I wonder if Sina Estavi, the guy who paid $2.9 million for an NFT of a tweet, feels the same exasperated energy as Andrew Lloyd Webber did when nobody first understood Cats.
Despite the doubters, both men clung tightly to their avant-garde investment, confidently muttering, “You'll see,” as they threw caution — and capital — into the wind.
Down the road, Cats ended up making Andrew Lloyd Webber a billionaire.
Estavi's highest offer so far is $23,660.
So what happened? Why did the world's most famous NFT lose 99% of its value in just one year? And what does this spectacularly failed NFT investment mean for the future of NFTs?
Also, did Estavi's shady past have anything to do with investors' lack of interest?
Let's perform an autopsy on the failed NFT investment of the Jack Dorsey tweet.
The Short Version
- In April, an NFT of Jack Dorsey's first-ever tweet was listed for sale for $48 million. The original buyer, who paid $2.9m in 2021, received a high bid of just $277.
- A lack of buyer interest could be due to the current owner's shady past and criminal history in the cryptocurrency space.
- However, it could also just be a sign of the times, as NFT sales are down 92% across the board.
TL;DR — What Happened?
Back in March 2021, a Malaysia-based crypto entrepreneur named Sina Estavi paid $2.9 million for an NFT of the first-ever tweet, made by Twitter founder Jack Dorsey.
Then, almost exactly a year later on April 9, 2022, Estavi listed his NFT for sale on the biggest NFT marketplace, OpenSea.
Estavi set a price of $48 million. After a full week his highest offer was $277.
The resulting media firestorm drew in more bidders — but at the time of this writing his highest offer was still just $23,660.03.
What the Heck Is a “Tweet NFT”?
If you're looking for a primer on what NFTs are in general, check out my section, “What Are NFTs,” in my full guide to NFT investing.
As for a tweet NFT, well, that's literally just an NFT of a tweet.
So, in literal terms, the buyer of this NFT would be getting a few lines of code on the Ethereum blockchain that say:
- Here's a tweet.
- This is who made it.
- Here's who currently owns it.
That's it. Their name stamped on line three.
As a result, that person would get infinite bragging rights to say, “I own the first-ever tweet.”
And as we'll see, it would be a very interesting type of person who would put down limited-edition-Lamborghini money for those lines of code.
Who Was the Original Buyer Who Paid $2.9 Million?
Sina Estavi is an Iranian-born, Malaysia-based crypto entrepreneur.
Needless to say, he's a big believer in crypto, blockchain and NFTs. Oh, and he just got out of jail. This is his LinkedIn profile pic:
Remember when I said big-ticket NFT buyers were interesting people?
Nobody's quite sure where Estavi sourced the $3 million to buy Jack Dorsey's NFT. An educated guess might be that it came from the coffers of his first two ventures, Cryptoland and Bridge Oracle.
Founded in 2015, Tehran-based Cryptoland rapidly grew to become one of Iran's most popular crypto exchanges. Springboarding off that, Estavi launched blockchain-focused Bridge Oracle (the startup he's best known for) in 2019. And in early 2021, Estavi took the world stage when he paid $2.9 million for the Jack Dorsey tweet.
Estavi's Arrest And Its Consequences
However, just weeks after he bought the tweet, things came crashing down for Estavi. He was arrested by Iranian authorities for “disrupting the economic system.” Details on the exact charges are scarce, but suffice it to say authorities didn't like how he was running Cryptoland.
The charges led to a nine-month jail sentence and the shuttering of Cryptoland. They also indirectly caused the value of Bridge Oracle's native token (BRG) to plummet.
Ironically, Iranian authorities seized Estavi's Twitter account and posted a tweet to it.
Translation: “The owner of this media outlet was arrested on charges of disrupting the economic system, by order of the Special Court for Economic Crimes.”
If you ask me, Estavi could probably make a few grand minting and selling that tweet as an NFT.
But that's not all.
Estavi Attempts to “Make It Right”
After his release, Estavi told CoinDesk that he was going to try to win back his furious, jaded BRG investors by exchanging their worthless BRG for Bridge Oracle's new token, BSG.
However, in order to get their BSG, investors would have to give Estavi:
- Their BRG
- Their cell phone numbers, and
- Some TRX — the native crypto of the Tron network where BRG and BSG live
Estavi's team even initially planned to ask users for their private keys.
Now, asking for private keys, crypto transfers and/or personal information to “verify” yourself are the three most common signs of a crypto scam.
By this point, numerous Bridge Oracle investors were publicly accusing Estavi of fraud. Crypto researcher Kave Moshtaq claimed a motorcycle gang beat him up to intimidate him into silence after he had filed a formal complaint with the Iranian court against Estavi.
Within 48 hours of Moshtaq's tweet, the Iranian Blockchain Association put out a call for more grievances against Estavi. The “many complaints” received led Iranian authorities to investigate further.
Lastly, let's not forget that Estavi was perceived as shady well before the fall of Cryptoland.
So that's who bought the Dorsey tweet.
It could also explain why it lost 99% of its value in a year.
But Why Did Estavi Pay $2.9 Million in the First Place?
The reasons he's given for buying the Dorsey tweet have been well documented in various media outlets. They can be summarized as follows:
- To “emphasize the importance of NFTs on [the] future of crypto and tech sphere.”
- Because “it's a piece of human history” and “the Mona Lisa” of tweets.
- To showcase how NFTs could support charity. (After he sold his tweet to Estavi, Dorsey immediately converted the Ethereum into Bitcoin for GiveAfrica.)
But Estavi had let slip his ulterior motivation (beyond publicity) in this quote to the BBC:
“Who knows what will be the price of the first tweet of human history 50 years from now?”
Those are the words of a hardcore HODLer, and many were surprised to see him try to sell the tweet after just a year. Some say it was for the free publicity. I personally think it's to cover legal fees that he knew would be coming.
But how did his estranged investors perceive the purchase?
In his interview with the BBC, he also said that his investors “are really appreciative and happy about this investment because they know the value and future price of this particular NFT.”
Why Did Nobody Buy It?
The issue with investing in something that's totally speculative — and has no intrinsic value — is that it's worth only what someone else will pay for it.
Just because Estavi spent $2.9 million on an NFT doesn't mean it's currently worth $2.9 million. It's worth only $23,600 since that's the highest amount anyone else has offered for it.
So Estavi's spectacularly failed NFT investment should be a warning sign to anyone who wants to treat a speculative asset (like an NFT) as an investment.
Specifically, the warning sign says, “Even the world's most famous NFT investment can lose 99% of its value in the secondary market. Why should your NFT investment be any different?”
Granted, some part of the failure can be attributed to Estavi's own greed and shadiness. He insinuated that he wouldn't seriously consider offers below $48 million for his “Mona Lisa.” Besides, even if someone bid eight figures for it, they'd have to live with the fact that they directly funded a convicted crypto-criminal — not great PR for them or the NFT market.
But if the seller wasn't somebody with such a checkered past, it's possible that legendary NFT collectors 3F Music (whose NFT portfolio includes “Disaster Girl,” “Charlie Bit my Finger” and — for $1.05 million — the “Coffin Dance”) would've thrown him a couple or more millions for it.
What Does This Flop Mean for the Future of NFTs?
Well, it doesn't help that NFT sales are already flatlining.
Sales fell 92% from September 2021 to May 2022, and the number of active wallets in the NFT market has plummeted by 88%.
Now, I don't think this means NFTs are dead. Corporations are flooding in, the minting process is becoming more streamlined and NFTs are ready to play a huge role in the upcoming Metaverse. Plus, people still like buying them for fun, publicity or to support an indie artist.
Reasons to Buy an NFT
NFTs as a product are fine.
NFTs as an investment are dying.
And depending on whom you ask, they were dead on arrival anyway. The idea that a one-of-a-kind virtual artwork — one that very few people understood and even fewer knew how to purchase — would somehow outgrow the S&P 500 was never very sound.
The Bottom Line
The Jack Dorsey tweet NFT lost 99% of its value in the secondary market due to several reasons. It certainly didn't help that the seller was a convicted crypto-criminal who insinuated that he wouldn't seriously consider anything less than private jet money.
But the majority of the flop came from the simple fact that the secondary market for NFTs is weak. Way weaker than bullish buyers hoped it would be.