OpenSea product chief accused of flipping NFTs with insider information(theverge.com)
theverge.com
OpenSea product chief accused of flipping NFTs with insider information
https://www.theverge.com/2021/9/15/22676075/opensea-insider-information-nft-trading-nate-chastain
74 comments
I wonder if this is actually unique to crypto, or if it's common in any industry where participants have a massive financial incentive to "cheat"? There's plenty of instances of hedge funds and stock traders acting like this. I bet there would be more if they were under as little regulation as the crypto exchanges..
Well, I spent most of my career as a hedge fund trader so I can also comment on this: of course everyone is looking for the upper hand and people will bend or break rules to achieve this. But this is universal to all games, and fundamentally the game is fair.
In crypto, the game is not fair. The refs are players and there are no rules.
In crypto, the game is not fair. The refs are players and there are no rules.
Could you be more specific about what makes crypto less fair than the other markets hedge funds trade in?
Read my original comment. For all of the Occupy Wall Street rhetoric, overwhelming majority of people in finance are law abiding participants. That’s not to say that they’re particularly moral or honest people. But in regulated markets, regulators seek to make rule breaking a negative EV outcome, so rule following becomes the logical behavior for a self interested actor. Regulators might not always succeed, but it still shifts the outcome distribution massively.
In crypto, the opposite is true. Because there are no penalties, otherwise malicious behavior is encouraged. First and foremost: exchanges trading against customers. This would never be allowed in a regulated market, just like we would never allow judges to wager on the cases over which they preside. It creates a horrible conflict of interest. But in crypto, conflicts of interest are the most successful business models (across a load of projects).
Crypto is mostly regulatory arbitrage. I’ll be the first to change my mind when the facts change, and maybe I’m just not as visionary as every other lambo hopeful. But as it stands today, this is the reality.
In crypto, the opposite is true. Because there are no penalties, otherwise malicious behavior is encouraged. First and foremost: exchanges trading against customers. This would never be allowed in a regulated market, just like we would never allow judges to wager on the cases over which they preside. It creates a horrible conflict of interest. But in crypto, conflicts of interest are the most successful business models (across a load of projects).
Crypto is mostly regulatory arbitrage. I’ll be the first to change my mind when the facts change, and maybe I’m just not as visionary as every other lambo hopeful. But as it stands today, this is the reality.
Let’s say hypothetically all financial regulation is lifted tomorrow, I have a hard time believing the current “honest” participants won’t have a similar free for all.
We may be saying the same thing: the difference is the regulation, not the moral character of participants.
We may be saying the same thing: the difference is the regulation, not the moral character of participants.
But the entire value proposition of cryptocurrency is how difficult it is to regulate via traditional law enforcement mechanisms.
Which can be used for good, of course - the standard example being things like "transferring money across immoral embargoes". But in this case, if the difference is regulation, then the question for ordinary folks who are not themselves trying to pull a scam is - would you rather work with dishonest con men who believe they will get in trouble with law enforcement if they actually con you, or with dishonest con men who believe they can get away with it?
Which can be used for good, of course - the standard example being things like "transferring money across immoral embargoes". But in this case, if the difference is regulation, then the question for ordinary folks who are not themselves trying to pull a scam is - would you rather work with dishonest con men who believe they will get in trouble with law enforcement if they actually con you, or with dishonest con men who believe they can get away with it?
I think the underlying value prop is totally orthogonal to this thread. The fundamental value prop is that software can trustlessly, directly, and irreversibly make financial transactions, which certainly does enable regulatory arbitrage. I understand why other applications haven’t convinced most people, but that’s a different discussion.
Your value prop has to outweigh the potential negatives or there is no value prop. What OP is saying is that you can't have unregulated markets in this space the incentives to cheat are too great.
Sure, and I'm not making an argument against regulation. My point is that there is nothing inherent in cryptocurrency to create these forms of fraud except the lack of regulation, otherwise the same fraud would exist in traditional markets.
But that point doesn't support the message you're trying to say.
Suppose I were to say "Elbonia is a dangerous lawless country, where corruption abounds and you're not safe on the streets," and you were to respond by saying "There's nothing inherent to Elbonia to create those conditions except the lack of laws against corruption or mugging. And corruption and mugging happen in the US, too, and you'd see more of it if there weren't any laws against it. There's nothing about the Elbonians as a people that makes them more inclined to crime."
I would respond by saying "Thank you for proving my point that Elbonia is a dangerous place."
Suppose I were to say "Elbonia is a dangerous lawless country, where corruption abounds and you're not safe on the streets," and you were to respond by saying "There's nothing inherent to Elbonia to create those conditions except the lack of laws against corruption or mugging. And corruption and mugging happen in the US, too, and you'd see more of it if there weren't any laws against it. There's nothing about the Elbonians as a people that makes them more inclined to crime."
I would respond by saying "Thank you for proving my point that Elbonia is a dangerous place."
So in this hypothetical, Elbonia has no laws against corruption and mugging, and we truly believe the only thing missing is the laws? Then sure, that's a fair comparison. In that case one might think that Elbonia could be a great place to visit once a less lawless regime steps in.
What message do you think I'm trying to say? I'm certainly not claiming crypto is free of scams and self dealings.
What message do you think I'm trying to say? I'm certainly not claiming crypto is free of scams and self dealings.
But your value add is that they are unregulated, right?
>trustlessly
In theory. In practice, it seems to have just moved the trust problem.
In theory. In practice, it seems to have just moved the trust problem.
You are saying the same thing
Insider trading in Defi is rampant and unregulated for starters
I think we learned in 07/08 that even when the game isn’t fair, no one cares, and no one goes to jail :)
> The entire crypto world is like this.
I've heard that there are a bunch of companies in the space paying their blockchain engineers minimum wage (when their salaries should have been at least 250k), and instead compensating them by letting them insider trade on their press releases. The reason the people in these cases rarely get fired when found out is that it's literally their compensation package.
I've heard that there are a bunch of companies in the space paying their blockchain engineers minimum wage (when their salaries should have been at least 250k), and instead compensating them by letting them insider trade on their press releases. The reason the people in these cases rarely get fired when found out is that it's literally their compensation package.
IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner).
Open interest, volume and price data down to seconds is available via APIs in real-time, from which it is absolutely possible to build a model of positioning.
If you launch a new exchange, your biggest problem is lack of liquidity, meaning limit orders won’t fill ‘timely’ and market orders slip, which is very bad UX obviously.
That is why it is fairly obvious that one of the best market makers in the industry launched their own exchange; Alameda could provide excellent liquidity for FTX from day one.
Open interest, volume and price data down to seconds is available via APIs in real-time, from which it is absolutely possible to build a model of positioning.
If you launch a new exchange, your biggest problem is lack of liquidity, meaning limit orders won’t fill ‘timely’ and market orders slip, which is very bad UX obviously.
That is why it is fairly obvious that one of the best market makers in the industry launched their own exchange; Alameda could provide excellent liquidity for FTX from day one.
> IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner).
I’ll say this as respectfully as I can: you’re wrong. Aside from algos, positions are the most closely guarded information in trading. If you know someone’s positions, you might be able to assess what their risk tolerance and stops would be, and you can exploit that.
If you’re a crypto exchange with huge highly leveraged perpetuals trading, you don’t have to guess where the stops are: you know exactly where those positions will be liquidated. Hell, you built the system to execute the liquidations.
So you just run an algo (you don’t even need funds/margin because hell you’re the exchange) to whipsaw people around and trigger this liquidations while you profit massively.
I’ll say this as respectfully as I can: you’re wrong. Aside from algos, positions are the most closely guarded information in trading. If you know someone’s positions, you might be able to assess what their risk tolerance and stops would be, and you can exploit that.
If you’re a crypto exchange with huge highly leveraged perpetuals trading, you don’t have to guess where the stops are: you know exactly where those positions will be liquidated. Hell, you built the system to execute the liquidations.
So you just run an algo (you don’t even need funds/margin because hell you’re the exchange) to whipsaw people around and trigger this liquidations while you profit massively.
Agree. If someone knows your margin situation, they know where they need to push the price to stop you out. Simple as that. And when the exchange stops you out, they unload the position in the market at any price. This is not unique to Bitcoin. In China plastics markets same things happen. Opponents learn enemies’ margin situation from corrupt exchange and push till he is liquidated. I don’t think there is much new to Bitcoin in terms of trading and all the games being played. It has gone on in all the other markets long before this.
I’m very sure that there is more money (for big high volume exchanges) in providing an environment with low liquidations (which amplify price moves against the index, again bad UX) instead of driving customers into them and profiting from trading these wicks.
The biggest risk to established exchanges is ‘regulatory alienation’ — and having millions of USD in daily liquidations probably is not helpful here.
Won’t say these trades aren’t done (data needed to build positioning models is public), my only point here; v unlikely by exchange owners.
The biggest risk to established exchanges is ‘regulatory alienation’ — and having millions of USD in daily liquidations probably is not helpful here.
Won’t say these trades aren’t done (data needed to build positioning models is public), my only point here; v unlikely by exchange owners.
You don’t need the exchange to do this. You simply need corrupt employee of the exchange with access to the information.
The entire crypto world is not like this. Crypto is not all about making money.
citation needed :)
Not clear whether this is even illegal, though. As long as they refer to existing objects, they're not securities, and since they're all different, they're not commodities. So they escape both SEC and CFTC regulation in the US. (The UK's Financial Conduct Authority, though...) That's the whole point of NFTs.
In 2019-2020, the SEC cracked down on Initial Coin Offerings. They grandfathered in the early coins, and shut down some out and out scams. Then the SEC started sending out letters, "explain to us why your ICO isn't a security offering requiring registration as an IPO". Suddenly there was a huge drop in ICOs.
So then came NFTs, which looked like they were going to evade regulation. Then some of the NFT issuers started making NFTs which looked like IPOs. Selling land in virtual worlds that don't exist yet, for example. That's a no-no. That passes the Howey Test - value paid into a common enterprise, with the expectation of future gains, to be derived from the efforts of others. That's the definition of an investment in the US. If the value of an NFT depends on the future efforts of the organization involved with the NFT, it's a security.
That doesn't quite seem to be the case here, though. It's legal, and fairly common, for an art dealer to front-run artworks or have shill buyers. You're supposed to know what the art is worth.
Selling NFTs in bulk, though, might start to look like a security for regulation purposes. Selling fractional shares in NFTs definitely is. The SEC is working on a guidance memo. If you're starting up an NFT, you definitely need some time with a securities lawyer. Remember, the whole point of most NFTs is to try to evade securities regulation. That comes with serious legal risks.
[1] https://www.howeycoins.com
In 2019-2020, the SEC cracked down on Initial Coin Offerings. They grandfathered in the early coins, and shut down some out and out scams. Then the SEC started sending out letters, "explain to us why your ICO isn't a security offering requiring registration as an IPO". Suddenly there was a huge drop in ICOs.
So then came NFTs, which looked like they were going to evade regulation. Then some of the NFT issuers started making NFTs which looked like IPOs. Selling land in virtual worlds that don't exist yet, for example. That's a no-no. That passes the Howey Test - value paid into a common enterprise, with the expectation of future gains, to be derived from the efforts of others. That's the definition of an investment in the US. If the value of an NFT depends on the future efforts of the organization involved with the NFT, it's a security.
That doesn't quite seem to be the case here, though. It's legal, and fairly common, for an art dealer to front-run artworks or have shill buyers. You're supposed to know what the art is worth.
Selling NFTs in bulk, though, might start to look like a security for regulation purposes. Selling fractional shares in NFTs definitely is. The SEC is working on a guidance memo. If you're starting up an NFT, you definitely need some time with a securities lawyer. Remember, the whole point of most NFTs is to try to evade securities regulation. That comes with serious legal risks.
[1] https://www.howeycoins.com
Can eBay pump up the price of it's own items with fake trading bots? No that's fraud. There are laws around auctions and trading. I'm guessing it's illegal
The key here is disclosure. If eBay was transparent with its bot activity, then it may be legal.
Not transparent and market manipulation change the situation entirely. And many govt agree and will happily put you in prison
>Not clear whether this is even illegal, though.
I think it's not, and I wager this is what's attractive about crypto for these people. All the old tricks are new again, because crypto kinda works like how currencies, exchanges etc work, but the regulation is few and far between yet.
I think it's not, and I wager this is what's attractive about crypto for these people. All the old tricks are new again, because crypto kinda works like how currencies, exchanges etc work, but the regulation is few and far between yet.
What does "refer to existing objects" mean? Are these any better than baseball cards or top trumps?
I don't think 'refer to existing objects' is the meaningful bit, here. You can print and sell and trade and auction baseball cards of players that don't exist, and they'll still be regulated the same way as baseball cards of players who do. (Which is to say, not at all.)
I think the meaningful bit is whether or not an NFT is a baseball card, or ownership of... Some yet to be generated value, somehow derived from a baseball card.
The latter is obviously a security, the former is, to my layman eyes, probably not.
Continuing on this train of thought, it should be worth noting that useless things (Ownership of a baseball cards) are not regulated, but useful things (Ownership of a stake in the value generated by a baseball card) are regulated.
It makes sense, in a perverse way - if someone wants to spend their money on a useless thing, that's on them. If someone wants to spend their money on a useful thing, then, well, the buyer should expect some assurance that they are not being completely lied to and swindled. (Which is why the SEC regulates securities markets, and not art auctions.)
I think the meaningful bit is whether or not an NFT is a baseball card, or ownership of... Some yet to be generated value, somehow derived from a baseball card.
The latter is obviously a security, the former is, to my layman eyes, probably not.
Continuing on this train of thought, it should be worth noting that useless things (Ownership of a baseball cards) are not regulated, but useful things (Ownership of a stake in the value generated by a baseball card) are regulated.
It makes sense, in a perverse way - if someone wants to spend their money on a useless thing, that's on them. If someone wants to spend their money on a useful thing, then, well, the buyer should expect some assurance that they are not being completely lied to and swindled. (Which is why the SEC regulates securities markets, and not art auctions.)
> This transparency has historically allowed users to protect the community by uncovering elaborate scams, such as when “cybersleuth” Fedor Linnik discovered that the team behind a million-dollar “female-led” project was actually Russian men.
This made my chuckle. The article that it links to was aptly titled "This $1.5 million ‘women-led’ NFT project was actually run by Russian dudes" [0]
Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes? Kind of like the those ghost board members that sit on thousands of board of directors on Cayman Islands shell corps and just do what management says?
[0] https://www.inputmag.com/culture/fame-lady-squad-nft-women-m...
This made my chuckle. The article that it links to was aptly titled "This $1.5 million ‘women-led’ NFT project was actually run by Russian dudes" [0]
Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes? Kind of like the those ghost board members that sit on thousands of board of directors on Cayman Islands shell corps and just do what management says?
[0] https://www.inputmag.com/culture/fame-lady-squad-nft-women-m...
> Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes?
Like much of modern crypto-centric products, this is a solution in search of a problem. People are accustomed to going in headfirst without knowing who is behind these projects. It's 'decentralized' and features 'smart contracts' for 'trustless commerce'. What more do you need?
Like much of modern crypto-centric products, this is a solution in search of a problem. People are accustomed to going in headfirst without knowing who is behind these projects. It's 'decentralized' and features 'smart contracts' for 'trustless commerce'. What more do you need?
> Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes?
Yes, it's called stock photography. Buy a couple of pictures of smiling people from a peddler of it, and stick them on your website's 'About Us' section.
Yes, it's called stock photography. Buy a couple of pictures of smiling people from a peddler of it, and stick them on your website's 'About Us' section.
Anyone surprised by this must be living under a rock. NFTs and crypto in general has turned into mostly an unregulated playground for market manipulation.
It's sad to see these fantastic technologies falling into darkness. Same can be said about the majority of the internet and its phenomenon to be honest.
It's sad to see these fantastic technologies falling into darkness. Same can be said about the majority of the internet and its phenomenon to be honest.
I was agreeing with you until you said fantastic technology. Crypto has always involved outrageous fraudulent claims about the technology in its sales pitches. The technology they sell does not exist. Decentralised trading is still incomplete research. It's vaporware
While i vaguely agree, crypto/blockchain/whatever has one unique aspect that is "valuable":
It creates a scarcity in an internet full of abundance. You can copy/paste a JPEG or MP3 a million times (hello piracy), but you can't own an NFT or coin you don't actually own. Sure, you can copy/paste the underlying JPEG, but thats not the same. There will only be 1 blockchain owner.
This unique property of scarcity is a valuable property for financial products, in an obvious way. The issue is that an abundance of a scarce product is ripe for fraud. Oh, and of course there is no answer for the on-chain to in-IRL conversion for things like ownership.
It creates a scarcity in an internet full of abundance. You can copy/paste a JPEG or MP3 a million times (hello piracy), but you can't own an NFT or coin you don't actually own. Sure, you can copy/paste the underlying JPEG, but thats not the same. There will only be 1 blockchain owner.
This unique property of scarcity is a valuable property for financial products, in an obvious way. The issue is that an abundance of a scarce product is ripe for fraud. Oh, and of course there is no answer for the on-chain to in-IRL conversion for things like ownership.
Blockchain does not equal bitcoin which created scarce money that can't be inflated which has value
Outside of money you don't need scarcity
Outside of money you don't need scarcity
> Blockchain does not equal bitcoin which created scarce money that can't be inflated which has value
Blockchains created scarcity. Not bitcoin. Bitcoin uses a blockchain to enforce its particular scarcity. Blockchains enable auditable history, meaning that we can have "only one" true owner (per chain) and one true chain - that's good for money, yes.
> Outside of money you don't need scarcity
Yet people seem to love it. I personally have no interest in NFTs but I understand that people like collecting, and its a way to collect that's verifiably true (presumably, it'd be humorous to find the exchanges were just CRUD app with sql ledgers).
Blockchains created scarcity. Not bitcoin. Bitcoin uses a blockchain to enforce its particular scarcity. Blockchains enable auditable history, meaning that we can have "only one" true owner (per chain) and one true chain - that's good for money, yes.
> Outside of money you don't need scarcity
Yet people seem to love it. I personally have no interest in NFTs but I understand that people like collecting, and its a way to collect that's verifiably true (presumably, it'd be humorous to find the exchanges were just CRUD app with sql ledgers).
Blockchain is not the same as a blockchain. Blockchain is a hashed data structure from bitcoin. While "blockchain technology" is used in completely different context. The two and not related technically
But in the end, they are the same. The major difference between a merkle tree (or patricia trie or whatever is implemented in x or y) and "blockchain technology" is the distributed consensus algorithm. Blockchain - by your own definition, is "blockchain", because its a hashed data structure with a distributed consensus algorithm.
Now, of course I'm splitting hairs; and the reason for it is that merkle trees (or hashed variants) aren't groundbreaking or new - they've been around for decades. What is somewhat interesting is the proposition of a distributed structure with the same properties. The groundbreaking innovation from "blockchain technology" stops there.
But then not the same because one as you say is just a datastructure that has existed already and uses standard computer science constructions. But the data structure is also revolutionary? That's a contradiction. So the other blockchain is not a datastructure but a separate unrelated concept
You misunderstood my comment. The novel part isn't the data structure, its the consensus mechanism tied to that specific datastructure. The fact that is used to implement cryptocurrencies and whatnot is irrelevant - you can implement crypto without "blockchain" (by using a typical non-distributed datastructure, called "a database"). In fact, the buzzword for that is "private blockchain".
Ok so we agree blockchain and blockchain are different. Also private blockchain would be a 3rd definition as that's another nonsense word that people use
Except that you can mint the NFT on an infinite number of chains, since the chains are also digitally created. Sure, maybe you can't own one on _that_ chain, but really, who gives a shit?
In the end, this is a less interesting beany babies.
In the end, this is a less interesting beany babies.
> but really, who gives a shit?
Who gives a shit about anything? Luxury goods have value from name only? Who cares about baseball cards or stamps? They're so easy to print on a inkjet that anyone can have any card they want?
This is just another example of "not made for you" collectors. Its scarce because the creator said so, and because its auditable without trust.
Who gives a shit about anything? Luxury goods have value from name only? Who cares about baseball cards or stamps? They're so easy to print on a inkjet that anyone can have any card they want?
This is just another example of "not made for you" collectors. Its scarce because the creator said so, and because its auditable without trust.
Just curious, why do you say decentralized trading is incomplete research/vaporware? There are dozens of decentralized exchanges that are up and operating, including sites like Dydx and uniswap. Obviously these are still experimental, but they do work.
They are pseudo decentralised. They have a point of failure. Take down the operator and the exchange is gone. Happened before with an ethereum exchange. Ethereum delegated some control to miners which isn't decentralised
Care to explain why you think uniswap isn't decentralized trading? The contracts are immutable, 100% on chain, and can be interacted with without any help from the uniswap web site.
Ethereum delegated some control to miners for within block trading which isn't decentralised. Between block trading is possible but you'd have to wait 10mins for a trade
Admittedly hyperbolic, though the tech I was referring to was blockchains in general. Maybe you know something I don't, but I always thought the idea and core of blockchains to be pretty rad.
I just heard the podcast with this guy a few days ago: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8...
It's crazy that a company like OpenSea, that is a massive success story in the space, can't keep an employee happy enough to wait for his riches to come.
There are so many fascinating and brilliant things happening in crypto but they get overshadowed by grifters like this.
It's crazy that a company like OpenSea, that is a massive success story in the space, can't keep an employee happy enough to wait for his riches to come.
There are so many fascinating and brilliant things happening in crypto but they get overshadowed by grifters like this.
The NFT community has been processing this news by changing their Twitter handles to Nate's with his imagined excuses and explanations ->
https://twitter.com/BoredPimp/status/1437989964680032264
https://twitter.com/nogoodlogan/status/1438014313722040322
https://twitter.com/Milkman2228/status/1437971018950250499
https://twitter.com/BoredPimp/status/1437989964680032264
https://twitter.com/nogoodlogan/status/1438014313722040322
https://twitter.com/Milkman2228/status/1437971018950250499
Oh man. This level of shame for someone not used to it (e.g. not a public figure) will certainly lead to some trauma.
Criminals and scammers are not normally the sensitive types
Just validates that the entire NFT concept is as ridiculous as it sounds.
How does potential insider trading in any way validate NFTs being ridiculous?
Because it's all a sham and the monetary success of a particular drop is contingent upon how well it's advertised. By knowing when and what drops would be featured, that was the information asymmetry he was exploiting. There is nothing fundamentally useful about a single NFT so far. It's all speculative bullshit in every sense of the imagination. This is just the ICO scams of 2019 regurgitated [1].
[1] https://en.wikipedia.org/wiki/Greater_fool_theory
[1] https://en.wikipedia.org/wiki/Greater_fool_theory
> There is nothing fundamentally useful about a single NFT so far.
If NFTs were useful, they'd be securities, and would be regulated by the SEC.
The entire point of NFTs is that they are naked, useless, purely speculative instruments. It's a big blackjack table, except unlike in Vegas, the house has an edge.
If NFTs were useful, they'd be securities, and would be regulated by the SEC.
The entire point of NFTs is that they are naked, useless, purely speculative instruments. It's a big blackjack table, except unlike in Vegas, the house has an edge.
> There is nothing fundamentally useful about a single NFT so far.
Do people promise there is? NFTs essentially seem like digital collectible cards. It seems stupid to me, but so does collecting little pieces of cardboard with pictures printed on them.
Do people promise there is? NFTs essentially seem like digital collectible cards. It seems stupid to me, but so does collecting little pieces of cardboard with pictures printed on them.
Most NFTs are technologically uninteresting for one reason or another.
Either the actual art exists off-chain somewhere and there’s just a hash of it onchain, which the “owner” controls with the private key of the transaction or contract the hash is in. But the art can still be copy-pasted all over the Internet and the only way to prevent rando’s from using it for free is with traditional copyright law, so it’s not actually decentralized.
Or the art itself is onchain but it’s just some avatar manually drawn in Microsoft Paint (cryptopunks I’m looking at you) and not pseudo-randomly procedurally generated in the smart contract or anything technologically novel and notable like that.
The concept of NFTs is interesting and may lead to something truly cool someday, but most of the implementations right now are trash.
Disclaimer - I haven't reviewed all the NFT implementations, there are too many. But if there are any that are fully on-chain, decentralized, have zero off-chain dependencies, and are artistically and/or technologically novel, then please let me know!
Either the actual art exists off-chain somewhere and there’s just a hash of it onchain, which the “owner” controls with the private key of the transaction or contract the hash is in. But the art can still be copy-pasted all over the Internet and the only way to prevent rando’s from using it for free is with traditional copyright law, so it’s not actually decentralized.
Or the art itself is onchain but it’s just some avatar manually drawn in Microsoft Paint (cryptopunks I’m looking at you) and not pseudo-randomly procedurally generated in the smart contract or anything technologically novel and notable like that.
The concept of NFTs is interesting and may lead to something truly cool someday, but most of the implementations right now are trash.
Disclaimer - I haven't reviewed all the NFT implementations, there are too many. But if there are any that are fully on-chain, decentralized, have zero off-chain dependencies, and are artistically and/or technologically novel, then please let me know!
Don’t you remember that time someone got caught insider trading stocks and it made everyone realize that the joint stock corporation was a bad idea.
So one dummy who made like 15eth off a very fringe method AND GOT CAUGHT invalidates a whole new technology / asset class?
Reminds me of a situation where I worked at an affiliate network that tracked ads and commissions. Adsense was relatively new back then and I figured out how to match impressions to clicks to AdWords keywords to sales. You could approximate the ROI/click for keywords on Google and to some extent SEO. The reaction from upper management was excitement then fear that the tool would get out, which it eventually did. Surely this will be a learning experience for OpenSea. It does happen. Here's another example. [1]
[1] https://www.theatlantic.com/business/archive/2015/10/draftki...
[1] https://www.theatlantic.com/business/archive/2015/10/draftki...
Anyone knows the legality of this? NFTs aren’t regulated, right? And OpenSea isn’t legally bound to act on its clients best interests?
Not against the law at all. If market manipulation and insider trading of art was illegal half the gallery owners, collectors and critics in New York and London would be in jail.
Bad look for OpenSeas and unethical? Sure.
Bad look for OpenSeas and unethical? Sure.
You can't rig an auction. That's illegal. eBay can't trade in it's own items to get the prices higher
Author of https://project-memento.com here, this is a disapointing news to see as a NFT creators. NFT aren't shown equally on their website
This makes OpenSea corrupt.
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MtGox pumping and wash trading with Willy bot. Bitmex trading against and liquidating customers. Coinbase hiring Litecoin creator Charlie Lee and having him frequently wash trading 99% of LTC volume. Each of these has been _the_ preeminent exchange at some point in time, just as OpenSea is for NFT.
FTX was born from one of if not the largest crypto trader/market maker, and one of two known Tether customers (who apparently account for a large majority of Tethers). Alameda was the only/largest liquidity provider on FTX for some time. Binance has been similarly accused (without solid proof) of trading against customers. Of course they claim to have walls between these relationships. But then again, so did Mt Gox, Bitmex, Coinbase, OpenSea and loads of others that would take too long to mention.
Crypto is a casino where there are a handful of dealers that are running thousands of tables. They are all colluding. The grift is to exchange real fiat currency for chips at their casino.
It has been proven at a shocking number of blue chip institutions (dare I say a majority). Given our expected likelihood of uncovering these things, it seems highly probable that it’s happening everywhere.