Why did Jack Dorsey’s 1st tweet NFT lose 99% of value?

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Twitter co-founder Jack Dorsey created an NFT of his first tweet, which sold for around R$13.6 million a year ago.

In December 2020, Jack Dorsey created an NFT (non-fungible token) of your first post on twitter. He turned a static image of a five-word tweet into a digital file stored on a blockchain and, presto, an NFT was born.

A few months later, the image sold for a staggering $2.9 million (approximately R$ 13.6 million, at the current exchange rate). But at an auction last week, no one bid more than $280 for it. And even current bids on the OpenSea platform come in at just $10,000, a 99% drop in value.

What happened?

Dorsey’s NFT initially attracted little interest. In December 2020, few people offered a few thousand dollars – a time when NFTs were not yet so popular. But in March 2021, the market went into hype mode, with monthly sales on OpenSea jumping to nearly $150 million, well up from $8 million two months earlier.

Iranian cryptocurrency entrepreneur Sina Estavi was carried away by the frenzy, and bought the NFT from Dorsey for $2.9 million. He told Forbes that he paid such a hefty sum due to the uniqueness of the NFT and its connection to a company as valuable as Twitter.

While you could argue that the NFT of Dorsey’s first tweet has historical significance, the $2.9 million price tag is nearly impossible to justify. The inflated amount that Estavi paid is a good example of the “Theory of the Most Foolish”.

“What is the use of this NFT? Jack Dorsey takes you to dinner in Silicon Valley?” jokes Mitch Lacsamana, NFT collector and head of marketing for a token trading group. “What is the real value proposition here? I think time has probably answered that question: none.”

On April 5, Estavi put the NFT up for auction for 14,969 ether, or about $50 million. It was embarrassing. No one bids higher than $280 (R$1,300). The businessman says that “nobody knows” why the values ​​were so low.

China Estavi

China Estavi

Sina Estavi in ​​her office in Malaysia

It seems that few people took the sale seriously. “The bidders eventually realized what had happened: a publicity stunt. A way to advertise,” says Blake Moser, an NFT collector who has nearly 400 tokens. “I think Sina Estavi got what he was looking for – publicity for his NFT.”

Estavi has really caught the eye of collectors, but he seems to be seriously out of the loop. NFT marketwhich is always in constant transformation. “The market is not ready to embark on any project that a celebrity or someone of high stature might launch,” says Lacsamana. “I think last year was a really good time for that, but a lot of people got tired of these slot tactics.”

Although the failed auction shows that the NFT hype has subsided, market is still very activewith turnover ranging from US$ 2 to US$ 3 billion (R$ 9.4 and R$ 14 billion) per month at OpenSea, up from US$ 150 million a year ago. Prices for some NFT collections, such as the Bored Ape Yacht Club, remain at all-time highs.

SEE ALSO: Interest in NFTs and Metaverse Is Falling Fast

Estavi’s NFT saga appears to be a combination of a reckless $2.9 million purchase with buyer’s remorse and a new attempt at attention. The Iranian’s own life story is quite strange. his startup, the Oracle bridgeaims to allow blockchain platforms to process data more easily, but today the company seems to be nothing more than an idea on paper.

Estavi also claims he was arrested last year in Iran and had to close the company for nine months while in jail. “They accused me of disrupting the economic system,” he says, without elaborating. He claims he is trying to restart the business.

On Wednesday (13), bids for Dorsey’s tweet NFT increased to around $10,000. Estavi says he won’t sell for anything less than $50 million.