Why Jack Dorsey’s First-Tweet NFT Plummeted 99% In Value In A Year

In December 2020, Jack Dorsey created a non-fungible token (NFT) out of his first-ever Twitter post. He turned a static image of a five-word tweet into a digital file stored on a blockchain, and voila, an NFT was born. A few months later, the image sold for a stunning $2.9 million. Yet in an auction this past week, no one bid more than $280 for it. And even current bids on OpenSea only amount to about $10,000, a 99% drop in value. What happened?

Dorsey’s NFT initially garnered little interest, with some people bidding a few thousand dollars in December 2020—a time when NFTs still had few believers. But in March 2021, the market entered hype mode, with monthly sales on OpenSea jumping to nearly $150 million, up from just $8 million two months prior.

Iranian crypto entrepreneur Sina Estavi got swept up in the frenzy, buying Dorsey’s NFT for $2.9 million. He tells Forbes he paid such a hefty sum due to the NFT’s uniqueness and association with such a valuable company as Twitter.

While you could argue that Dorsey’s first-tweet NFT has historical significance, the $2.9 million price tag is nearly impossible to justify. The bubble price Estavi paid epitomizes the greater fool theory at work. “What is the utility of that NFT?

Does Jack Dorsey take you out to dinner in Silicon Valley?” says Mitch Lacsamana, an NFT collector and head of marketing for an NFT trading group. “What is the real value proposition here? I think time has probably told us, and it’s probably nothing.”

On April 5, Estavi put the NFT up for auction for 14,969 ether, or about $50 million. Embarrassingly, no one bid more than $280. Estavi says “no one knows” why the bids came in so low. It seems that few people took it seriously. “Bidders just realized what it was–a publicity stunt. A way to get exposure,” says Blake Moser, an NFT collector who has nearly 400 NFTs. “I do think Sina Estavi accomplished what he was looking for–exposure to his NFT.”

Estavi has indeed gotten attention, but he seems severely out of touch with the rapidly changing NFT market. “The market isn’t ready to jump into literally anything that a celebrity or someone of high stature might release,” Lacsamana says. “I think last year was a really good time for that, but a lot of people have grown weary of cash-grab tactics.”

While the failed auction shows that NFT hype has waned, the market is still very active, with trading volume hovering between $2 to $3 billion a month on OpenSea, up from $150 million a year ago. Prices for some NFT collections like the Bored Ape Yacht Club remain near all-time highs.

Estavi’s NFT saga seems to be a case of an ill-advised $2.9 million purchase, buyer’s remorse and a new bid for attention. Estavi himself has a sketchy history. His startup, Oracle Bridge, says it will allow blockchain platforms to ingest data more easily, but today it seems to be little more than a white paper.

Estavi also claims he was arrested last year in Iran and had to shut down the company for nine months while he was in prison. “They accused me of disrupting the economic system,” he says vaguely. Now he’s trying to start the company up again. Over the past day, bids for the Dorsey tweet NFT have risen to about $10,000. Estavi says he won’t sell for anything less than $50 million.

I lead our fintech coverage at Forbes and also cover crypto. I edit our annual Fintech 50 and 30 Under 30 for fintech, and I’ve written frequently about leadership and corporate

Source: Why Jack Dorsey’s First-Tweet NFT Plummeted 99% In Value In A Year

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NFTs are traded in NFT marketplaces, which have structured platforms like eBay’s. Most NFTs are sold via auctions, although some sell at fixed prices. Some marketplaces specialize in a type of NFTs, e.g., art, games, sports, whereas others sell everything.

If you wish to create a new NFT (called minting) you can do so through any of the marketplaces. The largest marketplace is OpenSea, which in 2021 had about a 90% market share by dollar trading volume across marketplaces. 

There are fees for creating and trading NFTs, from upfront account setup fees and minting fees to sales fees. If you are going to create or trade NFTs, make sure you know a marketplace’s fee structure. To get a sense of fees collected, OpenSea collected about 8% of its sales volume in fees in January.

There may also be royalty fees (usually 10-30% of the sales price) that go to the original creator of an NFT every time a transaction in that NFT takes place. 

Through 2021, the top ten NFT collections had over $15 billion in historical trading value and around a 60% share of the total NFT market. The dominance of a few collections in the market is most likely due to a preference by NFT speculators to trade within collections. It is easier to value an NFT from a collection because there are other NFTs to compare it to.

It follows that, of the money a minority of traders make speculating in NFTs, most of it is from trading within collections. Clearly, informed traders know where the money is, but it is hard to believe that the market can absorb as many collections as there are today: 3,264, up from 193 a year ago. At some point, having so many collections defeats their purpose.

The evidence from the previous study is clear: most NFT speculative traders do not earn a positive return. From an investing perspective the results are unfortunate, but not surprising. Another aspect of trading in NFTs is that fraud within the NFT ecosystem is said to be rampant. The potential for “bad actors” to engage in nefarious selling and trading of NFTs (including counterfeit tokens or assets they don’t actually own) was described as a “contagion” by the CEO of one NFT platform.

The result is a situation where your NFT purchase could end up being worthless. Combining the difficulty of earning a positive return and the inherent risks, NFT trading is not a good proposition, so stay away. They have all the signs of being an investing fad that will likely pass.

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How America’s Richest People Can Access Billions Without Selling Their Stock

On Saturday, Elon Musk promised to sell 10% of his Tesla stake after 58% of people voted in a Twitter poll shared by the Tesla CEO. Yesterday, Musk began to follow through, exercising about 2.15 million Tesla stock options and selling shares to cover the taxes he owed as a result. Prior to this week, he has only ever sold Tesla shares twice—in 2010 and 2016—for pre-tax proceeds of $617 million ($593 million of that went to cover taxes he owed on options). Tesla’s stock has risen over 13,000% since his last sale, and Musk is now worth an estimated $281 billion (based on Wednesday’s closing price).

When the world’s richest man wants cash, he can simply borrow money by putting up—or pledging—some of his Tesla shares as collateral for lines of credit, instead of selling shares and paying capital gains taxes. These pledged shares serve as an evergreen credit facility, giving Musk access to cash when he needs it. Musk currently has pledged 88.3 million Tesla shares, nearly 36.2% of his overall stake (excluding options), as of Wednesday worth more than $94 billion.

Musk is one of 32 billionaires identified in the Forbes 400 list of richest Americans to be pledging public stock of companies listed on the NYSE or Nasdaq exchanges as collateral for current or potential lines of credit, as disclosed in company filings. Other pledgers include fellow mega-pledger Oracle chairman Larry Ellison, Walmart heir Jim Walton, and private equity’s richest person, Stephen Schwarzman. (Three others pledged shares of foreign companies are not included in this report.)

Across all companies listed on the NYSE and Nasdaq exchanges, there are 560 executive officers and directors and 5%+ shareholders currently pledging shares; the size of the average pledge is $427 million and the aggregate value of these pledged shares is $239 billion, according to a report from Audit Analytics, an independent provider of audit, regulatory and disclosure intelligence. Within this larger group, Forbes 400 members do most of the pledging—value wise, that is. Musk’s Tesla pledge alone is 47% of that aggregate pledged share value. Removing the extreme outlier Musk, the remaining 31 Forbes 400 members account for 56% of that figure. (Data for this report were calculated Nov. 5; Tesla shares are down nearly 13% since then).


“At current interest and tax rates, it is far cheaper to borrow against the value of one’s shares than to sell them and pay taxes on the gains.”


Information on companies’ pledging policies—found in annual proxy statements—-offer a window into the murky world of billionaire borrowing. The topic entered the national microscope in June after ProPublica’s report on leaked IRS data showed that several of the richest people paid nothing in federal income taxes in certain years. Last month, a proposed wealth tax from Senate Democrat Ron Wyden failed to win political support. That measure would have taxed unrealized capital gains of America’s richest individuals.

Most details on billionaire borrowing remain private. Individuals who own less than a 5% stake in a company, or who don’t work for that company, do not report stock ownership or pledging of shares to the SEC. Many of America’s wealthiest people—232 billionaires from this year’s Forbes 400 list, to be exact—hold their fortunes primarily in private companies. Any pledges against diversified baskets of stock or private assets are not reported in company filings. Disclosure requirements also do not include reporting whether, or how much, an individual has borrowed against their pledged shares. A few billionaires Forbes contacted said they don’t have outstanding debt against their pledges.

Most larger companies don’t allow pledging: Over two-thirds (68.4%) of S&P 500 companies ban all company employees and shareholders from pledging shares for debt, 22% prohibit pledging but with exemptions for certain individuals, and only 3.4% fully permit it, according to data provided by proxy advisory firm Institutional Investors Service (ISS). “When executives or directors have a significant percentage of their equity pledged, it creates a concern from the investor perspective,” says Jun Frank, an executive director for ISS’ corporate solutions group, which advises companies on corporate governance matters.

Those concerns include margin calls: forced sales of pledged shares that can sink a company’s stock price, which risks cascading into a broader, panic-induced selloff. An example: Green Mountain Coffee Roaster’s founder Robert Stiller borrowed against his company shares to fund an increasingly extravagant lifestyle, rather than sell shares. That worked fine when the share price was rising but quickly unraveled after a short-seller called into question its accounting in May 2012. The former billionaire was forced to sell 5 million shares, worth $126 million, in one day to cover margin calls on pledged Green Mountain stock. He was then removed as Chairman of the Board.

Pledging can also create friction between directors and executive officers pledging shares and outside shareholders, says Frank: “If you no longer have certain claims to those underlying economic interests and you continue to have the voting right, that creates a mismatch between the control you can exercise over the company and the economic interest you have in the company.”

Sometimes what company founders want, in this case to pledge shares, is at odds with what board members and shareholders want, which is to disallow pledging. The software company Oracle, for example, adopted a rule in January 2018 prohibiting its directors and executive officers from pledging company shares, although one individual was exempt: Larry Ellison, Oracle’s cofounder and largest individual shareholder. But then, as now, Ellison was the only Oracle director to ever report pledging any company shares. Ellison, who boasts a fortune of over $100 billion, has been pledging shares since at least 2007, after the Securities and Exchange Commission began requiring it.

In other words, Oracle’s new pledging policy had no immediate impact on the pledging activity of its directors and executives—Ellison least of all. Since 2018, he has increased the number of his pledged Oracle shares to 317 million — worth about $28 billion — equivalent to roughly 27% of his stake and 11% of all outstanding Oracle stock. Ellison did not sell any Oracle shares between December 2010 and June 2020, a near-decade stretch of big spending for the eccentric billionaire, who splashed $300 million in 2012 to buy the Hawaiian island of Lanai and tens of millions of dollars on opulent mansions, growing a $1 billion real estate portfolio that includes at least ten  properties on Malibu’s glitzy Carbon Beach.

While Oracle does not disclose how much Ellison has borrowed against his shares, his penchant for borrowing was revealed in unsealed court documents from a shareholder lawsuit. Those documents, first reported by The San Francisco Chronicle in 2006, showed that Ellison had outstanding loans of more than $1.2 billion in 2001, and that his financial adviser had warned him, “We have a freight train going down a track hitting a debt wall.” (Oracle did not respond to Forbes’ questions about its pledging policy or Ellison’s borrowing.)

Other companies find more creative ways to exempt billionaire founders from pledging bans. Take the oil and gas firm Kinder Morgan, whose prohibition on pledging comes with a caveat: shares owned “in excess of the applicable minimum ownership guidelines” are able to be pledged. The minimum ownership requirement for directors—such as executive chairman and billionaire Richard Kinder—is three times the value of their “annual cash retainer.” Helpfully, Kinder’s annual salary is $1. That means the eponymous cofounder can effectively pledge as many shares as he likes.

Kinder, whose $7.2 billion fortune makes him the 128th wealthiest American, has pledged 40 million shares of his eponymous company — 15.6% of his overall stake, worth $679 million — for the sole purpose of buying more company stock, as described in the company’s proxy statement. To date, Kinder has purchased 10 million additional shares of Kinder Morgan, financed with debt taken out against his pledged Kinder Morgan shares. A representative for Kinder Morgan confirmed Forbes’ interpretation of its pledging rules but declined to comment further.

Some companies are upfront about their exemptions, but fail to make a convincing argument for them. The medical conglomerate Danaher simply states in its 2021 proxy statement that its sibling founders, Forbes 400 members Steven and Mitchell Rales, are exempt from its pledging ban “because [their] shares had been pledged for decades.” Each brother has pledged a significant portion of their Danaher shares, a potential red flag for margin calls: Steven Rales has pledged 78% of his equity stake (just over $10 billion), and Mitchell has pledged nearly 91% of his equity stake (slightly under $10 billion). Together, their pledges are 9.4% of all outstanding Danaher stock. (Danaher and the Rales brothers did not respond to requests for comment).

Of the Forbes 400 billionaires, oil mogul George Kaiser (net worth: $10.7 billion) has the highest ratio of pledged shares to the company’s total outstanding common stock — another red flag for margin calls. His pledge of 21 million shares of bank holding company BOK Financial Corporation (worth nearly $2.3 billion) is equal to nearly 31% of all outstanding stock. But Kaiser says he only occasionally borrows against those pledged shares. “They are just low cost, back-up lines, which we have had in place for a long time and infrequently use,” he told Forbes over email.

Tesla argues that pledging creates a kind of fiduciary relationship between pledgers and shareholders. In 2018 the electric carmaker introduced a 25% loan-to-value limit on borrowing against pledged shares, arguing that pledging gives “executive officers flexibility in financial planning without having to rely on large cash compensation or the sale of Company shares, thus keeping their interests well aligned with those of our stockholders, while also mitigating risk exposure to the Company” — a stance Tesla has reiterated in subsequent proxy filings.

ISS countered this argument in its recent proxy analysis of Tesla’s corporate governance principles. “If an executive who already owns 15 or 20 percent of a company’s outstanding shares…is not already motivated to act in the interests of shareholders, there is no credible argument that increasing that stake to 25 or 30 percent will suffice to accomplish that goal,” says the report. “Perhaps a more salient, though unspoken, factor is that at current interest and tax rates, it is far cheaper to borrow against the value of one’s shares than to sell them and pay taxes on the gains.”

So just how prevalent is pledging assets to borrow among the ultra rich? “Pretty high,” responds Jason Cain, a managing director and chief wealth strategist at advisory firm Boston Private, speaking about his firm’s highest bracket of clients: those with above $500 million in assets. (Cain declined to provide an exact percentage figure). “It’s not any different than families… who borrow for homes” and other life purchases, says Cain. “Most of these clients are aware of the uses of debt and with interest rates where they have been in the recent past, they understand the arbitrage opportunity.”

Ali Jamal, and ex-Julius Baer banker and founder of Azura, a boutique wealth management firm for billionaire entrepreneurs, says that during the stock market crash of March 2020, about 70% of Azura’s clients took on leverage — by pledging shares, but also artwork and car collections — to take on debt to buy more stock. And over the past year, about 40% of Azura clients have leveraged their way into special purpose acquisition corporations. “You can borrow at 40 basis points, max 50 basis points, to have someone very smart” identify an investment opportunity, says Jamal about the appeal of leveraging into SPACs, “and if you don’t like the opportunity, you can pull your money out.”

Borrowing against one’s shares has its risks, but for these billionaires, the rewards seem to outweigh them. “It’s perfectly legal, and it’s a little hard to say it’s immoral. Like, it’s immoral to own a growth stock? It’s immoral to borrow money?” says Edward McCaffrey, a tax law professor at USC Gould School of Law who coined the popular term “Buy, Borrow, Die” to describe how the ultra-wealthy borrow to avoid paying taxes. “So the question is, why would anybody not do it?

Follow me on Twitter or LinkedIn.

I am a New York-based journalist covering billionaires and wealth at Forbes. I studied history at Claremont McKenna College and I’m currently receiving my M.A. in business and

Source: How America’s Richest People Can Access Billions Without Selling Their Stock

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Related Contents:

Savills and Wealth-X (2014). Around the World in Dollars and Cents (PDF). p. 2. Archived (PDF) from the original on 2014-05-14. Retrieved 2014-03-06.

Is Patient Financing Right for Your Health Practice?

In these times of post-pandemic financial uncertainty, additional return on investment for medical providers is more welcome than ever. Patient financing — which for the purposes of this article means partnering with an external lender to provide service and procedure payments — can produce not just steady income for a practice, but help ensure that patients won’t have to put off procedures or, worse yet, abandon them altogether.

For example, Toronto Plastic Surgeons provides this facility to its patients through Medicard Patient Financing. There are also veterinary financing services for pets available through Medicard Patient Financing. What are some reasons practitioners might have employed in deciding upon this option?

No More Delays

There are, unfortunately, economic disparities when it comes to accessing healthcare services. Too often, the high-income and privileged have more access to healthcare resources than the medium- and low-income populations. Patient financing can help in reducing this imbalance, because the simple and daunting truth is that many medical problems don’t come announced, and it’s often impossible to plan for their associated expenses. With financing, patients don’t need to wait to get their accounts in order before opting for procedures — the result is, ideally, prompt and less stressful treatment.

Related: Fintech fuelling growth in Healthcare Financial Industry

Increased Patient Satisfaction

Since clients can often better manage their expenses via patient financing, they tend to be more satisfied on the whole. In part this is because they are not stressed and burdened with sudden financial decisions associated with urgent medical procedures. Better yet, they are more likely to stay loyal to a practice if they don’t have to worry as much. Compared to other practices that don’t offer this option, they are more likely to choose the former, which can mean increased business through word of mouth.

Reduced Collection Costs

When you partner with a patient financer, you receive payments on time. It also means that your team won’t spend needless hours and energy trying to collect payments.

Steady Cash Flow and Less Bad Debt

In setting up a conventional payment plan for a patient, your team is taking the responsibility of keeping tabs on payments and collecting them on time. It’s essentially extending a loan to a patient, typically without any interest. However, expenses like bills, payroll and lease/rent go on as usual. This can lead to tied up in , which will easily and quickly impact a budget. But when you opt for association with a patient financing company, the latter bears the cost of collections, including giving you the option of getting payment upfront.

Related: Healthcare is in Turmoil, But Technology Can Save Businesses Billions

Better Marketing

Association with a financing company with its own marketing arm can help promote a business — making your clinic stand out in comparison to competitors.

Which to Choose?

When it comes to financing models, three predominate. In the first, Self-Funding, you as the healthcare provider are responsible for receivables. From creating a payment schedule to collecting funds to following up with the patient, your team carries out all the tasks. In the Recourse Lending model, you work with a patient financier/lender, which will approve a patient’s loan after the business/practice passes qualifying criteria.

If the patient doesn’t pay, the lending/financing company will recover the losses from you. Among the drawbacks here is that the practice will have to bear the losses and lender’s fees. Lastly, there is the Non-Recourse Lending model. Similar to the second, you work with a lending company. Key differences are that it is the patient who has to pass the underwriting criteria (if the lender doesn’t approve the patient, no funding is provided by them), and that losses are borne by the lender. One disadvantage of this method is that the lenders charge interest from patients; when rates are high, patients might not be interested. Also, patients with a weak credit history might be rejected during the underwriting evaluation.

By : Chris Porteous / Entrepreneur Leadership Network Contributor – High Performance Growth Marketer

Source: Is Patient Financing Right for Your Health Practice?

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Critics:

Publicly funded healthcare is a form of health care financing designed to meet the cost of all or most healthcare needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are set down in rules applying to the whole population contributing to the fund or receiving benefits from it.

The fund may be a not-for-profit trust that pays out for healthcare according to common rules established by the members or by some other democratic form. In some countries, the fund is controlled directly by the government or by an agency of the government for the benefit of the entire population. That distinguishes it from other forms of private medical insurance, the rights of access to which are subject to contractual obligations between an insured person (or their sponsor) and an insurance company, which seeks to make a profit by managing the flow of funds between funders and providers of health care services.

When taxation is the primary means of financing health care and sometimes with compulsory insurance, all eligible people receive the same level of cover regardless of their financial circumstances or risk factors.

Most developed countries have partially or fully publicly funded health systems. Most western industrial countries have a system of social insurance based on the principle of social solidarity that covers eligible people from bearing the direct burden of most health care expenditure, funded by taxation during their working life.

Among countries with significant public funding of healthcare there are many different approaches to the funding and provision of medical services. Systems may be funded from general government revenues (as in Canada, United Kingdom, Brazil and India) or through a government social security system (as in Australia, France, Belgium, Japan and Germany) with a separate budget and hypothecated taxes or contributions.

The proportion of the cost of care covered also differs: in Canada, all hospital care is paid for by the government, while in Japan, patients must pay 10 to 30% of the cost of a hospital stay. Services provided by public systems vary. For example, the Belgian government pays the bulk of the fees for dental and eye care, while the Australian government covers eye care but not dental care.

Publicly funded medicine may be administered and provided by the government, as in the Nordic countries, Portugal, Spain, and Italy; in some systems, though, medicine is publicly funded but most hospital providers are private entities, as in Canada. The organization providing public health insurance is not necessarily a public administration, and its budget may be isolated from the main state budget. Some systems do not provide universal healthcare or restrict coverage to public health facilities. Some countries, such as Germany, have multiple public insurance organizations linked by a common legal framework. Some, such as the Netherlands and Switzerland, allow private for-profit insurers to participate.

See also

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