Highlights:

  • The ownership of digital goods like music, artwork, video game items, concert tickets, and other intangible or even tangible items is represented by nonfungible tokens, or NFTs, a crypto asset based on blockchain technology.
  • The Ethereum blockchain now hosts all of the company’s other NFT collections, including Meebits, Cryptopunks, Bored Apes Yacht Club, Mutant Ape Yacht Club, Otherside virtual land plots, and Bored Apes Yacht Club.

In an auction for its first-ever bitcoin-based collection called “TwelveFold” that ended recently, Yuga Labs Inc., the company behind the top nonfungible token collection Bored Ape Yacht Club, raised USD 16.5 million.

Two hundred eighty-eight bidders were the winners of one of the Bitcoin NFTs from the collection. According to the company, the winners will receive their assets within a week, while unsuccessful bidders will be returned their bid amounts within 24 hours.

The ownership of digital goods like music, artwork, video game items, concert tickets, and other intangible or even tangible items is represented by nonfungible tokens, or NFTs, a crypto asset based on blockchain technology. Since NFTs are held in cryptocurrency wallets and transacted on blockchains, they can be bought, sold, and traded for other cryptocurrencies, giving them a market value.

Late in February, Yuga released information about the TwelveFold collection, describing it as bitcoin-inspired art that uses a 12×12 grid as a “visual allegory for the cryptography of data on the bitcoin blockchain.” The 300 pieces of generative art in the collection are all created using that theme as inspiration.

Being the first NFT collection on the bitcoin blockchain distinguishes TwelveFold from Yuga Labs’ other NFT collections. The Ethereum blockchain now hosts all of the company’s other NFT collections, including Meebits, Cryptopunks, Bored Apes Yacht Club, Mutant Ape Yacht Club, Otherside virtual land plots, and Bored Apes Yacht Club. Although possible, it is uncommon to launch NFTs on the bitcoin blockchain.

Yuga used a unique protocol called Ordinals, a just-released technique for putting NFTs on bitcoin, to put them on the blockchain. Using “satoshis,” the smallest unit of currency for bitcoin named after its eponymous inventor Satoshi Nakamoto, enables the attachment of images to the bitcoin blockchain.

Since the project’s launch in January, the use of Ordinals images that are “inscribed” onto the blockchain has allowed for adding a sizable number of NFTs to bitcoin.

Confusion over the Bidding Process at an Auction

The bitcoin community criticized the way the auction was conducted because those taking part had to send their entire bid in bitcoin to a specific address under Yuga’s control. Winners would receive their NFT, and losers would have their winnings refunded, the company claimed.

The idea of handing over their money to the business to hold onto even if they were unsuccessful and had to wait for a refund did not sit well with the community because it meant everyone would lose their money.

Since they were “taking custody of bidders’ bitcoin,” the Ordinals-focused Twitter account “ordinally” also commented on the controversy, branding it all a “scammer’s dream.” Even though he had no grounds for suspicion that Yuga was acting unlawfully, he continued that the situation would be an unfavorable precedent for future auctions.

On Twitter, Casey Rodarmor, the developer of the bitcoin Ordinals project, also expressed his outrage at the actions and vowed to wash his hands of Yuga Labs in the future if they did it again. He also urged others, including those close to him, to do the same.

An emerging market, Bitcoin NFTs hardly existed a few months ago. More than 200,000 bitcoin have been issued since December, and the market is predicted to reach USD 4.5 billion by 2025, according to a report from cryptocurrency lender Galaxy Digital Holdings Ltd. Currently, bitcoin has a USD 433 billion market capitalization.