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CryptoPunks are 24×24 pixel art characters, these collectible pieces of digital art have been generated algorithmically, each with its own unique traits and distinctive attributes. Each punk, out of a total of 10,000 CyrptoPunks, is completely unique because of its combination of distinctive accessories and quirks. So, for example, CryptoPunk 1442, a woman wearing a thick black eye mask and earring, who has a shock of dyed-red (“crazy”) hair, is categorized as one of the 3,840 female punks in the series (she was first claimed in June 2017 and has never been listed for sale by her owner).
CryptoPunks were originally released by Larva Labs with proof of store on the Ethereum blockchain. Recently, CrptoPunks was acquired by Yuga Labs, the creators of Board Ape Yacht Club, which is known to be the most valuable and hyped NFT project of all time.
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How it started
Originally released in 2017, John Watkinson & Matt Hall developed CryptoPunks as an experiment to create a software program capable of generating thousands of unique avatars. Inspired by the London punk scene, CryptoPunks drew in a community of collectors and connoisseurs. The size of the CryptoPunks was too large to store in the blockchain, so the developers took a hash of the composite image of all 10,000 punks and embedded it into the contract. It is now theoretically possible to store each punk on the Ethereum blockchain directly and put the CryptoPunk attributes (hairstyles, glasses, beards, hats, etc.) on the chain alongside the images. These avatars soon became a brilliant leap in technology, and can now be stored on the Ethereum blockchain.
The hype: Why are they so popular?
How did an NFT project giving away its NFTs for free reach millions in value over the years? Launched at a time when the NFT hype was non-existent, CryptoPunks were given away for free!
At first glance, these 8-bit style pixels might not look very special. Anyone can view, download or copy any of the CryptoPunks for their own use. The reason for their surging value lies in their ownership. When a CryptoPunk is minted, a unique key is generated and at the same time, the ownership of the non-fungible token (NFT) is stored on the Ethereum blockchain. This means that only one person can be the true owner of a specific CryptoPunk which is the person that owns the digital key that unlocks the ownership data on the blockchain.
Initially, the June 2017 CryptoPunks launch fizzled, with just a few dozen claimed. An initial breakthrough for CryptoPunks was an article by Mashable under the prescient headline: “This Ethereum-based project could change how we think about digital art.” Within a matter of hours, the entire CryptoPunk collection was claimed, including one selling the day after for around $3500 in ETH.
In a conversation with Mashable, Matt Hall (one of the founders) said, “The whole thing is pretty weird, and that’s kind of why we did this… There’s like a weird intersection here between these virtual, digital things and an artificial rarity, but a rarity that is real and valuable in some sense.”
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Precisely after three years and nine months on March 10, 2021, a CryptoPunk named “Wise alien” (blue-skinned smoking a pipe) was sold for $7.5 Million” at Christie’s auction, creating a sensational wave for the NFT hype. Followed by another noteworthy sale of rare alien CryptoPunk #7523. This piece of art depicted an alien wearing a medical mask and a beanie that led to its nickname “Covid Alien” which sold for $11.8 million!
Anticipations of NFTs as a thing of the future persuaded one of the world’s largest financial services corporations to get into the game. VISA, being the first one to identify the potential of owning digital art, bought its first CryptoPunk on Aug 19, 2021. The CryptoPunk #7610 (one out of 3,840 “female” punks), was purchased by VISA for $150,000. This news proved to be a game-changer for CryptoPunks.
Over the last 60 years, Visa has built a collection of historic commerce artifacts – from early paper credit cards to the zip-zap machine. Today, as we enter a new era of NFT-commerce, Visa welcomes CryptoPunk #7610 to our collection. https://t.co/XoPFfwxUiu
— VisaNews (@VisaNews) August 23, 2021
Followed by the news of Visa’s purchase, a further 90 CryptoPunks NFTs were snapped up in the next hour for cumulative sales of around $20 million. As of 17:50 UTC on Monday, 293 CryptoPunk NFTs had been sold for almost $77 million, up from just 39 sold for $8.4 million on an entire day on Sunday, according to data from CryptoSlam.
But this journey of a project that started from nothing cannot be summed up without the contribution of Gary Vee. An American entrepreneur, author, motivational speaker, and Internet personality, Gary Vaynerchuck stepped into the blockchain revolution and the ownership of digital art in its early days. By establishing a strong presence, Gary Vee established a strong influence in the crypto and NFT Community. Over time, he purchased dozens of CryptoPunks that encouraged NFT enthusiasts to take the punks as a serious investment. Investing $32 million, Gary Vee holds 59 CryptoPunks and claims the values of these will touch billions in the coming years.
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The ownership of a CryptoPunk is now turning into a status symbol that has taken over a number of prominent figures in the world to get hands-on a punk. The list goes:
- Jay Z — CryptoPunk #6095 ($126,000)
- Snoop Dogg — CryptoPunk #5017 and 9 more (estimated $10 million)
- Logan Paul — CryptoPunk #2294 and 5 more (estimated $4 million)
- Marshmello — CryptoPunk #8274 ($465,000)
- Serena Williams — CryptoPunk #2950 ($282,300)
The set of eccentrics gradually became more popular and reached its famed status after auction sales reached a mind-blowing amount of 23.7million USD on February 12, 2022. CryptoPunks is anticipated to be one of the most highly valued collections of all time, and even in the coming years.
The pros and cons of owning a CryptoPunk
Despite millions of dollars flowing into the set of a limited 10,000 non-fungible tokens collection, the question that still prevails is how does one pick a side? Whether to put in a serious amount of funds into an 8-bit pixelated piece of art on the blockchain?
The advantages of owning a CryptoPunk may be alluring due to the supply being limited to 10,000. It prompts buyers to trust the developers to not deviate from their promise of a fixed supply since that might lead to a market crash, but that can certainly not allow investors to overlook the disadvantages. Due to the NFT marketplace being fairly new and unclear, a lot of potential buyers might be skeptical about the reliability of decentralization.
|First NFT collectibles project on Ethereum||Higher on-chain fees because Ethereum based|
|10,000 unique CryptoPunk characters, including several sold for millions||Each CryptoPunk generated by a computer rather than a human|
|Compatibility with the widely used MetaMask wallet||No option to purchase via traditional methods such as PayPal or credit cars|
|Second most successful NFT collectible set of all time in terms of sales||Weaker user-friendliness due to the requirement to collect in a noncustodial wallet|
How are these applicable to crypto businesses and marketers?
Now that digital art could be seen as a risky yet high-yielding investment, does it benefit its owner? Whether it is a business or a crypto marketer, why are they willing to place millions on a pixelated image on the blockchain that is said to come with a high risk?
A few days after VISA bought its first CryptoPunk, VISA’s head of crypto – Cuy Sheffield, highlighted the organization’s main purpose for the purchase. He mentioned in a Twitter thread how VISA plans to learn more about the growing market while shedding light on other crucial factors as well.
2/ We think NFTs represent the intersection of culture and commerce and could play an important role in the future of online retail, social media, and entertainment.
— Cuy Sheffield (@cuysheffield) August 23, 2021
The business aspect might not be very comprehensive for crypto marketers and enthusiasts. Instead, their takeaway from the ownership is being a part of a community of like-minded people and networking with them. People who anticipate the NFT marketplace to skyrocket seek to connect with like minds to have a greater impact on the population that still doesn’t fancy this. In addition to this, the ownership of NFTs, like CryptoPunks, allows them to have an exclusive community of only the art holders. Whether it is Snoop Dog or a low-key investor, they are all part of the same network and are possibly introduced to new opportunities through interactions with the clique. The owners are also presented with several honorary whitelist tokens of upcoming NFT projects and, in some cases, given a free NFT as well.
A tremendous amount of funds being involved along with some prominent figures being associated with the project make NFT enthusiasts excited about the values of these digital arts to skyrocket in the coming years. But, a major population still remains skeptical about the sustainability of this marketplace.