[PragmaticPulp]

It's possible that someone was so crypto-rich that spending $600K USD just to say they "owned" Nyan cat was worth it for the lulz, or for the flex.

However, paying $600K for a blockchain meme is also the ideal way to manufacture the illusion of demand for blockchain memes. If you're part of a business that wants to make money by selling memes on the blockchain, seeding the frenzy with a very public $600K purchase of an iconic meme is a great way to get the party started.

If you want to take it to the next level, you could re-list the Nyan Cat NFT and then re-buy it from yourself using a second wallet that isn't obviously linked to the first. Now the "price" of Nyan Cat looks like it has gone up, as recorded publicly in the Blockchain, even though nothing changed hands. A well capitalized individual could continue re-selling Nyan cat to themselves from different wallets at increasingly high values to create the illusion of a bidding war: "Nyan Cat value rises 10x in a week!" This creates demand from others who want in on the action.

I guarantee NFT sellers will be using this sale to lend credibility to their ventures. Plenty of people will rush to "buy" other memes with expectations of flipping them to someone else.

Expensive meme, cheap advertising.

[vmception]

With NFT's because the provenance and price history is so easily visible, platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value much easier than fine art collectors or other property holders can.

This alters a lot of assumptions and behavior about the market. Efficient up to the second price history of one NFT and a basket of other NFTs is always available. Removes the need for appraisals and the discretion of lenders. Liquidity pools and dynamic rates are just available.

Obvious rebuttal: "But what if the market dries up and everyone is overlevered and lenders can't liquidate the NFTs"

Okay. No different than any other art and property market. For anyone passing by, don't create a fictional higher standard just because you don't want to respect the existence of this market.

[eli]

Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?

So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily? And a disadvantage is that I don't actually get to own a painting.

What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork? A physical painting is either in your possession or it isn't, but "owning" Nyan Cat is only valuable so long as people want Nyan Cat AND agree that the chain it's on is a valuable way to represent ownership.

[vmception]

The NFT market is only providing scarcity to digital collectibles. There is no NFT market for physical assets, markets might exist but "the market" is not choosing them because of the obvious shortcomings, so therefore that's not really an argument because we aren't talking about those. The remainder of this post is referring to digital-native collectibles:

> Why would I need an appraisal of a painting I bought at an old fashioned auction? Doesn't everyone know its market price at that moment?

Because of the structure of that market, the purchasers are not seeking liquidity at the time of purchase. The available lenders are not there as soon as a purchase occurred, and are lending to the universe of fine art not just yours, so the price history is not available. Between private sales, theft, duplicates, inheritances and liquidations, the appraisals are necessary to prove provenance and price history. If you had a banking relationship with the banker right there with you at the auction, you may be able to get liquidity for your purchase very quickly in the matter of a few business days. Such "privilege" is not necessary in the NFT market, making it faster and more efficient.

> So compared to owning a physical painting, an advantage here is I can do fancy financial maneuvers with it more easily?

Royalties to the original artist are accomplished more easily. There are a lot of NFTs coded to pay X% to the original artist upon transfer and other use cases. This is a world's apart better for artists and shifts the incentives of that whole market, and so the "market of artists" is immediately choosing that because its a new century with better options. They are also people more aligned to "support living artists", so the market is forming rapidly as artists get liquid. There are also a lot of other creative people that have been doing other things with their life, that are finding it economically viable to be a creative now.

They all inherit the same financial infrastructure.

> What happens when there's a competing blockchain that also claims to represent digital ownership of this artwork?

The earlier date proves earlier original existence. Consensus can also be managed by the market and the issuer as a fallback. And then of course the courts are a further fallback. The existing art world relies on issuers to not dilute their market and trust of it (if they say its a limited edition, we have to trust that well after the artist is dead). This on-chain world provides efficiencies that don't have to be a cure all, but will function as such most of the time any way.

[chrisco255]

This whole development of an art/creative ecosystem in coordination with a new financial innovation reminds me of how the development and adoption of double entry bookkeeping in Florence (and the rest of Italy) and the wealth created in that era helped fund and provide the foundation for the Renaissance. Artists such as Da Vinci worked for patrons.

[vmception]

I think this year will be very interesting to see how it adapts and evolves, given the network congestion. Higher value tickets wouldn’t really be affected though and need the immutable provenance more for now

[PragmaticPulp]

> platforms allow the NFT owner to borrow against them instantly so people can use NFT art and property as a store of value

Presumably the lenders are aware of the high risk of wash trading in these securities.

If someone takes an NFT and "buys" it from themselves with 100% of their crypto cash, they are now "worth" 2X: They have their original cash, and an NFT that was last priced at 100% of their original cash.

[vmception]

This is factored in the Loan to Value ratios.

[marcell]

Can you point me to some sites where I can use NFT's to get loans?

[philipyoungg]

You just basically describe how paintings and art got so expensive.

[koboll]

Interesting. I'd like to read more. Any good books on this?

[raziel2701]

I think it's just money laundering via art purchases.

[mike_d]

https://www.cnn.com/2020/07/29/business/art-money-laundering...

[rmorey]

> If you want to take it to the next level, you could re-list the Nyan Cat NFT and then re-buy it from yourself using a second wallet that isn't obviously linked to the first.

pretty sure this would be securities fraud

[PragmaticPulp]

Definitely. Blockchain is incredibly attractive for this type of fraud because wallet addresses aren't bank accounts. Anyone can create new wallets or even use tricks to hide the source of funds (send to exchange, withdraw from exchange to different wallet).

Cryptocurrencies are a dream come true for perpetrators of fraud like this. Buyer beware.

[xur17]

Is the Nyan Cat a security?

[eljee]

It's called wash trading and for securities, it is illegal. I dont think the Nyan Cat NFT is a security. Its more like a commodity. And yes, wash trading and money laundering via art is an age-old practice.

[xur17]

My point was that the Nyan Cat NFT likely isn't a security, and hence wash trading might not be illegal.

[rmorey]

IANAL so I'm probably misusing the term. But it definitely feels like buying and selling the asset secretly to inflate it's market value is some sort of fraud

[ryanmarsh]

This is amusing, and has a whiff of grift but if you are familiar with the real estate title business you'll see that NFT's would be a vastly superior and more transparent solution than what happens today. Title insurance is also a needless racket given NFT's.

Once the real-estate title business adopted NFT's DeFi mortgages would become obvious.

Today if you restructure your mortgage you actually have to file paperwork with the county clerk. County courthouses are the gatekeeper to residential liens. The County/District clerk could use a key to sign liens, etc...

[xur17]

There's a company that purchases properties and rents them out, wraps them in an LLC, and then assigns ownership of the LLC via crypto tokens (this ownership is written into the LLC docs). Owners of the tokens then receive monthly payments for rent.

I'm wondering if it would be possible to do something similar to accomplish what you are talking about - advantage being that no laws need to be modified to make it possible. The LLC acts as a thin proxy layer between the US legal system and the NFT that assigns ownership. Essentially there could be a legal service that would allow wrapping and unwrapping of these properties, and once they are wrapped, DeFi mortgages would become possible, split ownership, transfer of ownership within DeFi, etc. I could imagine a whole ecosystem developing around this that people could buy and sell houses inside of.

[PragmaticPulp]

The missing piece of the puzzle is the cost of recourse for things like non-payment.

If I buy fractional ownership of your rental LLC via traditional means, it's not hard to get those well-understand contracts enforced by courts. Not necessarily cheap depending on your lawyer, but it's well understood.

If I instead buy fractional ownership via some sort of crypto transaction from another country and suddenly the payments stop, it becomes difficult to work with a foreign legal system to understand essentially computer code.

Worse yet, what do you do if someone loses the private keys to their crypto tokens? Or they're stolen? Does the new holder simply get to collect the rent from that point forward? Does a hacker get to own the house because the owner's account was compromised?

[ryanmarsh]

This is why you'll need a trusted custodian (with real estate) ie the district/county clerk, with like a "god" token or something that allows them to make any changes necessary in their jurisdiction, including retroactively assigning a new custodian.

All of what I'm discussing has real world precedent, the only difference would be using DApps for simplicity, security, transparency, and thrift.

Ever wondered what a notary was for?

[AlanYx]

Just curious, do you recall what the name of this company is?

[xur17]

RealT.

[number6]

Did you ever here of rare pepe coins? https://rarepepewallet.com/