Yuga Labs Inc., the creator of the leading nonfungible token collection Bored Ape Yacht Club, raised $16.5 million in an auction for its first-ever bitcoin-based collection named “TwelveFold” that concluded on Monday afternoon.
A total of 288 bidders won one of the Bitcoin NFTs from the collection and the company said the winners will receive their assets within one week, while unsuccessful bids will have their bid amounts returned within 24 hours.
Nonfungible tokens, or NFTs, are a type of crypto asset based on blockchain technology that represents the ownership of digital items such as artwork, music, video game items, concert tickets and other intangible or even tangible items. NFTs themselves are transacted on blockchains and held in crypto wallets, which means they can be bought, sold and traded for cryptocurrency, giving them an exchange value.
Yuga announced the TwelveFold collection in late February and described it as artwork inspired by bitcoin, using a 12×12 grid in a “visual allegory for the cryptography of data on the bitcoin blockchain.” Each of the 300 pieces of generative artwork in the collection is designed based on that motif.
What sets TwelveFold apart from Yuga Labs’ other NFT collections is that it’s the first to be released on the bitcoin blockchain. All the company’s other NFT collections are released on the Ethereum blockchain, including Bored Apes Yacht Club, Mutant Ape Yacht Club, Otherside virtual land plots, Cryptopunks and Meebits. Although it’s possible to put NFTs on the bitcoin blockchain, it’s not ordinary to launch them there.
In order to put them on the bitcoin blockchain, Yuga used a special protocol called Ordinals, a recently released method for putting NFTs on bitcoin. It allows the attachment of images to the bitcoin blockchain via “satoshis,” which are the smallest possible denomination of bitcoin, named after the pseudonymous creator of bitcoin, Satoshi Nakamoto.
Using Ordinals images that are “inscribed” onto the blockchain has led to a booming number of NFTs added onto bitcoin since the project’s launch in January.
Auction draws controversy over bidding process
The auction’s methodology drew criticism from the crypto community because those participating in the process were required to send their entire bid in bitcoin to a unique address controlled by Yuga. According to the company, winners would receive their NFT and everyone else would get their winnings refunded.
That did not sit well with the community because it meant that everyone would be out their funds and the concept of giving over their funds to the company to hold onto even if they were unsuccessful and wait for a refund felt problematic.
The account of Ordinals-focused Twitter account “ordinally” also weighed in on the controversy, calling the whole thing a “scammer’s dream” because they were “taking custody of bidders’ bitcoin.” He added that although he had no reason to believe that Yuga was doing this illegitimately, it would set a bad precedent for future auctions.
Yuga is establishing REALLY bad precedence running an auction like this. They are taking custody of bidders’ bitcoin with a promise to send back unsuccessful bids. Not doubting they’ll do that, but this model is a scammer’s dream, and credible players need to set better example.
— ordinally (@veryordinally) March 6, 2023
Casey Rodarmor, the creator of the bitcoin Ordinals project, also spoke up on Twitter, saying that he found the actions deplorable and that if he ever caught Yuga Labs engaging in this behavior again, “I will wash my hands of you forever and encourage others, including those close to me to do the same.”
Bitcoin NFTs are an emerging market that barely existed just months ago. According to a report from crypto lender Galaxy Digital Holdings Ltd., since December more than 200,000 inscriptions have been minted on bitcoin and the market could reach an estimated $4.5 billion by 2025. The market cap of bitcoin is currently $433 billion.
