Why Are CryptoPunks So Expensive?

CryptoPunks

Looking at the NFT space today, you’ll notice there are certain templates and features that are widespread among collections, and if you’re wondering where these features come from, there’s a reasonable chance that the answer is CryptoPunks.

The CryptoPunks collection minted 10,000 tokens, which set 10,000 as the standard supply for other creators to adopt, although there is more variation between new projects now.

Then there’s the PFP (profile picture) standard format: a set of characters all facing in the same direction, algorithmically assembled, based on an identical underlying form, but with varying overlaid traits, some of which are rarer than others… yep, that all comes from CryptoPunks.

The collection also makes use of a pixelated, retro design style, and that too has become commonplace in NFTs.

In other words, CryptoPunks are iconic and influential, but what also stands out is that they are very expensive. Looking at the assets themselves, the artwork is simple and repetitive, so what exactly is it that makes CryptoPunks valuable, and what is their backstory?

NFTs Before CryptoPunks

cryptopunk nft

Image credits: Kevin McCoy

CryptoPunks were minted in 2017, but they were far from the first ever NFTs. For that accolade, you’d have to go back to 2014, when artist Kevin McCoy minted a work called Quantum on the Namecoin blockchain, and established a platform called Monegraph, meaning monetized graphics.

That same year also saw the launch of Counterparty, a platform built on Bitcoin which allowed for the creation and trade of unique crypto tokens (or in other words, NFTs), including early collections Spells of Genesis and Rare Pepes, which were recently rediscovered by new NFT collectors.

Predating both Counterparty and Quantum, there were Colored Coins on the Bitcoin network, but these can be thought of as proto-NFTs, setting a basis for further experimentation.

CryptoPunks Change the Format

nft

Image credits: Larva Labs

Paying homage to punks, cyberpunks and cypherpunks, CryptoPunks were launched by John Watkinson and Matt Hall’s Larva Labs in June 2017, on Ethereum. It was the first ever PFP-style collection, in the sense that it created the concept of a PFP collection.

A remarkable aspect of the story, especially when wondering about the price tag, is that they were originally distributed for free. In those early days, anyone with an Ethereum wallet could claim a CryptoPunk, and they were rapidly snapped up after a Mashable article brought them to wider attention.

It’s fascinating to read the article now, as it presents the case for NFTs long before most people had heard of the concept, and talks about a zombie punk (now one of the most sought after traits) being traded for $1.

punks nft

A prescient extract from the 2017 Mashable article

From there, punks were exchanged around the compact community of Ethereum users that existed at the time, and a marketplace was established. They immediately gained a little in value, but were still far removed from mainstream awareness.

Influence and Copycats

cryptopunk copycats

Image credits: ThreadPunks

It’s riding high on the frothy, WAGMI, NFT delirium of 2021 that CryptoPunks soar in value and start to garner attention from outside the crypto space. The collection is covered not only in crypto and tech media, but in art world channels too, and CryptoPunks items go on sale at auction houses Christie’s and Sotheby’s.

As this happens, they exert tremendous influence in the NFT space, with CryptoPunks-style traits becoming commonplace, and innumerable copycats, such as SolPunks on Solana, and the now defunct ThreadPunks on Cardano.

The NFT collection which currently has the highest market cap, Bored Ape Yacht Club, draws on the CryptoPunks ape trait, but the story comes full circle in 2022 when Yuga Labs (the creators of BAYC) acquire the IP rights to CryptoPunks.

Price History

cryptopunk price

Chart from Dune Analytics

CryptoPunks were free to claim in June 2017, and throughout the rest of that year–when crypto experienced a euphoric bull market surge–traded at an average price of between 0.15 and 0.62 ETH (taking average prices to a high of around $150).

Then, throughout the prolonged crypto winter of 2018 into 2019, prices dipped back down in both ETH and dollar terms, as crypto ground out the bear market lows.

Through 2020, prices prepared for take off, and by the end of the year, CryptoPunks were trading at an average price of 8 or 9 ETH, which had become equivalent to around $5,000.

After that, the really attention grabbing sales started happening during the crypto and NFT bull run of 2021, with the average sales price hitting a peak of 131 ETH in October, which at that time–while crypto was at a cyclical high–was equivalent to almost half a million dollars.

Keep in mind also that rare pieces sell for for much higher amounts, with the top three CryptoPunks sales coming in at $23.58 million, $10.35 million, and $7.82 million, and a lot consisting of nine CryptoPunks selling for just under $17 million at Christie’s in May 2021.

The current situation is that last month, 85 CryptoPunks changed hands at an average cost of 75 ETH, or about $115,000, and the floor price on punks right now is 63.95 ETH, up from a dip to 43 ETH at the end of May.

What makes CryptoPunks so Valuable?

cryptopunk art

Image credits: Sotheby’s

A huge factor is CryptoPunks’ unique historical importance as both tech artifacts and works of art. When it comes to tech, they are part of the crypto space, meaning an area that is expanding, finance-related and known for intense speculative gains, and at the same time, the art world that CryptoPunks have joined sometimes places immense value on prestigious items.

CryptoPunks are a scarce asset, with perfect, blockchain-locked provenance. They have permanently influenced the entire NFT space, forever, and what’s more, they operate as digital Veblen goods, allowing owners to flex wealth and–some holders might argue–tech sophistication.

As for claims that CryptoPunks lack artistry or creative merit, well, besides being subjective and overly dismissive of generative art, that’s hardly a new line of criticism in the modern art world. Tell it to the ghosts of Marcel Duchamp, Jackson Pollock and Andy Warhol, and let me know if it gets you a discount at Sotheby’s.

Should I Buy a CryptoPunk?

should you buy a cryptopunk

Image credits: Larva Labs

The collection’s floor price remains below all-time highs as the bear market persists, but the steepest mid-2022 dip was eaten up with conviction when the floor recovered sharply across two days in June.

If you have a low time preference and a pile of ETH, then yes, buy one. Even if NFTs disappeared forever (which they won’t), CryptoPunks would be the remains left over, of value to both art collectors and tech nerds alike.

They have been enormously disruptive, confidently low-key, and are detached from preoccupations with utility and brand-building. Why are CryptoPunks so expensive? Because they are a landmark in the histories of both art and tech, and each unique item represents part of a wider story.

Why Are CryptoPunks So Expensive? - - 2022

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