“NFTs are the future. You must create an account on OpenSea” – my friend of 10 years declares after going through one primer video. I enthusiastically nod. Its easy to be optimistic about being an early discoverer of an entirely new paradigm of the world and dream of the riches that will come ‘relatively-early’ adopter of the crypto world.
Whether you are steeped into the crypto world or dismiss crypto as a solution in need of a problem, chances are you have heard of eye-popping NFT trades. OpenSea essentially facilitates the trading of NFTs.
What is this NFT you ask….
Non-Fungible Token or NFT is essentially steeped into the ownership of unique digital asset like artwork, memes, gifs. What does this mean exactly? A fungible item is an interchangeable /replaceable item – I can exchange 1$ note with another 1$ and still use it for the same purpose.
An NFT signifies verifiable ownership like property rights. If I spend $50K to buy a Cyberpunk NFT and put it as my Twitter profile pic - my ownership is demonstrable and verifiable through a ledger and only I have the right to use the image. Sceptics argue what is stopping me from doing a Ctrl+ C and Ctrl + V on the image and using it anyways and saving my $50K. However, I haven’t heard of anyone actually doing it and risk getting cancelled. The easiest most-digestible way to think about an NFT is a digital equivalent of a Mona-Lisa painting – Someone can still theoretically copy it exactly but what is the value of it?
So is OpenSea the eBay for NFTs?
Yes. OpenSea is the largest and most visible marketplace for NFTs and is funded by the Who’s Whos of the VCs including YC, a16z, Founders Fund and Coinbase Ventures. Founder Devin Finzer in 2017 (ex-Google, Ex-Pinterest, also sold his previous company Claimdog to Credit Karma) dug deep into Crypto, and initially started a wifi-bandwidth sharing company using blockchain, which he pivoted to OpenSea as a crypto marketplace.
Obvious props for identifying a trend so far ahead and having the conviction to build when for most folks crypto was just some peripheral nerd-talk.
Now, OpenSea has had transaction value of $4Bn with over 34M NFTs, serving 300K users.
The meteoric rise has in part been fueled by celebrities jumping into the fray. Jack Dorsey sold his first tweet for 2.9 million. Electronic musician and Elon Musk’s girlfriend Grimes sold $6 million (€5.1 million) worth of her digital art last month. ).
But the OpenSea journey has not been without a few hiccups. Recently they were in the news for all the wrong reasons.
The Chief Product person at OpenSea – Nate Chastain, was discovered to be front running NFT sales which would show up on OpenSea’s home page. Thanks to ZuwuTV’s analysis of publicly available transaction data on Etherscan, the controversial NFT sale came to public view. Now people are checking prior transaction history to identify how far behind this was ongoing. After much pressure, OpenSea also acknowledged this and fired the accused.
Look, I am a slow-convert to the utility of blockchain and DeFi. My rationale for believing in the ultimate future of DeFi and web3 is embarrassingly simple. All the smart people I know in the real and virtual world believe the crypto technology is not going anywhere.
But this incidence gives me pause. You don’t need to be from finance to know Insider Trading is and would be outrightly banned in any real trading market of any size. That it takes a high-profile manipulation for OpenSea to actually create rules on banning insider trading makes me think that either the entire ecosystem is naïve or just too too early. Third-party independent regulators didn’t come to be entirely out of thin air. It’s easy to the hate the control the regulators or banks have over the financial system, but who is actually going to ban newer more creative frauds in the DeFi world.