Elon Musk slams NFTs but ends up arguing the case for Bitcoin Ordinals

November 2, 2023 Coin Telegraph

Elon Musk argued that NFT projects “should at least encode the JPEG in the blockchain,” to the delight of many Bitcoiners.

While publicly mocking non-fungible token (NFTs) during a podcast, Tesla CEO and billionaire Elon Musk appears to have inadvertently highlighted the case for Bitcoin Ordinals, also known as Bitcoin NFTs.

“The funny thing is the NFT is not even on the blockchain — it’s just a URL to the JPEG,” said Musk in an Oct. 31 released interview on The Joe Rogan Experience.

Musk said NFT projects should at least encode the JPEG on-chain:

“You should at least encode the JPEG in the blockchain. If the company housing the image goes out of business, you don’t have the image anymore.”

On social media, Bitcoiners argued Musk’s comments actually summed up the use case for Bitcoin Ordinals. Bitcoin’s version of NFTs launched in January by developer Casey Rodarmor, which was made possible by the Taproot soft fork in November 2021.

Cryptocurrency analyst Will Clemente was among those that praised Musk’s comments, noting there are 38 million and counting Ordinals inscriptions that will forever exist on Bitcoin’s blockchain.

.@elonmusk you just laid out the case for Bitcoin ordinals - image/text inscriptions directly on the most secure open source monetary network on the planet. There are currently 38 million of these inscriptions on the Bitcoin blockchain. pic.twitter.com/WASj1qpkz8
— Will Clemente (@WClementeIII) November 1, 2023

“This is why Ordinals will continue to grow,” said Rohun “Frank” Vora, the creator of NFT projects DeGods and y00ts. “It's the most elegant solution to one of the most universal criticisms of NFTs.”

Ordinals developer known as “Leonidas” liked Musk’s comments so much that they inscribed the 19-second video into Bitcoin’s blockchain at block 814,773:

*Video of Elon Musk inscribed on Bitcoin’s blockchain via the Ordinals protocol. Source:* *Ord.io*

The criticisms from Musk toward NFTs aren’t new. In December 2021, he mocked NFTs as a sign of mental illness in a meme showing a patient lying on a therapist’s couch.

pic.twitter.com/Wv6iJDuTge
— Elon Musk (@elonmusk) December 16, 2021

Musk’s comments however don’t stand true for all NFT projects on Ethereum.

For example, Larva Labs moved its Cryptopunks NFTs on-chain in August 2021 after they lived off-chain for the first four years.

“Storing them on-chain in this way would further cement the long-term survival of the Cryptopunks images and attributes, and ensure that they can be fully accessed by anyone with only an Ethereum client,” Larva Labs in the statement.

.@elonmusk is correct that having NFT merely provide an http link to someone's domain is silly.

However, with rare exceptions, it's also silly to insist NFT content be on chain,

IPFS links, with the content backed by whoever owns the NFT is the natural solution.
— Arthur B. (@ArthurB) November 1, 2023

Metagood, the team behind the Ethereum-native OnChainMonkeys, announced in September that it would migrate its NFTs to Bitcoin.

While the firm’s CEO Danny Yang didn’t directly address the JPEG dilemma, he explained that NFTs “will win on Bitcoin” because it is a more secure network to work from:

“The Bitcoin Ordinal protocol is better designed for decentralization and security than the Ethereum NFT protocol. High-value NFTs will win on Bitcoin.”

However, Ethereum still remains home to 84% of all NFT trading volumes, according to CoinGecko, sourcing data from June. Bitcoin and ImmutableX came in second and third with market shares of 11% and 2.5% respectively.

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CryptoPunk holders offered physical versions of their NFTs for 48 hours

October 26, 2023 Coin Telegraph

avante art

Online art store Avante Art is offering print copies of CryptoPunks for the next 48 hours through a partnership with CryptoPunks brand owner Yuga Labs.

Holders of CryptoPunk non-fungible tokens (NFTs) are being offered the chance to obtain physical prints of their digital art items, according to an October 26 announcement. The items are being offered as part of a partnership between online art store Avante Art and CryptoPunks brand owner Yuga Labs. The sale will last for only 48 hours. It began on October 26 at 3:00 p.m. UTC and will end on October 28 at 3:00 p.m. UTC.

Our print collaboration with @avant_arte is officially live – for 48 hours only.

Punk On-Chain is available exclusively to CryptoPunk holders at https://t.co/skT1FKTJgB pic.twitter.com/X657IqdgUT
— CryptoPunks (@cryptopunksnfts) October 26, 2023

Two different versions of the physical CryptoPunks collection are being offered on Avante Art. The first is called “Punk-On-Chain.” Each punk owner can commission a Punk-on-Chain print copy for each digital punk they own. However, users will need to prove ownership to commission a print copy. This means that individuals who do not own the on-chain version cannot buy its print version.

The second collection is called “10,000 On-Chain,” which is a print collection of all 10,000 CryptoPunks that's open to anyone. Collectors can buy the print version of a 10,000 On-Chain punk even if they don’t own the original on-chain version.

The two different versions of each printed punk are distinguishable from each other by a variety of characteristics. For example, the 10,000 On-Chain pieces are Archival pigment prints with silkscreen varnish seal, whereas the Punks-On-Chain pieces are UV pigment prints with white underpins. Both versions of each punk contain a Yuga Labs holographic sticker to prove their authenticity.

The Punks-On-Chain items also feature a QR code on the back of the print, leading to a blockchain-based digital Certificate of Authenticity (CoA). As for the 10,000 On-Chain pieces, they ship with a physical CoA that contains a QR code leading to the digital CoA, but this QR code is not on the print itself.

CryptoPunks was one of the first algorithmically generated art collections to be distributed through blockchain technology. It was developed by Larva Labs studio and released in June 2017. The pieces were originally free to any Ethereum network user who wanted to mint them. At the time of publication, the lowest-priced CryptoPunks sell for approximately $78,000, and the entire collection has a market cap of over $782 million, according to data from Coingecko.

Larva Labs sold the copyrights for CryptoPunks to fellow NFT development team Yuga Labs in March 2022.

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OpenSea once again delists CryptoPunks v1 as legal battle heats up

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Blockchain

Many users bought Punks' NFTs on the basis that there were only going to be 10,000 of them, not potentially 20,000.

Late Monday, popular nonfungible tokens, or NFTs, platform OpenSea once again delisted the CryptoPunks v1 collection, which spiraled into existence along with the iconic CryptoPunks v2 collection due to a smart contract bug. This was allegedly due to a Digital Millennium Copyright Act takedown notice issued by CryptoPunks v2 developers Larva Labs to OpenSea. As the company is also the creator of the CryptoPunks v1 collection, this move has struck some as strange.

LL has forced @opensea to remove V1 Punks collection because of a DMCA takedown.

We are responding via a counter-notice from our counsel in due course. We look forward to updating you further.

In the meantime, trade using https://t.co/KjPg88vDqE or @LooksRareNFT pic.twitter.com/1qmgdQrR7l
— V1 Punks (@v1punks) February 7, 2022

For many years, OpenSea banned the CryptoPunks v1 collection as users shunned their authenticity. However, the collection's recent listing on competing NFT platforms, such as LooksRare, led to an increase in recognition and led OpenSea to rescind its first ban. At the time of publication, the wrapped CryptoPunks v1 collection had surpassed 315.44 Ether (ETH) ($974,000) in total volume traded and continues to operate.

But the battle for the authenticity of the NFT collection appears to be heating up. In an announcement posted in the official CryptoPunks v1 Discord, developer Velinova.eth alleges that they've spoken with a "top-tier IP attorney from the U.S." who claims they are "lawfully able to carry on in the trade of these CryptoPunks." Meanwhile, the community is preparing a counter-notice to the OpenSea takedown. On top of that, its NFT holders have chosen to rename the collection to "CryptoPunks V1 313 WPV1," partly to reflect the NFTs' wrapped nature for patching up the aforementioned bug.

CryptoPunks V1 community announcement | Source: Discord

The issue of CryptoPunks' authenticity may have significant financial consequences. With a total of 824,947.17 ETH traded ($2.55 billion), CryptoPunks v2 is the most popular NFT collection globally. However, a part of the collection's high demand stems from its scarcity as its supply is fixed at 10,000 Punks. If another 10,000 images from CrptoPunks v1 are legitimized, it could potentially dilute the brand, leading to a rapid decrease in the NFTs' price.

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Blockchain

Delegitimize CryptoPunks v1 and face pushback from v1 owners, or legitimize v1 and cause brand dilution, dropping the value of v2.

In a Discord post published on Wednesday, Matt Hall, the core developer at Larva Labs, the entity behind the popular CryptoPunks v2 and, initially, CryptoPunks v1 nonfungible tokens (NFT) collections, announced he would be "taking appropriate steps" in the following days regarding the alleged copyright infringement of "both the art and the CryptoPunks name" of the CryptoPunks V1 collection. Normally, this would amount to submitting a takedown notice under the Digital Millenium Copyright Act, or DMCA, to the platform responsible for hosting the content for auction.

Matt Hall discussing CryptoPunks v1 vs. v2 | Source: Larva Labs official Discord

In 2017, Larva Labs created the CryptoPunks v1 NFT collection containing a fixed supply of 10,000 items. However, users soon discovered an underlying bug within the project's smart contract that enabled the Punks' buyers to withdraw their Ether (ETH) post-purchase, resulting in theft. Larva Labs quickly deemed the collection inauthentic and launched CryptoPunks v2, also with a fixed supply of 10,000 images. The move came only after the initial 10,000 CryptoPunks V1 collection sold out, however, so there are a total of 20,000 CryptoPunks in existence, with the authenticity of 10,000 of them disputed. On top of that, Larva Labs cannot simply destroy the v1 project as Twitter user @0xStroudonian allegedly pointed out that both the v1 and v2 smart contracts are intertwined as they point to the same file.

The issue remained under the radar as OpenSea previously banned the sale of CryptoPunks v1, even though users wrapped them as ERC-721 tokens to fix the underlying exploit. However, the wrapped collection's recent listing on LooksRare prompted OpenSea to rescind the ban. At the time of publication, the CryptoPunks v1 collection accumulated 12,069 ETH ($34.1 million) in total volume traded on OpenSea, while the CryptoPunks v2 collection accumulated 819,900 ETH ($2.22 billion) in total volume traded on the same platform.

Blockchain enthusiasts remain sharply divided over the authenticity issues of the v1 and v2 CryptoPunk collections. For example, Discord user Rufus Xavier#9449 wrote:

"Larva Labs, you need to get your shit together. DMCA is not the way. Now you're doing it to your collection after you traded it? You're making the entire space look bad. Stop."

Meanwhile, Discord user mb#1510 expressed a different point of view:

"I just don't know if I can be ok with selling someone V2 knowing there is another token that might or might not have relevance to it."

In copyright law, the existence of counterfeits and diluted products can significantly affect consumers' confidence in the original brand and may cause them to drop in value. As the supply of CryptoPunks was suppose to be "fixed" at 10,000 items, adding another 10,000 into the collection by acknowledging their legitimacy leads to brand dilution, and could lead to a drop in the collection's value. However, there is no legal precedent as to whether the spin-off, resurfacing and re-commercialization of an NFT art collection due to a smart-contract bug constitutes an act of copyright infringement.

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CryptoPunks creators sign with top Hollywood agents, as sales top $305M in a week

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Autoglyphs

Larva Labs' blockchain-created IP is set for Hollywood after the firm signed a representation deal with United Talent Agency for CryptoPunks, Meebits and Authoglyphs.

Larva Labs, the team behind the outrageously popular NFT project CryptoPunks, has penned a deal with Hollywood agents United Talent Agency (UTA).

According to an Aug. 31 article from the Hollywood Reporter, UTA will represent Larva Labs for intellectual property (IP) deals in TV, film, video games, licensing and publishing. Two other NFT projects from Larva Labs, Meebits and Autoglyphs, will also be represented by UTA.

CryptoPunks was launched back in 2017 and is one of the first NFT projects created on Ethereum. The IP-related deal with UTA marks a significant milestone for Larva Labs, as it is one of the first examples of content created in the blockchain sector that has entered the mainstream entertainment industry.

Lesley Silverman, head of UTA Digital Assets told the Hollywood Reporter:

“I would say that it is one of the first opportunities for an IP that fully originated in the crypto-world to enter a broader entertainment space, and they earned it.”

“They really have hit the zeitgeist in a tremendous way,” he added.

The CryptoPunks project maintained a relatively niche following for most of its short history, before exploding in popularity this year amid a growing wave of interest in the NFT sector which saw $2.5 billion worth of sales in the first six months of this year.

According to data from the CryptoPunks website, the Larva Labs OG NFTs have generated a whopping $1.18 billion worth of total sales since 2017, with $304.8 million worth of sales in the past seven days alone. The cheapest CryptoPunk on sale is currently priced at 115 Ethereum (ETH) worth around $391,000 at the time of publication.

Public figures such as rapper Jay Z, electronic dance musician Steve Aoki and entrepreneur Gary Vaynerchuk all reportedly own CryptoPunks. Cointelegraph reported on Aug. 23 that payments tech giant Visa purchased CryptoPunk 7610 — a female figure with a mohawk, clown green eyes and lipstick — for 49.50 ETH worth $150,000 at the time of purchase.

The Cryptopunks have done ~$140M worth of transactions in the past 24 hours, and have now passed $1B in lifetime transaction volume. pic.twitter.com/SCBY6F22Ho
— Larva Labs (@larvalabs) August 28, 2021

There are 10,000 CryptoPunks NFTs in total, all of which were computer-generated from a set of unique features to create the individual pixel art avatars. They were initially claimed for free, with TechCrunch reporting in April this year that a collector who goes by the name “mr703” online snatched 703 Punks at initial launch — keeping hundreds of the NFTs in a collection now worth tens of millions at current prices.

With a Punk now being a VISA mascot we are living through the end of an era: a fringe art experiment is turning into a corporate marketing tool. Happy, as it will propel #cryptopunks valuation through the roof.
— mr703 (@mr703_punks) August 27, 2021

Larva Labs’ other NFT projects also follow the computer-generated route of CryptoPunks. The Meebits NFTs were launched this May, and consist of 20,000 unique 3D voxel characters that are built for use in the Metaverse and NFT gaming.

Autoglyphs launched in 2019 and is a generated art project that is limited to 512 NFTs, where users generate a “Glyph” by donating a creation fee of 0.20 ETH ($687) to the chosen charity of Larva Labs, 350.org — an organization aimed at combating climate change.

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Larva Labs

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