There is a term that I have only recently become aware of; paper hands, referring to a certain type of panic selling and for the life of me I can't work out why anyone would be a paper hand trader.
NFT Paper
Whilst the term may not be new in financial investment circles, however the current wave of paper hands are being exposed by the bright lights of NFT blockchain technology.
Of course the ability to check transactions on the blockchain is ubiquitous and could be said to be the whole raison d'atre of the blockchain.
The difference is the average person on the street is not going to look at a load of block transactions for any given coin.
The plethora of NFT platforms currently available, all provide a very easy way of tracking the performance of any NFT you might be looking to purchase. At a glance you can see when the NFT was created, how many times it has been sold and exactly what it has been sold for, and crucially, how many times it has been listed and what the list price was.
The crucial component in this is the listing price, because it shows the exact time you put your NFT up for sale.
So a typical example is in the image above, whereby somebody has bought their NFT and then within the hour listed it for less than they bought it for. Acting as if their NFT were an iron weight, of which they held in their paper hands.
What's In A Paper Hand?
As mentioned above, the paper hands phenomenon is nothing new. I'm sure some of you reading this article have bought a coin in a pump and then an hour later you think to yourself; 'what the hell am I doing?' You then promptly dump the coin for less than you purchased it for.
However there is a difference, in this case you're only buying one asset. At least with a coin if you think you've made a mistake, you might just keep a few back for FOMO purposes, just in case it pumps again.
With an NFT that's it, you're just buying the one, so there is zero chance of recouping your very immediate losses should it increase in value.
It's just as mad as going into a shop to buy a pair of shoes, only to come out and sell them to someone for ten percent less than you've just paid.
So what could cause someone to behave in this way?
The logical path to this answer would seem to be one that suggests a person who either has severe ADHD or is so new to the space that they are easily panicked.
Perhaps someone like this did not realise that when they purchase an NFT, unlike when they buy a standard coin, the wallet's main balance decreases by the amount you have just spent on the NFT.
So for example if your wallet says $160 and you purchase a bunch of WAGMI coins worth $20. Your main balance will still say $160, whilst your other balances of say Sol, USDC and whatever else you have in your wallet, will change.
However if you purchase a Flying Monkes NFT for 0.149 Sol, roughly $28, then your main balance will read $132.
In the same way a twenty percent daily fluctuation in Bitcoin can freak out a newcomer to crypto, so too could something like this.
I can imagine somebody thinking; 'What? Hang on a sec, why has my balance gone down? Shit! Are these things just worthless? Am I being scammed? Right, just sell it, just get rid of it?'
There are many scenarios in which someone could just panic and that could be one of them. Perhaps another is the paper hands are easily distracted by the latest shiny thing, so they take a loss just so they can jump on the new one.
Whatever the reason, the phenomenon exists and there doesn't seem to be too much anyone can do about it.
Whilst there will almost always be people who'll come in and gratefully sweep the floor and buy up what they see as bargains. Ultimately these type of actions can end up causing great harm to a project. Because if one or two are doing it then no problem; who cares? But if it's on a large scale it could scare other would-be investors away.
Which brings us rather neatly to another possible theory, these paper hand actions are intentionally malicious, done by the owners of rival projects to destabilise ones that they see as threats.
Death By A Thousand Paper Cuts
It might seem a tad far-fetched and conspiratorial for you to even contemplate that somebody would deliberately buy something in order to ultimately destroy a project. However there is evidence of other projects trying to squash their rivals, and when we look at that evidence, it might not seem so strange after all.
The Monkey Kingdom project actively tried to block the Baby Wukongs from being listed in the Solana marketplace; Magic Eden. As you can see from the tweet below the Monkey King himself admits to pressuring Magic Eden into blocking the Wukongs.
The reason they did this is because they believe that the Wukongs are a derivative of Monkey Kingdom, which in itself is funny because they themselves are a derivative of an Ethereum project.
So what does the above tell us about the likelihood of paper hand attacks?
Not much other than showing project heads are prepared to use underhand tactics to squash their rivals.
Sound familiar?
In-Chain Fighting
If you scroll further down the thread of that tweet, you come across a reply by an account called solninjas.sol stating that the community (presumably referring to the Solana NFT community at large), tried to have Monkey Kingdom shut down for manipulating the floor.
The rumours at the time were that the Monkey King was buying up the cheap NFTs and then relisting them for thousands of times face value. On top of this there were accusations of buying up NFTs for tens of thousands of dollars in order to create a story.
The upshot of these two tactics is the Monkey Kingdom NFTs now range from 50 Sol ($9,032 at the time of writing) to 1250 Sol ($225,799).
At the end of the day the Monkey King was not able to stop the Baby Wukongs from being listed on Magic Eden and after being publicly shamed, I doubt it's a tactic that either them or anyone else will use again in a hurry.
So what now?
Well the beef hasn't died down just because the Wukongs are now listed. I can't imagine the Monkey King is all like;
"Oh well, I tried to crush them. I hate them so much, but hey, live and let live."
I mean maybe he's had a moment of inward reflection, leading him to a place of inner peace, tranquility, harmony and at one with his fellow monkey kind.
But if I was betting man, and I am, I'd be prepared to wager a fair sum of money that the Monkey King's animosity towards the Baby Wukong Clan has grown even more.
The Wukongs are now listed on ME and even though they are going for a mere 1.95-777 Sol (c $352-$140,000) the project which the King sees as a derivative, is still very much a rival; and who knows? Maybe they'll gain in popularity when people hear how they have resisted the attacks of the evil Monkey King; and of course they're cheaper!
The Case For Paper Cutting
Let's stick with the Wukongs for a moment and take a look at the history of this cute little fella.
Let's call this Wukong Blue Eyes. As we can see from the earlier image Blue Eyes was sold 10 days ago for over 0.7 Sol. The buyer then listed it for 5.3 Sol, after a few adjusted listings the buyer turned seller and managed to get 2 Sol for it a nice tidy profit, more than doubling his stake.
That's when the paper hands trader comes in. After buying it for 2 Sol, they then list it for 4.65 Sol; okay so far.
The next day they decide to try and get 2.45 Sol for it, still a 22.5% profit, not bad.
Five minutes later they decide to sell it for less than they bought it for at 1.98 Sol.
This is far from conclusive and the decision to sell it for less than you bought it just three days earlier could be put down to good old fashioned panic. Even if the panic seems strange, seeing as the Wukongs seem to be selling well at an average above 2 Sol.
It's early days for the Wukongs and much more monitoring will have to be done to try and ascertain if there are nefarious forces at play or not.
Whether the Monkey King will attack the Kingdom of Wukong again, only time will tell. However what is not in dispute, is he did try and squash their project before it got off the ground.
Perhaps the Monkey King has got a point, the Wukongs are a very similar derivative of the Monkey Kingdom NFTs which have done extremely well and are apparently popular with the Chinese.
However as has been pointed out many times, Magic Eden and the Solana blockchain as a whole is full of derivative projects and as long as they continue to do well, they will carry on growing.
Corporate Oligarchy The Path Of Least Resistance?
Many of us are into crypto because we're sick and tired of powerful corporate conglomerates dominating markets with their wealth and influence.
In the corporate world as a company grows from small-to-medium (SME) at some point in its growth begins to eliminate competition either by acquisition or outright heavy-handed shennanigans.
Look at Coca-Cola or PepsiCo, anytime a new drinks brand disrupts the marketplace one of those two companies acquire it; think Smart Water and Innocent.
If you are a certain age you will remember Laker Airways, a low cost transatlantic airline run by Sir Freddie Laker. British Airways wanted to be the only transatlantic player in town, so after they realised they couldn't buy him out, they put him out of business by selling their tickets at a loss, knowing that Laker would not be able to compete.
Some thirty or so years later BA were found guilty of price fixing, but of course the damage had already been done.
So are we naive to think that crypto is above all of that corporate skulduggery?
Perhaps so. At one point for a project developer crypto was the land of milk and honey. Just close your eyes throw a project up in the air, and there would be plenty of hands eager to catch it whilst parting with their hard-earned cash.
Nowadays there are a plethora of projects sitting atop a multitude of blockchains. Within the chains themselves there is intense competition for 'eyeballs'. It is not so easy today to come out with a hit that will make you millions.
By that reckoning it is not much of a jump to believe that there are project devs out there willing to do more than try and create a bit of FUD surrounding a rival project.
Perhaps it is inevitable that within the Block Chain Wars there will be plenty of in-chain fighting and just like in the corporate world, it is the customer, the likes of me and you who suffer the most. Either through a lack of choice or a loss of funds.
Despite this the wars will continue for years to come and who knows what lays in wait for us once the dust settles.
EDIT: The Wukongs are now (at the time of writing 21/12/2021) a minimum of 3.4 Sol
HAVE YOU COME ACROSS ANY IN OR EVEN CROSS CHAIN FIGHTING? HOW DO YOU SEE THE BLOCKCHAIN WARS TURNING OUT? OR MAYBE YOU DON'T EVEN BELIEVE THEY EXIST?
AS EVER, LET ME KNOW BELOW!
**NFTs & Me The Story So Far
3. NFTs & Me - A Valuable Lesson About Rug Pulling
Cryptogee
I think the paper hands in the NFT space are the little investors and collectors. The diamond hands in the NFT space are the big time investors and collectors willing to splash hundreds of thousands of dollars on a single NFT.
Very true, but like I say above, some of the paper hands are behaving very suspiciously. I saw one the other day where someone bought an NFT for 4 Sol, then listed it 32 minutes later for 1 Sol. It's hard to believe anyone is that crazy. Especially as the token was neither pumping or dumping.
Cg
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