When Time magazine announced a new collection of NFTs offering “unlimited access” to its website throughout 2023, all 4,676 tokens tied to the digital artworks sold out in minutes.
But the sale rush also clogged the Ethereum blockchain, sending gas fees through the roof. So much so that buyers spent almost four times as much on transaction fees as they did on the NFTs themselves.
Dubbed “TIMEPieces”, each token in the collection was priced at .1 ETH, or around US$310. But because of the exorbitant transaction fees, one address paid US$70,000 for just 10 Time NFTs.
Scalping Arrives in the Crypto Space
In a mirror image of what happens when highly sought-after concert tickets are snapped up by automated “bots” and on-sold at inflated prices (otherwise known as “scalping”), the 100 addresses with the most NFTs now own around 24 percent of the total minted supply.
The Ethereum blockchain complicates the issue with what it calls a “priority fee”, an incentive payment to miners to accept their transactions ahead of other users who haven’t put up as much cash. Users who can afford those fees can effectively jump the queue as too many people try to use the network at once, causing it to crash.
Buyers Don’t Know What They’ve Bought
The ultimate irony with the NFTs in Time’s collection is that they simply point to a red Time logo rather than an actual digital artwork, so at the time of writing buyers still didn’t know exactly what they’d bought.
With masterful understatement, TIME Inc president Keith Grossman said that the high fees and inequitable distribution of Time‘s NFTs were probably “not ideal”.
I think we learned a lot about gas in general. There are things that you can’t control … in the gas space. We’re going to make sure that the next time that we do this, everything that we have seen that went wrong, or that didn’t go as we planned, is fixed.Keith Grossman, president, TIME Inc
In June this year, US television news network CNN showed Time how it’s done by sharing “moments” from its archives as NFTs. CNN used the Flow blockchain, which seems to have handled the demand far more comfortably than Ethereum did in Time‘s case.
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