Launched in June of 2017, CryptoPunks are credited with being a major player in launching the NFT craze back in 2021.
CryptoPunks are widely considered to be one of the first NFT collections; there is a limited supply of 10,000 and each one was algorithmically generated based on different traits. Made by Larva Labs, each 24×24 pixelated JPG was created with different scarcity levels and includes people, apes, and more.
I first learned about CryptoPunks amidst the first NFT bull run in 2021; the story behind the collection along with the headlines – like CryptoPunk #3100 being sold for $7.58 million and the fact they made it to an internationally recognized art museum in Miami, Florida – piqued my interest.
CryptoPunks first began as an experiment by two Canadian software developers, Matt Hall and John Watkinson, as a captivating new form of art; they described it as, “a conceptual leap.” By leveraging blockchain technology but more specifically NFTs, the collection provided a new way to verify and authenticate the owner of digital art.
The Genesis of CryptoPunks: Exploring The Creation Algorithm
When CryptoPunks were first created, Larva Labs (the corporate entity created by Matt and John) were questioning if a few lines of code could revolutionize the concept of ownership; this is evident given that each Punk was originally given away for free.
Few, including the creators themselves, would have thought that Larva Labs would go on to be featured by widely recognized and respected media companies like Bloomberg and MarketWatch, among others.
So what was Larva Labs’ creation process for CryptoPunks?
CryptoPunks were created by a software program that generated 10,000 uniquely pixelated characters with no two punks being exactly alike. The algorithm was imbued with a multitude of traits, such as a mohawk and shades, that had assigned rarity.
Larva Labs stated, “We ran the generator hundreds of times, reviewed the results, and made adjustments. Then with little fanfare, we ran it one last time, linked it to the Ethereum smart contract that we deployed, after which the CryptoPunks were set in stone.”
Since each CryptoPunk is an NFT, no two are the same – even punks that appear the same are different because of the metadata which includes aspects like time of minting (or when they were created) and the specific number from 0 – 10,000. Each Punk is named within the range of 10,000, e.g. CryptoPunk #1009.
In 2017, the concept of digital ownership was still relatively unexplored, however Larva Labs demonstrated their continuous innovation by introducing a groundbreaking random generator. This pioneering approach was executed just a few months before CryptoKitties popularized the use of random minting tactics, which is something NFT collections commonly use today.
How Are CryptoPunks Valued: Factors That Determine Their Worth
As CryptoPunks have been sold at large fine art auction houses like Sotheby’s and Christies, many are left wondering: what makes CryptoPunks valuable?
It’s important to note that when it comes to valuing an NFT, there is no singular aspect that determines its value; rather, there are a multitude of aspects that contribute to making the item desirable – with demand being essential and the most vital.
At the most fundamental level, a CryptoPunk’s value is derived from supply and demand economics and worth what another person is willing to pay for it (similar to artwork). Factors like the historical elements, IP rights, access to the Yuga Labs ecosystem, verifiable ownership, and more make them valuable.
While many know and have come to appreciate CryptoPunks, I would consider them to be somewhat illiquid; this is because there may not be enough demand to sell a Punk listed at the floor price in any given period of time. Selling a Punk in a short period of time could potentially require undercutting all other sellers, which may even result in selling at a loss.
Similar to fine art, finding someone willing to pay high prices can be time consuming, however liquidating the piece for a price cheaper than current market price is easier and faster. That being said, high demand typically yields faster turnover, with sellers listing for increasingly high prices.
Aside from the economics of NFTs, it’s likely safe to say that much of CryptoPunks’ value can be derived from the historical aspect attributed to them. While not the first NFTs to be created, CryptoPunks are still revered as one of the first NFT collections.
As NFTs or verifiable digital ownership continues to be recognized as a new medium, the first few collections (e.g. CryptoPunks), who initially brought awareness to the space could potentially be immensely rewarded in the long run.
Furthermore, people likely derive value from being able to leverage the intellectual property rights of the CryptoPunk they own. We have seen restaurants open up with branding (specifically, the logo of the restaurant) from the owners’ personal Bored Ape (from the Bored Ape Yacht Club collection). Bored Ape Yacht Club is another NFT collection that was created by Yuga Labs.
Larva Labs (i.e. Matt and John), the creators of CryptoPunks back in 2017, sold the project – along with Meebits, their newer collection launched in May 2021 – to Yuga Labs, the creators behind Bored Apes. Upon selling the collection for an undisclosed amount on March 11, 2022 all holders were immediately granted full commercial rights.
With Yuga Labs acquiring CryptoPunks (& Meebits), holders gained access to the Yuga Labs ecosystem which opens up the potential for future utility like airdrops among other possibilities. Quantifying how valuable this is pretty subjective and therefore it’s hard to determine which aspect in particular impacts the value of a CryptoPunk.
The collector aspect of NFTs, particularly the recognition one receives for owning one of the 10,000 CryptoPunks, contributes to buyers’ willingness to pay high prices. This phenomenon is comparable to people paying significant amounts for custom license plates, seeking prestige through unique possessions.
Lastly, I think it’s important to mention the ownership aspect that owners receive from purchasing a CryptoPunk or any NFT for that matter. Since NFTs are tokenized on the blockchain, each NFT has verifiable information as to who the owner is.
Furthermore, aspects like provenance (wherein the previous owners of the NFT are also shown) helps to verify who created the NFT, thereby ensuring it wasn’t created by a party intending to impersonate the actual creators.
Exploring the Rise of Meebits: How Larva Labs Captured Success Again
Since the parabolic rise of CryptoPunks in 2021, many NFT projects have tried to recreate the same success; however the vast majority have failed to do so, due to their project receiving little awareness (which oftentimes is for good reasons).
Meebits are a line of 20,000 unique 3D avatar NFTs created by Larva Labs, the same team behind CryptoPunks. Launched in 2021, Meebits are metaverse-oriented and were randomly generated with unique features, which is akin to the CryptoPunks mint.
Currently, Meebits are owned by Yuga Labs, the parent company of Bored Ape Yacht Club.
Meebits gained market awareness due to the significant price surge of CryptoPunks which Larva Labs intended to recreate. This time, Larva Labs envisioned Meebits serving as metaverse avatars, usable in games like Decentraland and The Sandbox.
Meebits were sold through a Dutch auction, with users paying around 2.5 ETH to mint them. Purchasers were unaware of the randomly generated characteristics and luckier users obtained Meebits with rare traits, such as animal or skeleton features, which command higher prices. The initial minting cost was approximately $8,500 per Meebit and the current floor price is hovering around $2,500 amidst what many would consider a market downturn.
CryptoPunk owners were given priority to purchase Meebits as a utility reward; had holders taken advantage and quickly flipped, they could have potentially made substantial profit as some sold for close to 11 ETH (mint price was 2.5 ETH). Approximately 11,000 Meebits were allocated to these owners. However, some chose not to pay the high minting price. The remaining Meebits were sold in a Dutch auction and sold out within 8 hours, despite the steep fee.
Brand awareness played a vital role in the success of these NFTs. Many influential individuals in the NFT community with substantial followings expressed great enthusiasm for Meebits. The combination of their distinctiveness and captivating 3D features that made them playable in “metaverse-based games” further fueled the success of the release.
How To Purchase A CryptoPunk: Exploring The 3 Essential Steps
Acquiring one of the 10,000 CryptoPunks, or one of the 20,000 Meebits, or any NFT for that matter can be complex at first; however, soon it will become a moderately straightforward process. With just a few simple steps, transactions can be completed swiftly and efficiently. So, how do you buy an NFT?
The process involves three simple steps; firstly, users must establish a digital wallet that interacts with the blockchain. Secondly, users need ETH in their wallet to fund the transaction. Thirdly, buyers need to purchase the item and pay the transaction fee. These NFTs can only be purchased in the secondary market.
The first step is establishing a digital wallet, like MetaMask which can store the NFT; MetaMask is not the only option but it’s likely the easiest to configure when starting out. You will need to connect your MetaMask wallet to OpenSea as both collections can only be purchased on the secondary market.
In order to purchase a CryptoPunk or Meebit, Ethereum is needed as both collections are created on the Ethereum blockchain. Using a centralized exchange like Binance, you can send Ethereum to your MetaMask (Ethereum wallet address) or you can purchase Ethereum directly on MetaMask using a debit card.
When purchasing the NFT, it’s important to have enough funds to cover the gas fee in addition to the purchasing price. The gas fee is paid to miners for verifying transactions and is what keeps the blockchain secure.
If you are interested in learning about the procedure for how the NFT is transferred over, I highly recommend reading this article about smart contracts.
CryptoPunk Prices: Exploring The Average Sale Price
The average sales price for a CryptoPunk over the last year is approximately $930,000 USD; the collection has maintained exorbitant prices since the parabolic growth of the NFT market back in 2021. The collection was originally minting for free and when gas prices were only 12 cents.
When it comes to NFTs, those familiar with them often think of the Bored Apes but CryptoPunks are nothing less than second. I personally think of CryptoPunks as the collection that meaningfully moved the space forward and brought immense awareness to NFTs.
It’s important to note that I sourced the statistics regarding the average sales price for a Punk from Larva Labs’ website which loads the information directly from the CryptoPunks smart contract.
CryptoPunks’ Sales Market Trend
From the start of June 2017 – when CryptoPunks were created – to the end of 2019, these digital collectables saw roughly 50 – 200 unit sales per 30 day time period. At the beginning of 2020, the NFTs saw huge spikes in the number of sales, reaching as high as 2,500 sales in 30 days and averaging roughly 880 sales per 30 days. Since then, sales have been more stable however there are still substantial fluctuations.
When examining the amount of sales, the market price for these digital assets is cardinal to analyze.
From the beginning till around the end of 2020, CryptoPunks were seeing turnover of $15,000 every 30 days, however the gross sales varied greatly depending on the time period. At the start of 2021, prices increased tremendously to roughly $45 million in each 30 day period. From 2022 until the time of writing this article, CryptoPunks have primarily had a floor price within the 60 ETH range with some fluctuations to 40 and 70 ETH. A live floor price graph can be found here.
Understanding CryptoPunks Market Cap
Market cap is a powerful metric that offers insights into the size and value of various entities, whether it’s a company or a collection of NFTs. It provides a comprehensive understanding of the value and market perception of a business or NFT line.
CryptoPunks currently have a market cap of just under $1 billion. Relative to other companies this is remarkably high; for reference, Motley Fool – along with much of the market – considers small cap stocks to be companies within $300 million to $2 billion.
Market cap is continuously increasing to account for inflation and companies are progressively seeing larger and larger market caps. Apple recently hit a market cap of USD $3 trillion, making it the most valuable company in the world (at the time of writing this article).
Assessing the Investment Potential: Are Meebits or CryptoPunks Worth It?
Before diving into this section, I must advise that I am in no way providing financial advice or any other form of advice and this is simply my thoughts.
When it comes to purchasing NFTs, it’s important to recognize that they are highly speculative investments and that the vast majority of these digital assets don’t retain their value.
As a general statement, NFTs are incredibly risky and highly speculative investments. The bull case for CryptoPunks would entail them being thought of as having historical significance and the bull case for Meebits would entail them carrying the high prestige of owning a Yuga Labs NFT. The bear case is the downfall of Yuga Labs which would be catastrophic to the floor price for both collections.
Overall, I believe the underlying technology that allows for NFTs or verifiable digital ownership is immensely valuable; however, it’s almost impossible to say how individual NFT collections will do in the long run.
As with any purchase, it’s important to complete your own due diligence before taking action; I highly recommend sitting on the sidelines for a few NFT drops to understand what flops and what is successful.
When purchasing an NFT, it’s paramount to examine all aspects – especially the founding team, the community, the artwork, the utility, and more.
One aspect that I’ve noticed is the enormous awareness that is brought to these digital assets when large publications and even widely recognized people with large audiences express their interest.
Famous Owners of CryptoPunks: Exploring the Celebrities and Influencers
Among the 10,000 CryptoPunks some of the most widely known holders include Visa (digital payment company), Jay-Z, Mark Cuban, Odell Beckham Jr, Steve Aoki, Gary Vaynerchuk, Dylan Field, Snoop Dogg, FEWOCiOUS, Serena Williams, Marshmello, Jason Derulo, Logan Paul, Faze Banks, Dan Bilzerian, Jordan Belfort and 3LAU among others.
It’s likely more celebrities and potentially more companies will purchase CryptoPunks in the future.
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