On paper, it’s the priciest NFT ever. Someone paid 124,457 ethereum (about $532 million) for a CryptoPunk NFT, or nonfungible token, on Thursday. Things aren’t always as they appear in NFTs and bitcoin.
They bought the Cryptopunk from themselves, whatever is behind the transaction. NFTs are stored in digital wallets, just like Bitcoin. One user can create an unlimited number of wallets. The NFT was moved from Wallet A to Wallet B by this individual. Then, for $532 million, Wallet C acquired the NFT from Wallet B and instantly transferred it back to Wallet A.
Why not just sell it from one wallet to another instead of using three wallets? It’s because the buyer didn’t pay for the item out of his own pocket; instead, he was given a “flash credit” from others
Flash loans are a complex decentralized financial instrument, but the idea is that they allow you to borrow large amounts of cryptocurrency providing smart contract conditions are met. Consider buying a $1 million property with a loan, but only if you already had a buyer lined up who was willing to pay enough for you to earn a profit and repay the lenders’ interest. This person performed the same thing, only he was the buyer as well as the vendor.
The sale was rapidly found and speculated on Twitter and Discord, the sites where most NFT discussion takes place. The rumor on the market is that it was a PR scam and that the owner was attempting to inflate the price of his CryptoPunk.
Art NFTs are divided into two categories. One type is a one-of-a-kind, where an artist makes a work of digital art and then sells it, similar to how real-world art sales work. NFT series, such as Cryptopunks, offer another option. This is when artists and developers build a large number of NFTs (typically 10,000) with the same template but distinct attributes. For example, the Bored Ape Yacht Club has 10,000 apes dressed in different outfits, with various settings and facial expressions. The NFT becomes more expensive as the qualities get rarer — think of Pokemon cards. The “floor” price for Bored Apes is $152,000, although rare ones may sell for millions of dollars.
CryptoPunks is regarded as the first NFT collection, having debuted in 2017 at a time while most of the industry was just getting started with Bitcoin. The collection has 10,000 Cryptopunks, with the lowest starting at 100 ethereum ($400,000).