Why this CryptoPunk NFT sold for $530 million

Why this CryptoPunk NFT sold for $530 million

530 million nft

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What is the most expensive NFT ever sold? Beeple’s Everydays: A digital art collage that sold at Christie’s auction for $69 million. But then there’s the case of an NFT that sold for $532 million in October.

However, as is often the case with NFTs and cryptocurrencies, it’s tricky.

The NFT in question is a CryptoPunk, part of a pool of 10,000 NFTs that are some of the first to be created. Being the OG NFT collection, these are expensive. They typically sell for between $350,000 and $500,000, though some run into the millions.

However, whoever is behind this particular transaction bought the Cryptopunk. Like cryptocurrencies, NFTs are held in digital wallets. There is no limit to the number of wallets one person can create. This person transferred the NFT from Wallet A to Wallet B. Wallet C then bought the $532 million NFT from Wallet B and immediately transferred it back to Wallet A.

Why use three wallets instead of just selling it from one wallet to another? It’s because the buyer didn’t pay for the transaction themselves, but was lent the money by others through a “flash loan.” Flash loans are a complicated decentralized finance tool, but the gist is that they allow you to lend large sums of cryptocurrency only if the criteria of a smart contract are met. Imagine buying a $1 million house with 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 the lenders interest. This person did just that, except he was both the buyer and the seller.

NFTs right?

Twitter and Discord, the platforms where most of the NFT talk happens, quickly found out about the sale and speculated about the motives behind it. The smoke consensus is that it was a publicity stunt, with the owner likely trying to jack up the price of his CryptoPunk.

Generally speaking, there are two types of NFT art. One type is a one-of-a-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 features. The Bored Ape Yacht Club, for example, has 10,000 apes, all wearing different 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 “lower” price is $190,000, but rare ones sometimes sell for millions. (Recently, an auction of 101 sold for $24 million.)

CryptoPunks is considered the original collection of NFTs, beginning in 2017 when much of the world was just beginning to fall in love with Bitcoin. The highest legitimate sale for a CryptoPunk is $11.7 million.

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