anyone from copying that or swapping it out with a passable "fake" either (maybe even a file with a colliding hash, if only one hash is stored).
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By talking about it, perhaps? Or else chopping it into pieces. [merriam-webster.com]
Probably not that applicable to a blockchain, but hey... it's still an answer to your question.
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> How do you hash a physical ball?
You don't. You can't put a physical item on a blockchain.
I'm assuming you have another question now.
Re: NFTs are nothing (Score:3)
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Concepts and dicks, in certain hands they're as hard as you make them.
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Cheese grater? IDK.
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throw it in a tree chipper. That should do it.
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Was just about to answer the same.
Why is everyone assume the blockchain entry behind a NFT is an end-all certificate of authenticity? What prevents me from minting 10 NFTs attached to the same item?
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NFTs *COULD* actually serve a purpose if they were applied to a physical item to prove provenance.
I agree - even though it doesn't need to be about physical objects.
A blog [medium.com] from an artist's point of view on NFT kinda opened my eyes at the possibilities - especially this passage:
That made me think of another possibility: imagine a musical artist releases a music album (or, could even be some director
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>> Imagine going into a hotel room that has a bunch of empty wall frames with screens in them, and being able to just connect your NFTs to the hotel room walls, now you have a whole art gallery in a hotel room.
I could do the same thing with a set of JPGs or some URLs to hosted stuff, or some IDs from any given service. What makes NFTs special in this regard?
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>> Imagine going into a hotel room that has a bunch of empty wall frames with screens in them, and being able to just connect your NFTs to the hotel room walls, now you have a whole art gallery in a hotel room.
I could do the same thing with a set of JPGs or some URLs to hosted stuff, or some IDs from any given service. What makes NFTs special in this regard?
Yes, you could, just like I could pirate a movie and burn it on a DVD - but I wouldn't be able to prove that I bought it legally; I think the whole point of NFTs is the authentication (as in "authenticity" of the actual purchase/access/whatever you might call it)
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That sounds like a DRM dystopia.
Re: NFTs are nothing (Score:3)
It's actually a much better solution to DRM. It doesn't interfere at all with any sort of fair use, so the consumer isn't harmed unilaterally by the rights manager or failing DRM tech. But it proves ownership, so it allows you to apply your fair use rights (the right to put your JPG on the wall) within a commercial setting (the hotel, which would be unable to provide this service without proof of ownership rights.
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It proves nothing, you can have a NFT point to Mona Lisa, doesn't make it yours in any way.
But then that wouldn't be a legitimate NFT (duh!) - same as with an NFT of the Brooklyn bridge
Re: NFTs are nothing (Score:2)
It proves whatever it wants to prove. It's up to whoever minted the NFT.
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> Now say it's 2 decades later, that artist has passed away, and isn't issuing new NFTs (though his estate could still - no real need for a limit) or obviously not releasing any new versions of it, especially in any new audio format that might come along. But some enterprising fellow has converted his copy of the album in this new modern audio format; now, since the NFT states that the owner is entitled to a copy in any format, this allows this fellow to give out the copies in that new format - all he ne
So, a study was needed..... (Score:3, Insightful)
... to figure out what most people, pretty much everywhere (esp. on here), have been saying.
I guess this more or less "formalizes" it now.
Re: So, a study was needed..... (Score:1)
Cupcake if you haven't figured this out yet, "studies" are mostly a scam industry onto themselves.
If you convince enough people that a fact isn't a fact until they pay you a few tens of thousands (or more) to atest to it, well...you get the idea. Do you really need the rabbi to tell you that the bacon isn't kosher but the broccoli is?
The horror! The inequity! The injustice! (Score:1)
OMG a behaviorally based system is distributed as a power law!!!
gee thanks. (Score:1)
Whoever wields the largest number of bot accounts wins the whole pot.
risk vs reward (Score:3)
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Sounds to me like mates and debtors
Ah nft's (Score:2)
Why buy a NFT when you could buy ... (Score:2)
https://www.packersstock.com [packersstock.com]
And get a pretty piece of paper you can only hand down to your children!