In 2021, non-fungible tokens (NFTs) simply exploded into popularity. And one of the most popular among them has been CryptoPunks, whose value rose in tandem with their traction.
We have been seeing how museum-quality art has been crazy expensive on the back of the fame of the artists and the exclusive ownership of an artwork. And, now, as the world goes digital, so has the art.
NFTs offer a unique and non-fungible piece of artwork that also provides a certificate of authenticity or proof of ownership.
Amidst the ongoing craze around NFTs, they are being sold for millions of dollars. It was Beeple’s $69 million NFT sales that really grabbed the mainstream headlines, and from there, it has been only on an upward trajectory.
CryptoPunks are one of the most expensive NFTs out there. It actually makes up 3 out of the top 5 most expensive NFTs ever sold. In March, an ultra-rare alien punk was sold for 4,200 ETH ($7.58 million) and is currently on sale by its owner for 35,000 ETH ($142.4 million).
As of the time of writing this, the lowest price punk that you can buy is 61.95 ETH, worth more than $250,000.
In 2017, John Watkinson and Matt Hall released a total of 10,000 punks which were algorithmically generated. Their proof of ownership is recorded on the Ethereum blockchain.
CryptoPunks are 24x24 pixel art images that are mostly punky-looking guys and girls with a few rarer types mixed in, such as apes, zombies, and aliens.
Watkinson and Hall created these pixelated characters CryptoPunks, with different hairstyles, hats, and glasses, and since then, they launched another project called Autoglyphs, which is generative art. They have also built up a Larva Labs company around their various projects.
Until now, CryptoPunks had a small but passionate community. This year, as everyone from Silicon Valley, YouTubers, poker stars, and celebrities joined crypto in their appreciation of punks, so did the mainstream enthusiasts. YouTuber Logan Paul showed off his CryptoPunk, which he bought for $170k in his video in March.
The CryptoPunks platform has seen nearly $2 billion worth of transaction volume since its launch, up from $200 million in April this year and just $11,500 in June 2017, according to the NFT tracking site CryptoSlam.
While currently they are being sold for 6-7 figures, at the time of their launch, CryptoPunks were claimed for free. That's right if only one has had interest or conviction in them ahead of their time.
Now, as prices surge, owning a CryptoPunk has become a “digital flex” due to there being only a limited number of them. Several of their owners have also taken to flaunting them by using their punks as an avatar on social media sites like Twitter.
Much like physical art, beauty is in the beholder's eye, and every art has different value to different appreciators. There is also, of course, hedonic value when it comes to valuing any art, including NFTs, meaning just how much enjoyment one gets out of their art.
When it comes to CryptoPunks, there are other factors as well that are taken into consideration when valuing the NFT.
First and foremost, limited quality. Just like there would only ever be 21 million Bitcoin and not a single more, there will only ever be 10,000 CryptoPunks. It is up to the NFT creator if they want to have a rare collectible or have several versions of their NFT. Still, in both cases, the authenticity of the NFT is verifiable through their unique IDs and metadata.
In CryptoPunks, no two punks are the same. Some have a headband, some have caps, others have small shades, and many are wearing gold chains. Each punk has different attributes, and some are rarer than others. Simply put, the rarer an item, the higher its value.
Popularity is another factor that plays a pivotal role in the valuation of an NFT.
Up until September 2020, CryptoPunk’s monthly sales kept between $5k to $50k, only to hit six figures the first time at $2.96 million. CryptoPunk had its record month in August 2021 with almost $680 million worth of transaction volume. In terms of monthly data, Cryptopunks had over 1200 unique buyers, eclipsing 213 unique buys in January 2021 and just 15 in March 2018.
This is because it was around late 2020 and throughout 2021 that everyone noticed CryptoPunks. In August this year, the payments giant Visa announced that it had bought CryptoPunk #7610 for $150,000.
Visa's crypto head, Cuy Sheffield, described CryptoPunk as a "cultural icon for the crypto community."
As the punks got attention, they recorded an increase in value which drove their demand and fueled FOMO, leading to a spike in their value.
Another factor is just how old an NFT is. CryptoPunk’s high valuation could also be attributed to the fact that it is one of the oldest NFTs, which makes it an OG, giving it socio-cultural significance.
For instance, Twitter CEO Jack Dorsey's first tweet, which he sold as NFT, got its value because it was the first-ever tweet made, making it a historical landmark.
Additionally, CryptoPunks' metadata, the core of an NFT, which includes the NFTs name, description, traits, and link to the hosted image, details their longevity on the Ethereum blockchain, further adding to their appeal.
While NFTs are currently seeing a decline in their value and volume since early 2021 highs, they are here to stay. And despite the onslaught of projects like Art Blocks, Bored Ape Club Yacht Club, Meebits, Cool Cats, and tons of others, CryptoPunks is one of the collections with a bright future. It continues to be the most popular and influential in the market.
CryptoPunks have simply become a part of the social status game as only a handful of people have them or can afford to buy them. Ultimately, as time passes by, the value of this collection is likely to increase. That’s why I can clearly see the spread of fractionalized ownership of CryptoPunks soon, as it becomes the main method for most people to own this kind of NFT.