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Comment by tablespoon | Hacker News Reader

There seems to have been a steady stream of posts hyping NFTs lately.

> In October 2020, Miami-based art collector Pablo Rodriguez-Fraile spent almost $67,000 on a 10-second video artwork that he could have watched for free online. Last week, he sold it for $6.6 million.

And I believe in several comments, it's been explained that fake "sales" (really transfers from someone's left hand to right hand) are really easy to implement in order to inflate the "price" of an NFT on the blockchain.

So did someone really part with $6.6 million for this token, and if so did that person actually earn that money, or just win it from the Bitcoin slot machine?

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> did that person actually earn that money, or just win it from the Bitcoin slot machine?

Is it convertible to USD which can easily be used to buy kitchen appliances, and pants and flights? If so who cares?

> Is it convertible to USD which can easily be used to buy kitchen appliances, and pants and flights? If so who cares.

$6.6 million is going to be treated a lot differently by someone who worked hard to build that fortune, vs. someone who won it (e.g. from a lotto ticket or by buying $1000 of bitcoins on Mt. Gox on a lark for a $1/per).

Sure. I hope they commission a $6 million dollar painting of themself with Napoleon's body and unicorns in the background. It's their money. They can waste it however they want.

And unlike your extremely simplistic worldview, it's very possible they'll do something that will create long term value for them. They don't owe it to you to do that though.

> Sure. I hope they commission a $6 million dollar painting of themself with Napoleon's body and unicorns in the background. It's their money. They can waste it however they want.

You're missing the point: the question is what this $6.6 million transaction for this token mean? Does it mean these NFTs are starting to be taken seriously? Does it mean someone's hyping the tech through a shady transaction? Or does it mean some bozo who won the lotto was willing to blow some money on one?

Winning lotto tickets can also be convertible to USD, which can easily be used to buy kitchen appliances, and pants and flights. Noting that doesn't reveal anything about the differences between how lotto winners spend vs. other people.

> And unlike your extremely simplistic worldview

Excuse me?

No need to be excused

How would you know? I feel like it's the principle of charity to assume a transaction is not some kind of shady conspiracy in absence of evidence to the contrary

The point the parent was making was that someone could simply “buy” the NFT from themselves, and nobody would be the wiser. They more or less just transferred $X between their virtual bank accounts, but we can’t tell that apart from an actual sale. It’s not proof that $X actually changed hands.

If they are paying themselves, why would it matter if they made the money gambling?

Also, I don't see the issue with someone buying an asset from themself for some inflated price.

They're not actually buying or selling it though, just making it look like they are.

Who's the victim here? As far as I know it is legal to sell your self digital assets at any price you'd like.

> Who's the victim here? As far as I know it is legal to sell your self digital assets at any price you'd like.

Lets say I run a lunar land registry like this: https://lunarland.com/. I have a friend of mine buy a worthless deed from me for $10, then "sell" it to himself for $10,000. Now $10,000 is the "market price." I then use that transaction as "evidence" to hype the idea that lunar land deeds are serious things, part a growing market, good investment opportunity, etc. In the ensuing tulip mania, I pocket a pretty penny selling a lot more worthless deeds to lunar land. The victims are the people convinced my misleading hype to invest in them.

Now I'm not claiming something like is actually happening here, but the whole thing is fishy and I think it's a serious possibility to be considered.

The next person who decides to buy from this person based on it's previous "perceived" improvement in value....

> Who's the victim here? As far as I know it is legal to sell your self digital assets at any price you'd like.

It is. But if you register it as a sale, you get to pay taxes on "the profit".

The accusation (I don't know if it's true, I know next to nothing about NFTs) is that person A buys and NFT for $10,000. Because NFTs are online, and likely pseudonymous, they proceed to list it for sale, and then bid on it to drive the price up to $50,000. Person A still owns it, but to the rest of the world if looks like person B bought it. They then proceed to relist, pump up the price to $100k, and buy it themselves.

To the rest of the world, it looks like the value of this NFT grew by 2 orders of magnitude in a week. In reality, that person is leveraging the pseudonymous nature to just make it appear that way, in hopes that when they list it for $200k, someone else will actually buy it. They cleared $190k for making a couple of garbage auctions.

Like, they still need to eat the costs: transaction fee, percentage to the artist (if that’s configured on the platform), and any costs to convert/move currency.

As well: I can buy my $200k house from myself for $5m, but I still need to get the $5m. At that level maybe I can game the system (owning 5 properties on that block and selling when the “neighbourhood is valuable”), but this kind of system gaming is as old as money itself.

This is the case with all wash trading. It only works if you can create a greater fool in the process (net of fees).

However wash trading is rampant in crypto.

> So did someone really part with $6.6 million for this token, and if so did that person actually earn that money, or just win it from the Bitcoin slot machine?

The solution to that problem is amazingly simple: IRS. Whoever made that money, fake or not, gets to pay taxes on $6.6M USD.

Florida has a state sales tax as well, and I'm sure they'd like their cut.

Nope. Even if the "seller" pays taxes on that 6.6M we still won't know if he just paid himself that money. If you have 6.6M of dirty money, this seems like a nice way of washing it clean.

>>So did someone really part with $6.6 million for this token, and if so did that person actually earn that money, or just win it from the Bitcoin slot machine?

When you dismiss the concept of cryptocurrency, and another party sings its praises, and argues it will attain massive market value, and the latter ends up profiting from their judgment, they earned their gains. Now when you claim they won the slot machine, you're trying to diminish their accomplishment, and delegitimize their moral right to their success.

The terms of many of these auctions give a percentage of the sale to the original creator. I don't know the terms but it's possible Mike Winkelmann got quite a bit from the resale.

> The terms of many of these auctions give a percentage of the sale to the original creator. I don't know the terms but it's possible Mike Winkelmann got quite a bit from the resale.

I guess the suspicion I have is that someone who's heavily invested in NFT marketplaces may have arranged this to hype them.

And that category may even include this artist, Mike Winkelmann. According to the article linked here https://news.ycombinator.com/item?id=26303420, he'd only ever sold his artwork once before listing it for sale on some NFT marketplace in December 2020 and immediately hitting jackpot.

> Mike Winkelmann never used to call himself an artist. But that was before he made $3.5 million in a single weekend from selling his artworks. In December, he auctioned off multiple editions of three digital artworks, each priced at $969, and 21 unique works, most of which sold for about $100,000 each. It was only the second time he had put his art on sale.

The alternative, which is I think is also very possible, is this is just lucky cryptocurrency money hoping luck strikes twice.

I'm not familiar with the example you gave, but what if it's just an old school tax write-off? "Buy" something for crazy value, whilw knowing the buyer, then later get that money back and claim (some strange tax law) it on tax?

Edit: Ahh I missed you part about other comments, I guess I was pretty close

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