OpenSea, once the leading marketplace for non-fungible tokens, was built on a promise of perpetual royalties for digital artists. Then came upstart Blur, whose no-fee, trader-friendly platform put the focus on pricing and costs.



It only took a few months to kill the art world’s <a href="https://www.forbes.com/sites/digital-assets/2023/03/17/what-blurs-success-reveals-about-nft-marketplaces/?sh=19e61c2a189f">utopian dream</a> of long-lasting income streams for content creators.



As of September 1, OpenSea, once the leading marketplace for art linked to non fungible tokens, rescinded its policy of mandatory royalty payments to NFT creators. The decision came after it lost its dominance to no-fee competitor Blur, which only appeared on the scene in October but then quickly gobbled up market share by not charging platform processing fees and became the top NFT trading site in February. Overall NFT trading volume has plummeted from about $5.36 billion in January 2022, according to The Block, to $410 million in August. OpenSea’s share of the struggling NFT market has plummeted to under 30%.



Besides the lack of platform fees, Blur does not force sellers to abide by royalty agreements, which creators who launch their works on OpenSea and a few smaller marketplaces can require on transactions in their artworks after the initial sale. OpenSea, which did police such arrangements, said it would no longer do so after August 31, and it seems unlikely that many buyers will offer the payments.



Without the guarantee of a long-term royalty stream, the appeal of creating works linked to NFTs lessens, and prices for the kind of computer-generated art often linked to the tokens are plunging anyway. So why should artists bother with NFTs?



“Making art is an act of risk-taking,” says Amy Whitaker, associate professor of art business at New York University. “It makes sense, therefore, for artists to share in the upside that they helped to create.” She termed OpenSea’s decision to abandon royalties “unfortunate.”



Digital works encoded onto blockchains rose in popularity in 2021 after the artist Beeple sold a collection of images previously published on his Instagram page for $69 million. Seeing the big bucks to be made in a seemingly simple process–just upload a digital file to an NFT marketplace, which would encode it, for a fee, onto a blockchain–hundreds, if not thousands of artists joined in. NFT aficionados, including artists and collectors, claimed that blockchain-linked art would democratize access to a murky and difficult-to-break-in market, making the opaque system of well-connected galleries and deep-pocketed buyers obsolete. The decentralized system for royalty payments, they contended, would also ensure that artists would directly participate in the appreciation of their works, typically earning a 10% cut on each subsequent sale.



Each marketplace maintained its own policy for awarding royalties to artists. Beeple for example, famously would sell his “drops” for $1 each, but as they were bid up and resold on NFT marketplace Nifty Gateway for hundreds of thousands of dollars, he earned tens of thousands in royalties on each transaction.



In its brief life, NFT-linked art has largely been digital, often in series of similar images with various unique features that make some more collectible than others. But anything can be linked to a token–traditional art, real estate, even musical instruments–and then tracked on its associated blockchain. So, the technology could speed transactions and cut out middlemen in many industries.



<abbr>T</abbr>he fight for royalty payments has largely played out in the court of NFT marketplaces, websites that allow creators and sellers to list their pieces in primary and secondary transactions. In order to better compete with Blur, OpenSea launched what it called its operator filter, which allowed creators of NFTs to prohibit their tokens from being sold in marketplaces that did not enforce royalties. In other words, the filter blocked OpenSea’s competitors and required collections to trade either on its own marketplace or others that did enforce royalty payments, keeping them away from Blur.



Market forces did not cooperate with OpenSea’s strategy. Free trades and optional royalty payment policies quickly drew sellers, which in turn attracted buyers. Since prices and volume were controlled by traders, seeking quick, if marginal, returns, voluntarily paying royalties to artists were easily dismissed by them.



OpenSea’s trading volume plummeted to 27% in August as Blur’s skyrocketed from a mere 5% to 60% in the same time frame, according to data from&nbsp;<a href="https://www.theblock.co/data/nft-non-fungible-tokens/marketplaces" target="_blank" rel="noreferrer noopener">The Block</a>. Even OpenSea Pro, OpenSea’s no-fee aggregator and direct competitor to Blur which launched in April, has been unable to take market share from Blur, accounting for only 33% of trading volume on NFT aggregators in August (63% of trades happened on Blur), according to data from<a href="https://dune.com/hildobby/nft-aggregators" target="_blank" rel="noreferrer noopener">&nbsp;Dune Analytics</a>.



But the playing field is not level for OpenSea. With no marketplace fee, Blur is living mostly on its $11 million in&nbsp;<a href="https://www.forbes.com/sites/digital-assets/2023/04/13/forget-art-lets-trade-how-a-10-person-startup-came-to-dominate-nft-markets/?sh=227ffacc2680">venture capital funding</a>&nbsp;and a&nbsp;<a href="https://docs.blur.foundation/tokenomics" target="_blank" rel="noreferrer noopener">hefty</a>&nbsp;supply of blur tokens, reward tokens given out to its founding team and traders as rewards for using the platform. While Blur has attempted to grow its customer base with the launch of its lending products (Blend) and more uses for its token, how long its dominance will last will depend on its reliance on its token model, which could make it susceptible to regulatory action.



Ultimately, OpenSea has not only lost market share to Blur, but it is taking a smaller piece of a smaller pie. After peaking at $16 billion in January 2022, NFT trading has plummeted, with only $559 million worth exchanged in August in 3.2 million transactions, a more-than-<a href="https://www.forbes.com/sites/digital-assets/2023/08/03/stan-lee-becomes-nft-superhero-illustrating-a-downward-shift-in-prices/?sh=6de9fb6d5ae5">60% volume decrease</a>&nbsp;from last year, according to industry research firm&nbsp;<a href="https://dappradar.com/blog/blockchain-industry-regains-traction-as-2-million-unique-active-wallets-interact-daily/#Chapter-4" target="_blank" rel="noreferrer noopener">DappRadar</a>. Even then, only 15% of unique active wallets contributed to August’s NFT transactions. In July, only 4% of wallets traded the NFTs.



Few transactions and even fewer users (measured by the number of unique wallets) points to a new normal in NFT trading which is bad news for digital artists: traders rule the market, and most refuse to pay royalties.



Blur’s predecessors, aggregators like X2Y2 and LooksRare which listed NFTs available in various marketplaces, set the standard for royalty-free marketplaces geared toward traders by offering quick no-fee transactions. Others, like Magic Eden, the largest marketplace for NFTs on the Solana blockchain, and Ethereum-based OpenSea, had to respond to draw customers back to their platforms, lowering costs one way or another. Magic Eden took the first step, moving to a royalty-optional model in&nbsp;<a href="https://twitter.com/MagicEden/status/1581101016686399491?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1581101016686399491%7Ctwgr%5E9d190b061a3b95519526e7d4bab1ea7a5ea8bfbb%7Ctwcon%5Es1_c10&amp;ref_url=https%3A%2F%2Fwww.coindesk.com%2Fbusiness%2F2022%2F10%2F15%2Fmagic-eden-moves-to-optional-royalty-model%2F" target="_blank" rel="noreferrer noopener">October</a>&nbsp;as trading declined, preceding OpenSea by two weeks.



<abbr>T</abbr>he royalty policy changes at OpenSea and other marketplaces should send a loud wake up call to Bored Ape Yacht Club maker Yuga Labs. Since it debuted in April 2021, Yuga has received $58 million in royalties from the resales of its Bored Ape collection. Its Mutant Ape Yacht Club and “Otherdeed” collection brought in nearly $100 million more. Chiru Labs, which designed the anime-inspired Azuki collection, and&nbsp;<a href="https://www.forbes.com/sites/mariagraciasantillanalinares/2022/09/13/reddits-ohanian-leads-54-million-doodles-capital-raise/?sh=84266a63bf38">Doodles</a>, purveyor of pastel-forward illustrations are also likely to take big revenue hits.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading" id="h-top-10-royalty-generating-nft-collections">TOP 10 ROYALTY GENERATING NFT COLLECTIONS</h2>



<h4 class="wp-block-heading" id="h-through-august-2023-profile-picture-collections-have-received-the-most-in-total-royalties-since-launch-garnering-millions-in-fees-from-secondary-trading-but-when-it-comes-to-effective-royalty-rates-metaverse-and-gaming-nfts-with-rates-of-8-to-9-are-the-winners">Through August 2023, profile picture collections have received the most in total royalties since launch, garnering millions in fees from secondary trading. But when it comes to effective royalty rates, metaverse and gaming NFTs, with rates of 8% to 9%, are the winners.</h4>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Even prior to OpenSea scrapping royalty payments, 10% royalties were more of a goal than a reality. According to Nansen, the average royalty for the highest earning collections was between 2% and 4%. Top-performing gaming collectibles were earning 5% to 10%.



Though they stand to have the most dollars to lose, some big creators are insulated by the brand recognition they’ve garnered, including shows at traditional&nbsp;<a href="https://www.centrepompidou.fr/en/magazine/article/the-centre-pompidou-in-the-age-of-nfts" target="_blank" rel="noreferrer noopener">museums</a>, and can still claim the big bucks on primary sales. Chiru Labs, for example, raised $38 million ahead of its much-anticipated “Elementals,” although investors ultimately thought that collection of characters with&nbsp;<a href="https://twitter.com/wizardofsoho/status/1673772462289350657?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1673772462289350657%7Ctwgr%5E1f3046daac6098742355f02bd7c2633d1e660522%7Ctwcon%5Es1_c10&amp;ref_url=https%3A%2F%2Fdecrypt.co%2F146464%2Fazuki-nft-prices-plummet-collectors-blast-identical-elementals-art" target="_blank" rel="noreferrer noopener">almost identical designs</a>&nbsp;was a flop.



The most dire consequences of the loss of royalties are likely to fall on the smaller creators whose monthly payments have been in the hundreds or low thousands of dollars but who have included the income in their financial planning, according to Calderon.



At the $6.7-million collection Rektguy, the loss of royalties is having tangible results, says co-founder Ovie Faruq. “We&#8217;ve used royalties to pay a moderator, to put-on real-life events, to build different competitions and build our website and community,” he says. “So, when you strip that out, it changes the business model.”



Combined with the evaporating royalties, NFT participants face new U.S. regulatory issues. The Securities and Exchange Commission last month required Los Angeles-based&nbsp;<a href="https://www.forbes.com/sites/digital-assets/2023/08/31/sec-opens-a-new-can-of-worms-with-nft-enforcement-action/?sh=4aba9c3921ab">Impact Theory</a>, a digital media studio which raised $30 million from its NFT sales since 2021, to revise the smart contract underlying its Founders Keys NFTs to&nbsp;<a href="https://www.sec.gov/files/litigation/admin/2023/33-11226.pdf" target="_blank" rel="noreferrer noopener">eliminate</a>&nbsp;any royalty payment the company may receive from future secondary market transactions. The SEC alleges the company sold unregistered crypto securities through its sale. Because Impact collects and profits from the royalties (set at 10%), rather than the digital artist, the SEC contends, its NFTs are securities. This week, the SEC also fined the creators of the Stoner Cats collection&nbsp;<a href="https://www.sec.gov/news/press-release/2023-178" target="_blank" rel="noreferrer noopener">$1 million</a>&nbsp;over the sale of unregistered securities.



Impact Theory’s NFTs offered a number of exclusive opportunities to holders, including discounts and early access to videos and gaming content. To settle charges that it was selling unregistered securities–the first SEC enforcement action against an NFT issuer–Impact Theory also agreed to destroy its remaining supply of the tokens and pay a $6 million fine.



If the SEC is looking at royalty payments as a potential criterion for treating the tokens like securities, NFT studios, collectors and even the marketplaces they’re traded on could be susceptible to the same kinds of enforcement actions the agency has been taking against cryptocurrency companies. The way the Impact Theory NFTs were structured may have made them especially susceptible.



“There&#8217;s a pretty good argument for the artists receiving royalties downstream, based on certain case law,” says James Walker, co-lead of Perkins and Coie’s fintech enforcement and compliance team referring to the way the entertainment industry compensates musicians, actors and screenwriters, for example. “But there’s a stronger argument [that NFTs are securities] when you have a company [like Impact Theory] that isn’t involved in the creation that is getting royalties downstream from certain NFTs issued.&#8221;

Collage of woman falling through the metaverse

Requiem For Royalties: NFT Exchanges Abandon Recurring Compensation For Artists

The NFT craze has minted its first billionaires.&nbsp;



The founders of buzzy blockchain startup OpenSea have joined the three-comma club following a fresh funding round announced Tuesday that values the company at $13.3 billion—up from $1.5 billion just six months ago. With estimated 18.5% stakes in OpenSea, cofounders Devin Finzer and Alex Atallah are each worth about $2.2 billion, Forbes estimates. (Forbes applies a discount to the value of privately-held companies due to limited liquidity. An OpenSea representative declined to comment.)



Founded four years ago, the&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2021/11/23/what-every-crypto-buyer-should-know-about-opensea-the-king-of-the-nft-market/?sh=10edd5c62f89">New York City-based startup was an early player in the NFT market that took off in early 2021</a>. Shorthand for “nonfungible tokens,” NFTs are computer files used to track ownership of unique digital assets like art, music and even virtual sports cards on a ledger known as a blockchain. OpenSea bills itself as a peer-to-peer platform on which users can create, buy and sell all sorts of NFTs—in exchange for a 2.5% cut of each sale.&nbsp;



OpenSea has grown rapidly over the past year. In March 2020, the five-person outfit counted roughly 4,000 active users doing $1.1 million in monthly transactions,&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2021/11/23/what-every-crypto-buyer-should-know-about-opensea-the-king-of-the-nft-market/?sh=10edd5c62f89">for about $28,000 in monthly revenue</a>. Its luck changed in February 2021, when platforms like the Winklevoss twins’ Nifty Gateway&nbsp;<a href="https://www.forbes.com/sites/michaeldelcastillo/2021/04/05/revenge-of-the-winklevii-facebook-winklevoss-bitcoin-nft-billionaire-revenge/?sh=b87bb51572af">generated buzz</a>&nbsp;by auctioning off high-end digital art. By July, OpenSea had closed a $100 million funding round led by venture capital firm Andreessen Horowitz and recorded about $350 million worth of transactions that month. The next month, transactions hit $3.4 billion—a staggering ten-fold increase that earned the company $85 million in revenue from commissions.&nbsp;



The NFT market cooled off slightly in the months that followed, before heating up again in December. OpenSea&nbsp;<a href="https://dune.xyz/rchen8/opensea" target="_blank" rel="noreferrer noopener">processed more than $3.3 billion worth of sales last month</a>, generating&nbsp;about $82.5 million in revenue for itself. Today, the company employs more than 70 people.&nbsp;



Finzer and Atallah, each around 30 years old,&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2021/11/23/what-every-crypto-buyer-should-know-about-opensea-the-king-of-the-nft-market/?sh=10edd5c62f89">have familiar resumes for young tech billionaires</a>. CEO Finzer grew up in the Bay Area, studied at Brown University and took a job as a software engineer at Pinterest. In 2015, he cofounded his first startup, a search engine called Claimdog, before selling it to Credit Karma a year later for an undisclosed sum. Colorado-born Chief Technology Officer Atallah proved to be a spreadsheet whiz from a young age. While he was a student at Stanford, he worked at Palantir, according to his LinkedIn profile, and after graduating worked at Silicon Valley startups Zugata and Whatsgoodly.



In January 2018, the duo teamed up for the Y Combinator startup accelerator with an idea for paying users crypto to share their Wi-Fi hotspots. But CryptoKitties—the cartoonish virtual cats that were among the earliest examples of NFTs—captured their imagination.&nbsp;<a href="https://www.forbes.com/sites/jeffkauflin/2021/11/23/what-every-crypto-buyer-should-know-about-opensea-the-king-of-the-nft-market/?sh=10edd5c62f89">Finzer and Atallah quickly pivoted to launch OpenSea and relocated to New York.</a>



Since its start, OpenSea has raised more than $420 million from investors, according to data from PitchBook. The $300 million series C haul announced Tuesday was led by venture capital firms Paradigm and Coatue. OpenSea says it plans to increase its headcount, with a focus on its “trust and safety” teams, and invest in making its products more accessible to a wider audience.&nbsp;



OpenSea faces heightened competition, including from crypto giant Coinbase, which in October announced plans to launch its own NFT exchange. Critics have also called out the potential for fraud and scams in the NFT world. In September,&nbsp;<a href="https://opensea.io/blog/announcements/employee-information-use-at-opensea/" target="_blank" rel="noreferrer noopener">Finzer requested the resignation of OpenSea’s head of product</a>&nbsp;after he was discovered to be buying NFTs shortly before they went live on the marketplace. And, just last week, a New York art gallery&nbsp;<a href="https://cointelegraph.com/news/opensea-freezes-2-2m-of-stolen-bored-apes" target="_blank" rel="noreferrer noopener">reportedly claimed that $2.2 million worth of NFTs had been stolen from him</a>&nbsp;and listed on OpenSea.&nbsp;



If the company can navigate the choppy waters, even greater riches could be on its horizon. Some $23 billion worth of NFTs exchanged (virtual) hands in 2021, according to data tracked by&nbsp;<a href="https://dappradar.com/blog/2021-dapp-industry-report" target="_blank" rel="noreferrer noopener">DappRadar</a>–and the market is just getting started.



“Our vision is to be the destination for these new open digital economies to thrive,” Finzer said in an emailed statement.



By Eliza Haverstock, Forbes Staff

Screenshot 2022-01-25 at 14.12.10

The First NFT Billionaires: OpenSea Founders Each Worth Billions After New Fundraising

BY TIANA CLINE



IN AN INTERNET ENABLED VIRTUAL WORLD, THERE NEEDS to be a way to own digital items. Non- fungible tokens (NFTs) are already proving this is possible. Locally, the debut collection from artist Norman Catherine fetched $53,000 at Africarare, the first South African VR metaverse.



In November 2021, Nigeria&#8217;s contemporary art fair partnered with Super rare to showcase digital works by African artists such as Linda Dounia and Rendani Nemakhavhani.



Collecting NFTs is becoming increasingly popular but what if you could use something you’ve bought online? Created by Larva Labs, Meebits are one of the first NFT collections to be created as 3D avatars. Avatars are an important part of the metaverse because they’re what will ultimately represent a person, digitally. Microsoft, for example, is adding 3D virtual avatars to Mesh, their new collaborative platform which will enable mixed realities within Teams, as part of their metaverse strategy.



When the collection of (approximately 20,000 different) Meebits launched in May, it sold out in six hours. And to date, the most expensive Meebit has been sold for $222.9K.



“Meebits are algorithmically generated 3D characters linked to NFTs on the Ethereum blockchain. They are rendered in voxels (or pixels with volume) similar to characters from popular games such as Minecraft or Roblox. You can use these NFT characters as metaverse avatars, or in games, and virtual reality,” explains Zhulik the Meebit. “If you purchase a Meebit, you get the 3D model. You can then take the 3D model and animate the avatar in real time using VR equipment such as a headset and controllers or a full body suit.” 



Because Meebits have utility as a 3D avatar, they can be used in various ways which has only added to their growing popularity. 



“For the first time, we have true digital ownership and I believe we are going to see an even bigger wave of creativity and innovation in intellectual property. The exciting thing about NFTs is that this is only the beginning.”

BRITAIN-BLOCKCHAIN-NFT-TOKENS

The Future Of NFTs: ‘This Is Only The Beginning’

<p id="h-startups-are-supposed-to-specialize-but-opensea-s-founders-thrived-by-building-a-wide-open-market-for-creating-and-trading-all-manner-of-nfts-whether-art-music-or-gaming-now-that-they-re-centimillionaires-and-poised-to-become-billionaires-they-have-other-worries-competitors-fraudsters-and-the-next-crypto-crash">Startups are supposed to specialize, but OpenSea’s founders thrived by building a wide-open market for creating and trading all manner of NFTs, whether art, music or gaming. Now that they’re centimillionaires and poised to become billionaires, they have other worries: competitors, fraudsters and the next crypto crash.&nbsp;



In March 2020, as Covid-19 began to spread, OpenSea founders Devin Finzer and Alex Atallah held a gut-check phone call. Their five-person startup had built a platform on which users could create, buy and sell all sorts of nonfungible tokens (NFTs)—computer files used to track ownership of unique digital assets like art and music on a ledger known as a blockchain. Yet 26 months after going live, they had just 4,000 active users doing $1.1 million in transactions a month, which translated (given OpenSea’s 2.5% sales commission) to a paltry $28,000 in monthly revenue. The NFT market had a “dead feeling,” recalls CTO Atallah, who conducted his side of the call from the basement of his parents’ Colorado home, where he had gone to work as New York locked down. Ominously, Rare Bits, a direct and better-funded competitor, had just announced it was folding. The pair set a do-or-die goal of doubling business by the end of the year—and met it in September.&nbsp;



Finally, in February 2021, the NFT market roused from hibernation—and went crazy. In July, OpenSea processed $350 million in NFT trades. That same month, in a round led by Andreessen Horowitz, it raised $100 million in venture capital at a $1.5 billion valuation. In August, as NFT hype (and FOMO) reached a fever pitch, volume spiked tenfold to&nbsp;<a href="https://dune.xyz/rchen8/opensea" target="_blank" rel="noreferrer noopener">$3.4 billion</a>—an $85 million commission windfall for OpenSea in a month when it likely burned less than $5 million on expenses. Although transactions have since retreated to around $2 billion a month, the platform now has 1.8 million active users and a dominant share of the market. It’s up to 70 employees and is scouting for dozens more, including much-needed customer service reps.&nbsp;



Recently, there’s been talk of another round of venture investment at a valuation that could reach $10 billion. With a 19% ownership stake each, CEO Finzer, 31, and Atallah, 29, are centimillionaires on the cusp of becoming crypto’s newest billionaires.&nbsp;



Yet Atallah was humble as he chatted in November at a restaurant in New York’s kitschy new Margaritaville Resort Times Square, sitting near its 32-foot Statue of Liberty replica, which hoists a cocktail instead of a torch. He was there for the third annual&nbsp;<a href="https://www.nft.nyc/" target="_blank" rel="noreferrer noopener">NFT.NYC</a>&nbsp;convention, which boas­ted 5,500 registrants with 3,000 on the waiting list. Young enthusiasts prowled the hotel wearing&nbsp;<a href="https://opensea.io/collection/boredapeyachtclub" target="_blank" rel="noreferrer noopener">Bored Ape Yacht Club</a>&nbsp;sweatshirts—a tribute to a collection of 10,000 simian NFTs whose owners treat it as a social club as much as a collectible or investment.&nbsp;



You might say humility was at the heart of Finzer and Atallah’s successful strategy. Some advisors had urged them to specialize in an NFT niche—say, art, gaming or music. But they opted to build a category-agnostic platform because they didn’t think they were prescient enough to predict which NFT types would catch on.&nbsp;



Beyond casting a wide net, Finzer says, OpenSea has thrived simply by “being in the right place at the right time” and listening to users about what they want. The platform tracks NFTs on ethereum and other blockchains, and all purchases are made in crypto. Sellers can opt for a fixed-price or auction format. Artists can reserve a percentage of each resale price. Ultimately, Finzer sees the NFT ownership verification model working for anything from concert tickets to real estate—he’s just not sure what will succeed when. “I’ve always had a pretty gray view of the future,” he says.&nbsp;



Despite its sudden success, OpenSea faces big and varied risks—from fraud and another NFT market bust to new competition. In October, Coinbase, the nation’s largest crypto exchange and an original investor in OpenSea, announced it will launch its own NFT peer-to-peer marketplace. Within weeks, Coinbase had 2.5 million sign-ups for its waiting list, and CEO Brian Armstrong was predicting the new business “could be as big or bigger” than its core crypto trading business.&nbsp;



OpenSea’s open-market approach heightens the risk of counterfeits, scams and fraud—just ask Amazon or eBay. For example, a scammer can copy an image of someone else’s art and sell it as an NFT on OpenSea. Finzer says the site is working on an automated way to spot fakes and has moderators who investigate suspicious offerings. Still, people can present problems too. In September, Finzer&nbsp;<a href="https://opensea.io/blog/announcements/employee-information-use-at-opensea/" target="_blank" rel="noreferrer noopener">requested the resignation</a>&nbsp;of OpenSea’s head of product after Twitter users&nbsp;<a href="https://twitter.com/0xZuwu/status/1437921263394115584" target="_blank" rel="noreferrer noopener">discovered</a>&nbsp;a crypto wallet linked to that executive was buying NFTs shortly before they appeared on the price-moving OpenSea home­page—in other words, he was allegedly frontrunning his own employer’s decisions.&nbsp;



While they come across as humble, OpenSea’s founders are hardly low on ambition. Raised in the Bay Area by a physician mom and a software engineer dad, Finzer says he was “devastated” to be rejected by Harvard, Stanford, Princeton and Yale. (He settled for Brown.) After a short stint as a Pinterest software engineer, he cofounded his first startup, Claimdog, in 2015 and sold it to Credit Karma a year later.&nbsp;



As a kid, Atallah, the Colorado-born son of Iranian immigrants, made spreadsheets to compare the attributes of everything from birds to brow­sers. After graduating from Stanford, he worked as a programmer before teaming up with Finzer. In January 2018 they entered the Y Combinator startup accelerator with an idea for paying users crypto to share their Wi-Fi hotspots. But at that point, CryptoKitties—the cartoonish virtual cats whose ownership records were digitally inscribed on the ethereum blockchain—had captured the public imagination. “It was the first time people who didn’t really care about crypto were suddenly getting interested in it for reasons other than flipping a coin. I thought that was really powerful,” Atallah says. They quickly pivoted to OpenSea and later moved their operation to New York City.&nbsp;



Much like Beanie Babies, their cloth-and-stuffing ancestors, CryptoKitties turned out to be duds as investment-grade collectibles—the supply was too great to make most of them worth much. After spiking in early 2018, interest in both crypto and NFTs went into hibernation.&nbsp;https://view.ceros.com/forbes/sidebar-2-3-1?heightOverride=741



What awakened the market in early 2021 wasn’t OpenSea’s doing. Instead, platforms like the billionaire Winklevoss twins’ Nifty Gateway&nbsp;<a href="https://www.forbes.com/sites/michaeldelcastillo/2021/04/05/revenge-of-the-winklevii-facebook-winklevoss-bitcoin-nft-billionaire-revenge/?sh=4c2e24a01572">captured attention</a>&nbsp;with curated, high-quality art. Last March, Christie’s auctioned the NFT for digital artist Beeple’s “Everydays: The First 5000 Days”&nbsp;for $69 million, the third-highest price ever paid for work by a living artist.&nbsp;



As NFTs fetched eye-popping prices, more and more ordinary folks decided they too wanted to become creators, collectors or speculators—and turned to OpenSea, with its anyone-can-be-an-artist ethos, built-in secondary market and handy features. For instance, the site has an advanced filtering system so users can find NFTs with the rarest—and theoretically most valuable—attributes. (Only 46 Bored Apes have solid-gold fur, and they command a hefty premium.) When a new NFT is created and recorded on ethereum, the site automatically spawns a webpage displaying it—a nice feature as NFTs became a status symbol, with people sharing their OpenSea pages and changing their Twitter profile pictures to an NFT they own. “It became this circular feedback loop, driven by envy and desire. And OpenSea really captured that market,” observes Richard Chen, a partner at VC firm 1Confirmation and an early OpenSea investor.&nbsp;



Dani, 27, a former fashion designer living in Georgia, has turned a $17,000 investment in NFTs like the World of Women into a portfolio worth $715,000. AJ, a 37-year-old former gaming company CEO from North Carolina, put less than $10,000 into NFTs and now values his digital assets at $1.3 million. He recently convinced his gastroenterologist brother to start buying NFTs. The brother, in turn, hooked his own buddies. “They’re pretty much doing colonoscopies and then checking their phones for new NFT drops,” AJ says.&nbsp;



Sounds like a bubble, all right, raising the question of how OpenSea will fare when it bursts. Responds Finzer: “We have a large amount of padding in case we need to weather a winter.” 



<a href="https://www.forbes.com/sites/jeffkauflin/"></a>By Jeff Kauflin, Forbes Staff

Non-fungible token art.

What Every Crypto Buyer Should Know About OpenSea, The King Of The NFT Market

NFTs have been making waves in the art world, with recent high-profile pieces selling for millions of dollars and high-profile art auctioneers participating in the sales. However, many see the main benefits of NFTs in allowing transparency of ownership and royalties for the artists. One online South African art fair is in agreement, and launched their own NFT offering this week.



Imagine a world where artists earn royalties for every sale of their work in perpetuity, a world where ownership of a piece’s history is public record? With the advent of Non-Fungible Tokens (NFT) transforming the art world globally, that reality is here, and South African art and artists are entering the NFT game along with museums, and looking to transform the way art is bought and sold forever. Confused by what an NFT is? First, we need to understand what is termed ‘the blockchain’, on which NFTs are built. Here’s a simple analogy; your bank processes all transactions between yourself and others, and keeps track of your account balance and those of thousands of others. It also talks to other banks which do the same thing. Now imagine that these transactions are public, and being managed by thousands of different computers across the world – that’s the blockchain. An NFT is a symbol or representation of something that’s unique; imagine you own a jacket for 10 years. You could buy a new jacket of the same make and the same size etc, but it wouldn’t be the exact one you’ve had for 10 years – that’s an NFT. The proof of these transactions and the contracts of sale are built into the blockchain itself, so they can be verified independently.



Think this is too complicated? You’re not alone.



“I’m clueless but excited,” says Koos Groenewald, one half of Jana + Koos, an art and design duo who are participating in South African online art fair Latitudes’ first NFT offering. “It’s like an internal combustion engine. You don’t need to understand how internal combustion works in order to benefit from it.” Latitudes aims to be “the first African marketplace for art-focused NFTs”, and made their first offering in the space yesterday with their Made it to the life raft collection, which offers silk scarves for sale online by eight South African artists. The first 25 people to purchase each scarf receive a free NFT with their purchase. “You can’t really be in the art world right now and not be thinking about NFTs,” says Roberta Coci, Latitudes co-founder in an interview with FORBES AFRICA. In South Africa, some in the art world are excited by the possibilities that NFTs represent, particularly due to the ability to implement what are termed “smart-contracts”, essentially terms of sale or re-sale that are built into the artwork, which have strong implications for authenticity verification and royalties. NFTs in the artworld have hit mainstream news over the last year, with several high-profile sales garnering millions of dollars – today, around 5% of major sales at auction houses such as Sotheby’s and Christies being made up from NFT sales. (Art Market Research, 2021).



Latitudes started examining the space earlier this year. Originally founded as a highly-successful physical art fair which aimed to promote a platform where artists, galleries and independents could come together on an equal playing field, hosting another physical art fair was hampered by the Covid-19 pandemic. Like many others in the industry, Latitudes made the move online. “We launched [latitudes.online] in July 2020 with around 350 artists. Now we are closer to 900 and growing nicely and quickly – we’re basically a third-party marketplace with galleries, artists, curators… as long as you have good art to sell you can bring it on to the platform,” says Coci.



Partnering with NFT experts and social marketplace Momint for the implementation, culminated in yesterday’s ‘soft launch’ of Latitudes’ NFT offering. This democratized ethos fits in well with the benefits that NFTs can bring to the art world; increased transparency of art origination and ownership, as well as perpetual royalties for the artist even after the first sale – preventing the phenomenon of people “flipping” an artwork. “The main gamechanger is that ownership rests with the artists, that you can build the royalties into the smart contract… this way, every time a work is sold, the artist will receive royalties,” says Coci.”Ultimately, it’s a very practical application in the end.”



And indeed, even though the concept of NFTs can be confusing and misunderstood due to the novelty of the technology, participating artists clearly see the possibility of benefits.



“The royalties – they’re sure exciting for me… especially with digital and moving pictures in art. A print is tangible, but if something’s intangible it doesn’t hold the same value. NFTs are bringing up the value of intangible work – and it’s very exciting,” says Groenewald. While Latitudes is amongst the first online art fairs to make an NFT offering, Cape Town-based art Gallery WorldArt also presented an NFT sale earlier this year.



“This is a ground-breaking development in the art world. I am particularly thrilled that this mechanism guarantees artists royalties when their artworks are resold,” says gallery owner Charl Bezuidenhout. Museums, and even rhino-conservation efforts are moving into the space, with a tokenized pen-gun owned by South African anti-apartheid activist OR Tambo and a digital rhino horn going on sale in the weeks to come. “We are still at the early-adopter stage,” says Coci, “But once the hype dies down, we’ll begin to see the real value that NFTs offer.”

Tag: NFT Art

FORBES AFRICA SOCIAL MEDIA

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How The South African Art World Is Entering The NFT Space