What are CryptoPunks?

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robertstevens

Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.

CryptoPunks, a 10,000-strong collection of 8-bit avatars, is one of the hottest crypto art projects around.

Created by Brooklyn-based art studio Larva Labs in 2017, CryptoPunks are NFTs, or non-fungible tokens: Ethereum-based cryptocurrency tokens that contain a link to a piece of art. As of August 2021, CryptoPunks is the third-most-popular project by sales, followed by NBA Top Shot and Axie Infinity.

Although CryptoPunks are just 8-bit avatars, a single Punk can sell for well over a million dollars, so that anyone who snapped them up for free when they were created in 2017 might be rich today. One investor bought a CryptoPunk for $443 in November 2018, and in August 2021 sold that same Punk for $4.4 million, a return of almost a million percent.

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CryptoPunks: A brief introduction

In 2017, Larva Labs founders Matt Hall and John Watkinson created a piece of computer code that automatically generated 10,000 characters. They thought they would use the characters for a computer game but ended up releasing them as NFTs instead.

Each Punk may be of a different race, gender, or have different attributes. There are 6,039 males, 3,840 females, 88 zombies, 24 apes and 9 aliens. Zombies are the most expensive; the average sale is 1,920 Ethereum (ETH), which as of August 2021 is worth about $6.2 million.

Each Punk has up to seven different facial attributes. Some wear fedoras. Others tassel hats. Some smoke cigarettes. Some wear makeup. Just eight punks have no attributes at all, and one has seven attributes.

Hall and Watkinson also created two more NFT projects: Meebits, 20,000 3D characters, and Autoglyphs, a generative art NFT project. Neither has found the success of CryptoPunks, but they are slowly picking up steam. Auction house Christie’s plans to auction off Meebits could give them an air of legitimacy.

Why are CryptoPunks so valuable?

One of the key features of the NFT market is that all tokens, CryptoPunks included, are one-of-a-kind. There are only 10,000 CryptoPunks, each of which is unique, and the Ethereum blockchain makes it easy to keep track of who owns what at all times. Some of the punks are rarer than others, and those fetch higher prices today.

One other reason they’re valuable is that people keep buying them. They are understated, immediately recognizable, and owning a CryptoPunk carries a certain social cachet: owners often replace their Twitter profile pictures with them as proof that they’re rich enough to fritter away their money on a picture or arrived to crypto early enough that they managed to get them at an affordable price (or perhaps even for free). One investor likened it to picking up the Mona Lisa just two years after it was painted.

The Punks also appear in very trendy places. They go up for sale at prestigious auction houses Christie’s and Sotheby’s, appear on billboards around New York City, and are bought by famous people.

But everyone has their own reason for shelling out huge amounts of money for the Punks. In June 2021, Shalom Meckenzie, the largest shareholder of fantasy sports betting company DraftKings, paid $11.8 million for an alien CryptoPunk in April 2021. “It is part of the alien collection, which is the rarest of the punks, and the only alien that has a mask. I thought it was symbolic of Covid and the popularization of NFTs,” Mackenzie told crypto publication Decrypt.

One final reason is that although the NFT market picked up in 2021, CryptoPunks has been around since 2017, making it one of the earliest NFT projects. True to the cypherpunk spirit of crypto, CryptoPunks were released for free in June 2017 by developers of New York-based Larva Labs, meaning they weren’t, at least originally, reserved exclusively for the rich. (However, the creators claimed 1,000 Punks for themselves).

What can you do with a CryptoPunk?

Just like physical pieces of art, some people think that CryptoPunks are pieces of beauty and bought for their own sake, while others consider them investment opportunities on which to speculate.

CryptoPunks, really, are both. At their core, they are cryptocurrency tokens that contain a link to a picture of a digital avatar. As such, they are pieces of art that live on the blockchain, a decentralized payments network for the 21st century. While you can just copy and paste a picture of your favourite CryptoPunk and do with it what you will, the point of all the crypto stuff is to play with the ownership that the token represents.

Innovative uses for these tokens are still being created. Some financial protocols let you stake NFTs as collateral for loans, others as insurance, and more yet let you lend your CryptoPunks to anyone who wants to rent it. Some videogames and physical picture frames only let you display a CryptoPunk if you own the token.

How can you buy a CryptoPunk?

Because CryptoPunks are cryptocurrency tokens, you can send them between wallets just like any other cryptocurrency. That means you can buy CryptoPunks from a range of places: either from Larva Labs’ website itself, from prestigious art auction houses like Sotheby’s and Christie’s, or from secondary cryptocurrency art exchanges like OpenSea.

Whichever method you choose, you’ll need some ETH, or Ethereum, the native cryptocurrency of the blockchain that goes by the same name. You’ll need to buy ETH from a source that lets you transfer cryptocurrencies between wallets, like Binance or Coinbase, and not from brokerages that just let you buy and sell cryptocurrencies.

You’ll want to move that ETH to a browser-based wallet like MetaMask, and then connect your wallet address to the website from which you plan to buy your CryptoPunk. Remember to account for Ethereum’s transaction fees, which can range from a couple of dollars to a couple hundred dollars, depending on the network congestion fees.

Not all Punks are up for sale. Just like real art, the owners might want to show off their art or hold onto them until they can get a better price. You can check out which Punks are up for sale on the Larva Labs site directly. Remember that these don’t come cheap, as of this writing, the cheapest Punk is worth $100,000, and rarer ones can go for millions. You might end up in a bidding war with other anonymous blockchain users.

What other NFT projects are there?

In early 2021, the NFT market experienced its first bull run off the back of the rising price of Bitcoin and Ethereum. Around then, sales of other NFT projects began to surge. Chief among them in early 2021 was NBA Top Shot, a crypto take on a virtual basketball card collection game. As of August 21, 2021, NBA Top Shot tokens have conducted $687 million in sales.

But this was just the cream of a bumper crop. When people realised that they could make money by selling pictures or videos, often applying no major effort, the market swelled with activity. A picture of a pet rock sold for $100,000 in August 2021 and a New York Times columnist sold an NFT of his column for $562,000.

Digital artists, finally with the space to sell their creations, also helped drive the surge of the NFT market. One, Beeple, holds the record for the highest value NFT sale; his collection of NFTs of his digital paintings sold for a record $69 million on art marketplace Christie’s in March.

The creators behind every famous internet meme you can remember sharing have also reclaimed their work and sold them as NFTs. Nyan Cat sold for 300 ETH, Scumbag Steve sold for 30 ETH, Clarinet boy sold for 5.555 ETH and Overly Attached Girlfriend sold for $411,000. Most of these NFTs didn’t innovate on the original meme but provided a way for their creators to cash in on their success.

The NFT market started to die down after it became too saturated with junk—anyone can sell anything as an NFT, with little quality control—and after concerns about blockchain’s environmental impact.

The vast majority of these NFTs sold on Ethereum, which, in early 2021, processed transactions by having computers expend electricity. It aims to move to a more environmentally-friendly mechanism by 2022 that its creators claim reduces its carbon footprint by more than 99%. Still, lots of people didn’t want to stimulate the wider crypto economy, which generally isn’t environmentally friendly.

That is, until the summer of 2021. In late June and early August, two projects started to boom: Axie Infinity, a Pokémon-inspired monster battling game that runs on NFTs, and CryptoPunks.

Axie Infinity grew its user base by 10 times from June through August. It surpassed a billion dollars in sales in early August, making it the most valuable NFT project. And in the last week of July, CryptoPunks rose by more than 50% after rich investors triggered a trading frenzy.

So, what next for CryptoPunks? Perhaps CryptoPunks will fizzle out like much of the rest of the NFT market, or perhaps they’ll always be remembered as a sign of the times, and as one of the first NFT projects ever to go viral.

Last Updated September 7, 2021

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