Could NFT auctions be moving away from Ethereum? One new group is betting they will – TechCrunch

Could NFT auctions be moving away from Ethereum? One new group is betting they will – TechCrunch

Could NFT auctions be moving away from Ethereum? One new group is betting they will

NFTs were arguably already taking off when Beeple sold his NFT artwork for $69m. But another crypto project attracted attention when it bought an original Banksy artwork for $95,000.

The group literally burnt the artwork and sold its NFT on the OpenSea platform for $400,000. Although the stunt was covered by CBS News, BBC News, The Guardian, and others, it did actually make a significant point.

By removing the physical piece, the group – calling itself “Burnt Banksy” – proved that the value of the piece wasn’t affected by being destroyed, given that the NFT went up so much in value.

Now that project is turning that stunt into an actual blockchain platform for art auctions.

Burnt Finance says it has raised $3 Million for a decentralized auction protocol built on the Solana blockchain.

The project is being incubated by Injective Protocol (which recently raised $10 from investors and Mark Cuban, as well as Multicoin, DeFiance, Alameda, Mechanism, Vessel Capital, Hashkey, Spartan, Do Kwon (CEO of Terra), Sandeep (COO of Polygon), and others.

The reason why it’s worth mentioning all this is that in trying to auction the painting, the Burnt Banksy group stumbled on an increasing problem in the world of NFTs: the rising congestion on the Ethereum network is leading to larger and larger gas fees. This is making both the creation and bidding on NFTs increasingly expensive, just from a baseline.

As a result, team decided to build the Burnt Finance NFT auction platform away from Etherum and hit upon the Solana blockchain, which has comparatively good speed, performance, and lower transaction costs. It will use ‘Solana Wormhole’ which connects ETH and ERC20 tokens to SPL Tokens.

A spokesperson for Burnt Finance, ‘Burnt Banksy’ told me: “Most auctions are Ethereum based, and currently the Ethereum gas fees are extremely high. It can cost you up to $70 to make an artwork, which doesn’t work if you’re selling an NFT for $50. We chose Solana mainly because of the ecosystem. It’s fast-growing, in addition to the technical aspect of it.”

There’s another reason why we may see other Crypto projects move away from Ethereum as ETH rises in price and as gas fees increase: the potential for bad faith actors in NFT auctions.

If a bad actor tries to leverage the congestion on Ethereum and manipulate the transaction fee, they might sway the results of an auction. This would be quite something, if the auction was for, say, $69 million…

Why Is Ethereum Classic Going Up? Ethereum Classic Price Prediction

Over the past few days, the cryptocurrency market has seen significant growth. Ethereum, Dogecoin, Ethereum Classic, and many other cryptocurrencies reach their all-time high prices. Only a year ago, crypto was a niche hobby and not a lot of people were aware of crypto trading. However, cryptocurrencies have become highly popular in 2021, and even the general public has started looking at crypto as a serious investing and trading tool. In this article, we’ll take a look at Ethereum Classic, which has seen a massive jump over the past couple of days, to reach its all-time high price. Read on to know why Ethereum Classic is going up and Ethereum Classic price prediction

What is Ethereum Classic? Why is Ethereum Classic Going Up?

The original Ethereum cryptocurrency was started by Vitalik Buterin and Gavin Wood in 2015. In 2016, there was a hack in the Ethereum network, which resulted in 3.6 million Ether coins being stolen. This incident divided the Ethereum community on how to deal with the hacking issue. In response, Ethereum Classic was created as a hard fork in the Ethereum blockchain in July 2016. In short, Ethereum Classic is the continuation of the original Etherum blockchain with none of the new features that exist in the new Ethereum network, which got a lot of security and upgrades as a result of the hack.

The group that created the Ethereum Classic fork from the Etherum blockchain wanted to retain the original network and wanted to follow the ‘code is law’ principle. As time went on, the two different Ethereum blockchain, the new one and the classic diverged from each other a lot, as the new Ethereum saw a lot of development.

Crypto experts believe the main reason that Ethereum Classic is going up is that it’s simply catching up to the markets. As per an article by Coindesk, Bitcoin, Ethereum and many other cryptocurrencies saw a major rise in their prices over the past year, whereas Ethereum Classic didn’t rise by much. Experts believe the recent rise of prices of ETC is just a natural ‘correction’ of the price, as it adjusts to this bull market.

Ethereum Classic Price Prediction

Crypto experts jointly agree that Ethereum Classic is an outdated cryptocurrency, but the main attraction lies in the fact that this coin is true to the original code of the Ethereum network. Many hardcore Ethereum fans are fond of this currency. However, predicting the price of cryptocurrencies can be quite difficult, as crypto markets are highly volatile. As per DigitalCoinDesk, the price of Ethereum could rise to $123 by the end of the year and up to $139 by 2022. However, people should do their own research before investing in any cryptocurrencies, and only invest money that they can afford to lose. Stay tuned for more updates on the crypto markets.

IMAGE: SHUTTERSTOCK

Why Ethereum Keeps Soaring High

Bloomberg

(Bloomberg) – Jeff Bezos has an ex-wife, a girlfriend, four children and billions of reasons to watch whether Joe Biden’s tax overhaul wins congressional approval.The Amazon.com Inc. founder’s heirs may have to pay more than $36 billion if the president succeeds in closing a loophole that helps the rich transfer much of their fortunes tax-free at death.Under current rules, whoever inherits the Amazon shares Bezos bought in 1994 for $10,000, worth $180 billion today, will receive a so-called step-up in basis, wiping out any capital gains tax liability. Biden’s plan would close that loophole and apply the top capital gains tax immediately when assets transfer to wealthy heirs. If the rate increases – it’s 20% for holdings like Bezos’s, and Biden has called for boosting it to 39.6% – the eventual tax bill would too.For Bill and Melinda Gates, who announced on Monday that they would be divorcing, a change in the step-up rule might be less costly. The Gates fortune, valued at $145.8 billion, is older, and they’ve already sold or donated much of their stake in Microsoft Corp. But $26 billion of Microsoft shares remain, and it isn’t clear how the couple will manage their assets in a split.Congress estimates that stepping up the tax basis of inherited assets costs the government about $43 billion a year. Ending that practice and raising the rate would amount to the biggest curb on dynastic wealth in decades, altering an American economic landscape dominated by a few wealthy families. An Amazon spokesman didn’t respond to emailed questions about Bezos’s shares.Read More: How the ‘Step Up’ in Inheritance Taxes Would Work: QuickTakeThe proposals are far from becoming law, even though Democrats control both houses of Congress, as they threaten wealthy donors to both political parties who have lobbied against them. But proponents say getting rid of the step-up rule, known to estate planners as the Angel of Death loophole, is crucial to achieving Biden’s vision of tax fairness. Otherwise, economists project that the proposed increase in the top capital gains tax rate would further encourage holding assets until death, decreasing revenue for the Treasury.The step-up rule allows investors to pass on assets to heirs virtually tax-free, raising the taxable value of a property to its fair market value at the time it is inherited. A beneficiary who inherits a house worth $1 million purchased for $100,000 two decades earlier would have no capital gains. If she later sells for $1.5 million, she only pays tax on $500,000. The rule also applies to Amazon shares, which have risen more than 200,000% since a 1997 public offering, as well as other appreciated assets.The Joint Committee on Taxation, a nonpartisan arm of Congress, estimates that untaxed capital gains on inherited assets run into the hundreds of billions of dollars a year. About half of unrealized gains belong to the wealthiest 1%, according to an analysis of data in the Federal Reserve Board’s Survey of Consumer Finances. And unrealized and accrued capital gains account for about 40% of the wealth of the top 1%, the Fed data show.The step-up rule has been criticized as a government-subsidized engine for amassing dynastic fortunes and a cause for widening economic inequality. Even some prominent estate planners say the provision – enacted a century ago to avoid double taxation at a time when the estate tax had few exemptions – has outlived that original purpose.Billionaires’ lawyers have developed sophisticated strategies to avoid the estate tax, making the step-up allowance an unalloyed boon. “It’s an enormous loophole,” said Jonathan Blattmachr, a trusts and estates lawyer and senior adviser at Pioneer Wealth Partners, a financial advisory firm for high-net-worth clients and family offices.Republicans and some business organizations have criticized the Biden proposal. A study by Ernst & Young commissioned by the Family Business Estate Tax Coalition predicted that eliminating the step-up rule could cost tens of thousands of jobs a year and cut $10 billion from annual gross domestic product.Opponents of the plan say the burden would largely be avoided by the ultra-wealthy, who can afford sophisticated estate planning, and fall instead on small businesses and family farms, which might have to be sold to pay tax bills.“Repealing step-up could have a dramatic impact on small manufacturers across the country, potentially requiring families to liquidate businesses, leverage assets, or lay off employees to cover the tax hit,” said Chris Netram, vice president of tax and domestic economic policy at the National Association of Manufacturers, which supported President Donald Trump’s 2017 tax cuts.Biden’s plan addressed some of those concerns by sparing the first $1 million in inherited appreciated assets from capital gains taxes and by exempting family farms and small businesses in cases where heirs continue to operate them.The plan has been cheered by progressives, who have long called for an end to the preferential treatment given to capital gains. Frank Clemente, executive director of Americans for Tax Fairness, an advocacy group allied with labor unions, said the gap between taxes on labor and capital is fundamentally unfair and the administration’s plan simply seeks to “tax wealth like work.”“Our two-tier tax code, with one code for working-class Americans, and another full of special breaks for the people at the very top, has destroyed public confidence in our tax structure that must be fixed,” said New Jersey Democrat Bill Pascrell, chairman of the House Ways and Means Subcommittee on Oversight. “This loophole is one of the chief causes of a broken system.”A version of Biden’s plan was floated by President Barack Obama in 2015, but it died in a Republican-controlled Congress.Any substantial change to the step-up rule could upend financial planning for America’s richest families, including the techniques they use to avoid incurring capital gains for decades.“To the extent to which there is ability to work around the policy, that’s in large part a policy choice,” said Chye-Ching Huang, executive director of the Tax Law Center at New York University School of Law. “There are ways to draft and implement it so it doesn’t allow for large, inefficient tax shelters.”Currently, wealthy people who need cash can take out loans using stock as collateral, rather than selling shares, which would trigger a tax bill. The technique allows billionaires to fund their lifestyles, then pass their assets to their heirs without ever realizing capital gains.Larry Ellison, the founder of Oracle Corp. who purchased Hawaii’s sixth-largest island in 2012, had $17.5 billion of stock pledged to such loans as of September, figures in a company disclosure show. The strategy has also been used by Elon Musk, the world’s second-richest person, and Sumner Redstone, the former chairman of Viacom Inc. who died in August. If the step-up rule changes, capital gains taxes on the assets of these billionaires would be triggered by death.When Apple Inc. cofounder Steve Jobs died in 2011, his $10 billion fortune was relatively paltry compared with today’s tech billionaires. But a step-up in basis proved valuable nonetheless.Jobs’ biggest holding was in Walt Disney Co., which gave him shares in connection with its 2006 purchase of Pixar, the animation studio Jobs had bought from filmmaker George Lucas two decades earlier. By the time Jobs died, his Disney shares were worth $4.5 billion, and his shares of Apple, stemming from a 2003 stock grant, were worth about $2.1 billion.Between the two holdings, there were at least $5 billion of untaxed capital gains at the time of his death, meaning the step-up in basis could have saved his family more than $750 million in taxes, a review of corporate filings shows. Jobs’ fortune passed to his wife Laurene Powell Jobs, whose wealth has since swelled to $22 billion, making her the world’s 80th richest person, according to the Bloomberg Billionaires Index.A spokesperson for Laurene Powell Jobs, who would have inherited any Apple shares at a stepped-up price, didn’t respond to a request for comment.The nation’s wealthiest families have spent millions of dollars lobbying Congress in recent years to blunt attempts to increase taxes on inherited wealth, and those efforts have often paid off.Members of the Mars family, who built an empire on candy and pet care, helped lead the fight against the estate tax during George W. Bush’s presidency and have lobbied against efforts to increase taxes on inherited wealth since, according to congressional records.When Forrest Mars Jr. died in 2016, he left his heirs a fortune worth more than $25 billion. Today, six family members are among the world’s 500 richest people, according to the Bloomberg index, sharing a combined fortune of more than $130 billion. A spokesperson for the Mars family declined to comment.Administration officials say retaining the step-up rule would undermine the effort to raise more revenue from the wealthy through higher taxes on investment income.An estimate released by the Penn Wharton Budget Model, a nonpartisan fiscal policy research group at the University of Pennsylvania’s Wharton School, last week found that raising the top capital gains rate to 39.6% would raise $113 billion in new revenue over the next decade – but only if the step-up in basis is severely restricted. If the policy remains unchanged, raising the capital gains rate would motivate more wealthy people to avoid selling assets before their deaths, costing the Treasury $33 billion in lost revenue over 10 years, the study found.Another study published in January by the National Bureau of Economic Research says an increase in the top capital gains rate could generate more revenue than Congress estimates because asset owners have less flexibility on when to realize gains. Eliminating step-up in basis would further decrease flexibility, the study said.“You’re telling me that if I effectively doubled the rate and make death a realization event that you’re not going to get much money from it?” said Owen Zidar, a professor of economics and public policy at Princeton University and one of the study’s authors. “I find that hard to believe.”But even if Biden’s plan is adopted, tax lawyers and accountants will likely find ways to increase flexibility by using charitable donations and novel estate planning strategies.“The story of taxing rich people throughout history is that they will always find ways to sidestep taxes,” said John Ricco, author of the Wharton study. “This will certainly narrow the avoidance opportunities –- perhaps not as much as the proponents of the Biden proposal hope, but it will have some bite to it.”(Adds comment from Representative Bill Pascrell in 16th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.