What Are CryptoPunk NFTs?

BeginnerJan 12, 2023
A study on the NFT that started it all
What Are CryptoPunk NFTs?

Among the many NFTs in the NFT world, CryptoPunk resonates as the NFT that pioneered the craze for the concept of owning digital assets secured on the blockchain, with unique attributes which inspired the development of the ERC-721 standard and forged the way for subsequent NFT projects, like Bored Apes Yacht Club, Meebits, and Art Blocks.

In this article, we will explore CryptoPunk NFTs, learn how to mint them, and get to know the reason they are in high demand among crypto enthusiasts and NFT collectors.

What Are CryptoPunk NFTs?

In June 2017, two Canadian Software Developers, Matt Hall and John Watkinson, greatly influenced by the London Punk subculture, the CyberPunk movement, and electronic music artist Daft Punk, created a set of 10,000 8-bit digital collectible characters living on the Ethereum blockchain.

At the time, the concept of NFTs was still in its developing stages and much of the focus of crypto enthusiasts were on Bitcoin and the burgeoning blockchain technology.

Thus, the launch of these unique digital assets came as amazement and caused many to ask, “how could a few lines of code translate to a feeling of meaningful ownership?” And also, “what is the usefulness of acquiring any of these digital items?”

Meanwhile, the idea of owning CryptoPunk NFTs was not appealing to a broad Crypto audience and initially struggled to gain popularity.

After the launch, Matt and Watkinson decided to give out the first set of CryptoPunks (about 9,000) in a bid to create wide publicity on the uniqueness and invaluable nature of the product within the Crypto World, while keeping to themselves 1,000 in the hope of bullish days.

Three years later, CryptoPunk NFTs became highly desirable among crypto enthusiasts and NFT collectors. The cost of acquiring these NFTs skyrocketed and was sold at auctions - Christie’s and Sotheby’s.

Furthermore, the NFTs were listed among the most expensive in the NFT world, attracting the attention of Celebrities, Key Opinion Leaders (KOLs), Influencers, and Business Leaders who bought the NFT at high costs and adorned their social media profiles with it.

In addition, CryptoPunk is popularly regarded as the genesis of the present-day CryptoArt movement, which engineered the need for the development of ERC-721 standards for the minting of NFTs, and laid the foundation for subsequent NFT projects.

As the price and fame grew, so did market demand and value, with over $1.56 billion in total sales within a short span.

Types of CryptoPunk NFTs

There are majorly two categories of CryptoPunk NFTs:

  • Human Punks: There are 6,039 male punks and 3,840 female punks, which makes them less desirable and as such less expensive inside the Punk market, though there are few exceptions.

  • Non-human Punks: Matt and John modified their software algorithms to generate several rare and scarcer CryptoPunks, which are the most sought-after of all the collections.
    The non-human Punks include 88 green-skinned Zombie Punks, 24 hairy Ape Punks, and 9 light-blue-skinned Alien Punks. Of the punks, Alien has a higher rarity and is very expensive.

Moreover, none of the 24×24 pixel CryptoPunks are alike but instead have a unique set of attributes, such as headbands, hats, hair color, pipes, and masks, which were randomly assigned by a generator, thereby distinguishing them from the other.

Reasons for the High Prices of Cryptopunk

As was seen with successive NFTs, market demand and value can be dependent on several factors such as:

  • Uniqueness: CryptoPunk is a pioneer in the NFT world that created a ‘craze’ among crypto enthusiasts offering for the first time the possibility for anyone to purchase universally recognized digital assets.

  • Scarcity: The number of a product available in the market goes a long way to determine the cost; for example, in Ferrari, the producers create scarcity by simply producing a small number of models, targeting the world’s wealthiest. This is similar to CryptoPunk! The non-human Punks are in limited supply leading to higher demand and making them very expensive.

  • Rarity: Those with rare attributes, such as Aliens, Apes, and Zombies are more expensive and also have high market valuations.

  • Form of Investment: Within the crypto world, acquiring NFTs is seen as a form of investment and with the security and transparency that blockchain technology provides, your money is kept safe in the form of digital assets and essentially earning interest.

How to Buy CryptoPunk NFTs

To purchase CryptoPunk NFTs, you need to have an Ethereum wallet, such as MetaMask. You can connect with your wallet to the NFT marketplace such as OpenSea- the leading secondary marketplace for NFTs.

Once you have connected your wallet, you need some Ether ($ETH), as CryptoPunk is an Ethereum-based NFT; so you can either buy the token through the service provided by the wallet or send Ether you already own on an exchange such as Gate.io to your wallet address.

Once this is done, you can buy CryptoPunks through the (verified) official site, by simply confirming the transaction. Once confirmed, the Ether ($ETH) will go to the seller, and you’ll see the NFT appear in your wallet.

Always make sure you verify the address of the NFT marketplace, and ensure you set up your wallet to work with your web browser using its extension.

Fractional Ownership

Most often, CryptoPunk NFTs are sold at exorbitant amounts or auctioned, allowing very rich investors to participate in the acquisition, and excluding a vast majority of retail investors that desire to own the digital asset.

To enable retail investors to acquire a portion of pricey CryptoPunk NFT, and earn through subsequent sales; the idea of fractional ownership was created which allows a whole asset, to be divided into parts to allow for more investors or owners and even artists (such as Beeple) to be able to buy a piece of their work.

By fractionalization, anyone can own a fraction of a digital asset at a minimal cost and make profits from the sale, guaranteeing the steady supply of highly needed liquidity for the illiquid NFT markets.

A Simple Case Study: F-NFTs

An example of Fractional NFTs (F-NFTs) is the Zombie CryptoPunk, which sold in August 2021 for 1,144 ETH ($3.2 million). This piece of digital art is not owned by an individual but rather more than one buyer, around 480 buyers.

Upon buying the ZombiePunk, each buyer received tokens (ERC-20s) representing their share of the artwork.

Moreover, the F-NFT is usually locked in a smart contract secured fractional vault of a decentralized platform.

Conclusion

CryptoPunk is a revolutionary project in the NFT world which laid the foundation for the NFT market, transformed how people owned NFTs and transferred digital assets, and empowered artists to push the frontiers of their creativity and monetize it.

Also, with Fractionalization comes a greater demand for CryptoPunk NFTs allowing retail investors to own a fraction of the digital asset at a minimal cost and also make profits from future sales, ensuring the steady supply of liquidity for the illiquid NFT markets.

Moreover, the acquisition of the project by Yuga Labs further strengthened the value and market demand for the NFTs after initially dropping in floor price and valuation.

Author: Paul
Translator: Joy
Reviewer(s): Matheus, Ashley, Joyce
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