Fortune hosted its first-ever auction for non-fungible tokens, or NFTs, this past week.
The technology enables digital certificate-tagged media—everything from artwork to virtual basketball cards to illustrations of rocks—to be tracked, owned, and traded on a blockchain, a distributed computer network that underpins cryptocurrencies. It was a crazy, “live digital experiment,” as Fortune CEO Alan Murray put it.
The experiment consisted of two parts. First, Fortune sold a set of 256 limited edition NFTs of its latest cover art, designed by the digital artist pplpleasr. Each “tokenized” piece was priced at 1 Ether, the basic unit of the cryptocurrency Ethereum, or around $3,000 a pop. The lot sold out in a few minutes, as I noted in Fortune’s Data Sheet newsletter. The lowest price at which anyone is reselling a copy is now seven times the original listing—quite a bump.
The second part of the experiment involved a three-day auction for three special edition NFTs featuring more in-depth graphics. An hour before the planned closing time of 12 p.m. ET on Monday, I hosted a Twitter Spaces chat with Fortune editor-in-chief Brian O’Keefe, pplpleasr, our tech partner Richerd Chan of Manifold, and some folks whose avatars were featured on the cover of the issue, including the pseudonymous crypto influencers Loomdart (who represents himself as an anthropomorphic blueberry) and Mewny (a blob-like couch).
Unfortunately, the marketplace that hosted our auction, OpenSea, couldn’t handle the action. The site buckled under a crush of web traffic, and it started serving up “Error 504” pages to visitors. Many people were unable to place bids.
OpenSea let one of the NFT auctions run its course, despite these problems, and it paused the two other auctions while attempting to stabilize. “I really want to apologize on behalf of whole company for the downtime,” said Alex Atallah, OpenSea’s cofounder and chief technology officer, joining us on the Twitter Spaces virtual stage.
“We got flooded with traffic that appears to be somewhat related to the auction, but also related to a couple other changes on the site,” Atallah said. He added that the issues, which dropped bids, were “not fair to the auction rules.”
As OpenSea’s engineers worked to restart the company’s servers, we set a new deadline. The remaining auctions would conclude at 3:15 p.m. ET. Over the next couple of hours, bidding wars ensued. We watched the prices rise and fall as folks vied for control of the NFTs.
Eventually, another technical glitch caused one of the auctions to stop registering bids and to conclude prematurely. “[D]ue to DoS [denial of service] attacks that occurred during the auctions, we were unable to process some bids for Chad 1 and 3,” OpenSea later wrote in a statement on Twitter, referring to two of the Fortune NFTs by their codenames. “We take full responsibility for this breakdown in our auction mechanic.”
Even though the top bid on one NFT was 47.4 ETH—and it appeared only to be going up from there—the piece sold for 23 ETH, wiping out at least half the apparent value. (Congrats to the person with the alias “countertrade,” you got a steal!)
The final leg for the remaining NFT consisted of a heated battle between someone who identified as “lilyatty” and Jamis Johnson, a member of PleasrDAO, an investment club inspired by pplpleasr’s works. “ur not getting chad 2 assholes,” lilyatty goaded in a note. “i’ll extend the auction for days if i have to.”
For whatever reason, lilyatty did not succeed in prolonging the affair. Johnson won out, purchasing the final NFT for 105 ETH, or more than $300,000.
Despite all the hiccups, Fortune is pretty pleased with the outcome. Fortune and pplpleasr brought in 429 ETH, or more than $1.3 million, in proceeds. We plan to donate half that sum to nonprofit organizations (stay tuned for more on that) and equally split the remainder. When I asked Fortune’s chief financial officer, Anastasia Nyrkovskaya, about whether Fortune plans to cash out its share, she said we’ll plan to keep it in Ether, at least for now.
I guess that makes us HODLers, fam. 💎🤲
Robert Hackett
@rhhackett
robert.hackett@fortune.com
DECENTRALIZED NEWS
Credits 🚀
The hacker (or hackers) behind the largest DeFi heist ever have returned almost all of the $611 million stolen from the PolyNetwork... FTX.US wants to offer crypto derivatives in less than a year... Second-quarter profits at Coinbase rose by almost 4,900% from last year... An affiliate of secretive high-frequency trading firm Jump accounted for 11% of Robinhood's Q1 transaction revenue thanks to crypto PFOF... Soccer legend Lionel Messi's new contract with Paris Saint-Germain set off an unexpected jump in the club's fan token $PSG... U.S. Immigration and Customs Enforcement want to use Coinbase-developed "computer forensics software"... Super Bowl winning quarterback Tom Brady has released his first set of NFTs on DraftKings' NFT platform... Major League Baseball is getting in on the digital collectible boom too with plans to release NFTs for all 30 teams... Crypto tax and accounting software company TaxBit has reached a $1.3 billion valuation... Its smaller rival Bitwave, meanwhile, has raised $7.25 million in seed funding... NFT rocks are selling for more than $200,000... Powerbridge Technologies is venturing into Bitcoin and Ethereum mining... The water cooler of day traders, Reddit, landed a more than $10 billion valuation in its latest funding round... Robinhood made its first acquisition as a public company... WallStreetBets' favorite movie theater chain AMC plans to be able to accept crypto payments this year.
Debits 🐻
New language to tweak the infrastructure bill's cryptocurrency reporting rules was blocked in the Senate... Washington-regulators-turned-crypto-execs Brian Brooks of Binance.US and Brett Redfearn of Coinbase both left their posts this past week... BitMEX has agreed to pay $100 million to settle claims from the Commodity Futures Trading Commission that it failed to follow U.S. laws when allowing Americans onto its platform... The Securities and Exchange Commission is taking a harder look at crypto platforms offering unregistered securities... USDC is backed by a lot more than just cash... The "One Token That Rules Them All" racked up some bad press ahead of its debut.
FOMO NO MO
What happens to a meme stock after its meme moment? It's a question that Papa Cohen, a.k.a. Chewy co-founder Ryan Cohen, is now facing as the self-appointed architect behind GameStop's turnaround story, the Wall Street Journal reported Thursday. The stock has largely tapered off from its year-to-date peaks that reached well above $300 earlier this year, though it still remains up nearly 3,500% from a year ago. But Cohen, GameStop's chairman, has plenty of questions to address if the still-struggling video game retailer is ever going to justify its price:
If Mr. Cohen has made winning look easy thus far, it is far from clear what comes next. From his perch as chairman, he has to revamp GameStop’s business, if only to justify the stock’s remarkable run. The stock closed Wednesday around $159 per share, up more than eightfold this year, but far below the high of $483 it touched in January. The company has reported annual losses for three consecutive years.
Save for pledging to increase digital sales, Mr. Cohen is vague on his long-term vision for the company, which mostly sells videogames and related products at its roughly 4,700 stores world-wide. At a June shareholder meeting, he deflected specific questions, saying he was wary of providing hints to competitors.
“We know some people want us to lay out a whole detailed plan,” he said in a live video appearance at the meeting, “but that’s not going to happen.”
BUBBLE-O-METER
$93 million
SEC Chair Gary Gensler's crypto comments may have ignited renewed hope for a Bitcoin exchange-traded fund this year. But do investors want one? For the fifth straight week, digital asset investment products offered by Grayscale, Bitwise, 21Shares, and others have seen outflows that are now approaching $100 million, Bloomberg reported Wednesday.
THE LEDGER'S LATEST
USD Coin is the latest stablecoin to have its stability cast in doubt by Rey Mashayekhi
Bitcoin generated nearly $3 billion for miners in April by Marco Quiroz-Gutierrez
Defusing the crypto broker bomb in the infrastructure bill by Don Tapscott
What would two of the world's most famous economists think about Bitcoin? by Shawn Tully
The infrastructure bill is a coming-of-age moment for crypto by Dante Alighieri Disparte
SEC 'crypto mom' Hester Peirce criticizes agency's $10 million Poloniex fine by Rey Mashayekhi
SEC files charges in first DeFi technology case by Declan Harty
NFT artist pplpleasr: How crypto changed my life by pplpleasr
Tesla's Bitcoin bet is back in the black—big time by Shawn Tully
AMC has a new legion of investors—and the CEO has a new lead on life by Alan Murray and Katherine Dunn
Stocks, crypto and commodities are quiet—but another potential inflation jolt looms for investors by Bernhard Warner
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
MEMES AND MUMBLES
In "Headlines I didn't expect to see this year" for $1,000, Alex (er, sorry, Mike/Mayim...), FTX and Kevin O'Leary have struck a deal. That's right, "Mr. Wonderful" himself—the curmudgeonly Shark Tank investor whose frequency on CNBC is starting to feel like it's rivaling that of Jim Cramer—is taking an equity stake in Sam Bankman-Fried's FTX Trading and West Realm Shires Services (which together own FTX.US and FTX.com). O'Leary is also becoming an ambassador and spokesperson for the crypto exchange in a multi-year deal in which he will be paid in crypto assets to be managed on FTX.
Weird times, indeed.
This issue of Fortune's The Ledger was assembled by Declan Harty, who you can follow here.
