Why Are Cryptopunks So Expensive?

What Are CryptoPunks?

CryptoPunks is a collection of 10,000 unique 8-bit digital characters created by Larva Labs in 2017. The project was founded by programmers John Watkinson and Matt Hall, and it was one of the first Non-Fungible Tokens (NFTs) on the Ethereum blockchain. Each CryptoPunk is a one-of-a-kind asset with verifiable ownership, making them rare and valuable digital assets.

Note: technically, there were several projects arguably that predated CryptoPunks. 

In recent years, the value of CryptoPunks has skyrocketed, with some selling for millions of dollars at auctions. The reason for this madness is simple: these pixelated Punks represent the first PFPs to be minted on the Ethereum blockchain, and that is a historical reality that cannot be displaced. Their miraculous origin story is a testament to their greatness. They were fairly launched and then largely forgotten about, only to reemerge as a viral sensation due to their unforgeable “firstness.” Their cultural significance and rarity have captured the hearts and wallets of investors everywhere. 

The CryptoPunk Collection

When the creators of the Cryptopunk collection were asked why they chose the name, their response was, “CryptoPunk just seemed right for the culture, it is punky, and people in the blockchain industry think of themselves as counter-culture.” And indeed, the collection has become a cultural phenomenon, with each of the 10,000 unique 8-bit digital characters being a part of crypto history.

Initially, the Cryptopunk craze was slow to pick up, with many punks being given away for free to anyone willing to pay the gas fees for minting, at that time around one to five dollars. But after Mashable picked up the story, the collection gained recognition, and the remaining 8000-9000 punks were sold out within 24 hours. 

To the uninitiated, it may be challenging to understand the value of a PFP (profile picture) that only exists in the digital realm. However, for those who live on the internet, these memetic virtual goods are a part of their identity. As Fred Ehrsam put it, 

“Imagine you live on the internet. The way the world primarily knows you is not through your face or your clothes—it’s through your digital avatar. Of course, you are willing to spend a lot of money on something like a CryptoPunk: It’s your face to the digital world. Plus, it’s key to enter a small, unique internet club. Being a Cryptopunk owner as a crypto-native is the equivalent of being an Augusta National member as an old-school businessperson.”

What’s even more interesting is that the creators did not anticipate people tracking the different attributes of the collection. For example, they soon realized that there were only eight Cryptopunks with zero attributes and only one with seven. And the variety of attributes is wide, ranging from beanies and chokers to vapes and 3D glasses. Additionally, there are different types of Cryptopunks, such as Aliens, Zombies, and Apes.

In the end, the Cryptopunk collection has become a digital cult phenomenon. Its rarity, uniqueness, and status as pioneers of the NFT market make them attractive to collectors and enthusiasts. It’s a true testament to the power of the digital realm in shaping our cultural landscape.

Why Are CryptoPunks So Expensive?

For centuries people have been interested in art and culture. Art has been a valuable investment for centuries, often outperforming traditional investments. Many got excited about a potential new use case for the blockchain – the digital market of Non-Fungible Art, or NFTs and see it as a great diversification asset for their crypto portfolio allocation. The current value of the NFT market, according to NFT Valuations, is around $12 billion, representing just a fraction of the overall physical $1.7 trillion dollar art market. But why are some NFTs, like CryptoPunks, so damn expensive?

To understand the magnetism of these pixelated PFPs, read the original piece on NFTs 101. In that piece, a part describes the sale of Punk 7804, which was purchased for a whopping $7.5 million by a pseudonymous collector going by the name “Perrugia” from the founder of Figma. 

1) How I Learned to Stop Worrying and Love the Punks:

If this comes across your timeline you likely believe that in the future the world will grow more digitized and decentralized. If not I doubt a guy who values MS Paints at over $13,000 per pixel will convince you otherwise.

— Peruggia (@peruggia_v) March 12, 2021

Here is a quote from Dylan, who actually thought that Cryptopunks are the digital Mona Lisa after selling his punk. This quote clearly shows how culture and nft-art shape the identity of a person: 

“It was sort of a part of my identity. It was a mask. What are masks? They’re objects that you can project identity onto. And for 7804, the wise alien, I felt a bit different wearing it. And as soon as I sold it, it didn’t feel right to wear it anymore. And so I had to take it off. And now the person that’s wearing it, I’m like, “Wow, you are totally the wise alien, this is perfect.” But I definitely did feel very emotional about it. I felt extremely attached to it. It felt like a breakup to have sold it. I literally had dreams about it.” 

This paradox of ownership is the ultimate challenge for any collector. As more people become invested in their tribe’s success, the PFP becomes a symbol of one’s identity and, therefore, less likely to be sold. And with high-profile names like Jay-Z, Snoop Dogg, Serena Williams, and Odell Beckham Jr. among the owners of CryptoPunks, it’s easy to see why many want to be part of one of the first NFT art projects. As stated in the huge NFT 101 piece:

“In short, buying a CryptoPunk certainly is a speculative bet right now, but it’s far from being a totally baseless, foundationally empty speculative bet.”

Most Expensive CryptoPunk NFTs Ever Sold

The most expensive one ever sold is a punk that was sold for 8.000 ETH and even got a mention in the Guinness book of records as the “World’s Most Expensive NFT.” 

Deepak Thapliyal, the CEO of blockchain infrastructure startup Chain, spent a staggering $23.7 million on the blue Alien Punk donning a bandana. The purchase of CryptoPunk #5822 has set a new record for the highest-selling NFT, further cementing the prominence of digital art in the global art scene.

But this is not the first time NFTs have commanded such high prices. In March 2021, the digital artist Beeple sold a collage of his artwork for a staggering $69 million at a Christie’s auction, making it the most expensive NFT bundle sold. The artwork, called “The First 5000 Days,” is a digital composite of every image Beeple posted on Instagram over the past 13 years. This sale also demonstrated the immense potential and power of NFTs as a new asset class in the art world and put NFTs on the map for the first time.

How to Buy a CryptoPunk NFT?

If you have deep pockets and want to be part of the Cryptopunks community, you can easily do so. You just need to download the Chrome browser plugin MetaMask to let websites access your Ethereum account (only the ones you authorize, mind you). If you do not know the MetaMask plugin, inform yourself first about custodial vs. non-custodial wallets and how to protect your assets by owning your keys. Once you’re all set up, you can bid on, buy, and sell punks directly from the interface. The only caveat is you’ll need a bunch of Ether if you want to get in on the action. The current floor price is around 65ETH. 

Also, The creators of the iconic CryptoPunks have flipped the script on their own invention with a unique twist that’s got everyone talking. When Larva Labs first unleashed their collection of CryptoPunks, they also printed out physical lithographs of 24 of them, with each signed by co-founder Watkinson. Each lithograph was accompanied by a physical envelope that contained a “wallet,” which endowed ownership of said CryptoPunk to the person that possessed it. Nine of these bad boys went up for auction at Sotheby’s, with five fetching a cool $210,000-$315,000 each. 

However, the creators had no problem putting up lithographs of their famous Punks for auction at the esteemed Sotheby’s but were vehemently against the idea of putting more NFTs up for sale there. They argued that doing so would go against the very ethos of the crypto world. The entire point of CryptoPunks is that they have a native market built into them on the blockchain, one that’s open to anyone with an Ethereum wallet and willing to pay a small amount of gas fees. The main signal is that you’re counter-culture, and you don’t need to be part of some exclusive art investing community to buy a Punk. 

Invest in Cryptopunks Starting With $1 (Only on Morpher)

If you do not possess a small fortune to spend on a pixelated JPEG, you can now still invest in it. Thanks to the blockchain and fractional trading, investing in high-value art collections is now a reality. On Morpher, with as little as $1, anyone can be part of the elite world of blue-chip NFT projects, diversifying across all Cryptopunks. You can even buy a stake in multiple blue-chip NFT projects for less than $1, whereas before, you needed hundreds of thousands of dollars. More collections offered on Morpher are Bored Ape Yacht Club, Azuki, Moonbirds, and others.

Conclusion

But with such unprecedented access to the world of high-value digital art, questions abound. Are these NFT projects overvalued? Do they truly deserve the hype they’ve generated, or is it just a bubble waiting to burst? The founders of these projects remain non-committal on the matter. It’s an industry once small and niche, beloved by a loyal few. Now, the answer to that question remains unclear to the world watching. The founders say only with time and understanding of human behavior and emotional attachment to NFTs will we see. 

Listen to this great interview by culture and NFT OG Kevin Rose with the creators of Cryptopunks, where they also talk about upcoming projects and plans. If you liked that Podcast, you should check out our article on “NFT Podcasts,” where we recommend the best podcasts to stay ahead of the game in this space. 

Disclaimer: All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. This post does not constitute investment advice.