In today's edition of YIYL, (You Invest, You Lose) we take some time to laugh at the absolute carnage that was this cycles NFT craze.
A lot of people bought into the hype of easily reproduced digital "scarcity" that you could own pet rocks, sell your own poorly made art or you could buy collections of VC-backed NFTs who were wash trading and holding the floor with the fees they were netting.
I've already explained several times why art NFTs are completely useless and why most NFT applications apart from coupons make any sense, so I won't rehash that. What I will focus on is the amount of money lost on NFTs.
NFTs are priced at the margins
When you buy an NFT from lets say a creator or a company, they set the initial price for it and their overall collection so there is a price history spun up out of thin air. Then you and other NFT collectors see who can buy pieces from different collections hoping that others will bid up the rest of the collection up after seeing activity on the collection.
Then when activity is at its greatest the NFTs that have the lowest prints, are flipped to the greatest fool thinking he is holding something of value and will later flip it to the next greater fool.
Now as this game of chicken goes on, some call time and want out and they start dumping, if part of the collection dumps, so begins the repricing of all the NFTs and if there are no bids on an NFT to act as a floor it can quickly lose any value because there is no liquidity.
Fuck around and find out
Now many new shitcoiners were minted in this last run and they chose to fuck around with NFTs because, it was fun, cute, creative, meme culture, or whatever stupid name you want to add as a label on this trend.
They fucked around with something that had artificial demand, that was illiquid and driven by a market frenzy, and found out that those who hold, end up losing.
Today there are plenty of people with NFTs in their wallets that may or may not show an image and have a transaction history as well as a price history and one company feels that could be worth nothing but also worth something.
Salvaging something for your stupidity
If you bought an NFT for thousands of dollars and it's now worthless, you can either hold on to that momento, as a reminder of your stupidity or sell it to someone else at a loss. The thing is even pricing NFTs at 1, 10 and 100 bucks might not secure a buyer because all the morons are out of money or left the NFT space bruised.
So what do you do?
Well, you could wash-trade it with yourself and then claim it as a loss but that could come back to you because most people are too stupid to use the blockchain properly and privately.
So you still have to find someone willing to buy it before you can claim it as a loss on your taxes.
A project called "Unsellable" has emerged to fill that need—buying worthless NFTs for $0.01 (for a small fee) so that people can claim the losses.
"This tool really helped me unload those embarrassing early NFT Hype investments. Should shave about a few bucks off my tax bill",
A supposed user writes in a testimonial blurb on the site (although the testimonials appear to be faked) or just created it to ensure that the site looks like people are using it. I think they are banking on enough people selling their NFTs for next to nothing and holding on to it hoping the next edition of morons comes in on the next cycle and they can resell it.
If you're buying something for 0.01 and you can't turn a profit, well you really fucked up which is not impossible but let's see how it turns out. Unsellable now has 5,000 NFTs, and founder Skyler Hallgren expects that to grow to 15,000 as they grow a collection off the back of other people's bad decisions.
Perhaps someone has finally found a viable crypto business model after all.
Your wife probably left you anyway
Each country is different, some might not recognise you trading pet rock images as investments and might not allow this kind of bullshit, but in the US it seems like the IRS accepts that Americans do some dumb shit.
So an individual taxpayer can write off up to $3,000 in net losses each year, which is pretty easy for an NFT collector to rack up, so you can claim that against your latest tax bill.
If you still managed to keep your wife after telling her you can mortgage the house on Ape jpegs, you can write off the $3000 between the two of you, so if your wife did leave you after this, think of that as her contribution to the cause.
Sources:
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