Cryptopunk: Worthy Investment Or Risky Business?

CryptoPunks are a collection of 10,000 pixelated avatars stored on the Ethereum blockchain. They were one of the first non-fungible tokens (NFTs) and have become increasingly popular among investors, with some selling for millions of dollars. So, are CryptoPunks a good investment?

Cryptopunks are the first NFTs

CryptoPunks are among the very first non-fungible tokens (NFTs) and the first to gain mass popularity as a collection. Created in 2017 by Larva Labs, CryptoPunks are a set of 10,000 generative, pixel art digital collectible avatars. CryptoPunks are 24x24 pixel art images, generated algorithmically. Most are punky-looking guys and girls, but there are a few rarer types mixed in: apes, zombies, and even aliens.

CryptoPunks are one of the earliest NFT projects on the Ethereum blockchain. They were created months before CryptoKitties, a popular cat-breeding blockchain game/NFT project. Being one of the first projects of its kind gives it value. CryptoPunks are also unique, with only 10,000 in existence, creating scarcity among collectors.

The Larva Labs team developed a pixelated character generator inspired by the London punk scene and cyberpunk films and novels. They generated 10,000 unique characters and hosted them on the Ethereum blockchain in 2017. Anyone interested could claim a CryptoPunk for free, paying only the gas fee to cover the computing energy. Larva Labs kept 1,000 portraits for themselves, but the rest were quickly claimed.

CryptoPunks are revered by crypto investors. When crypto is going up, especially due to decentralized finance, desirable NFTs like CryptoPunks gain significantly in value. Investors want to stay in crypto and make their mark with their peers, and CryptoPunks are the best way to do both. The most valuable CryptoPunks are those with rare attributes. For example, CryptoPunk #7804, an alien wearing small shades, a hat, and smoking a pipe, fetched more than $7.5 million.

CryptoPunks are also VIP passes for the internet. They are becoming a special community, especially as teenagers and young adults become engrossed in virtual worlds and the rapidly developing metaverse. In the future, CryptoPunks will be in high demand from this age group as they mature, along with other respected NFTs. CryptoPunks are also avatars that can be used in any domain. The simple pixel art style means they work across all social media and are now being voxelised for use within virtual worlds.

CryptoPunks are also highly liquid compared to other NFTs and physical art. You can sell them on the Larva Labs marketplace with zero fees, or on OpenSea, and buyers will always be found. Decentralized finance protocols like NFTX allow for the instant buying and selling of CryptoPunks, and there are projects that allow owners to fractionalize CryptoPunks to distribute ownership across multiple buyers.

Cryptopunks are VIP passes

Cryptopunks are becoming the VIP passes of the internet. Although they are still mostly known within the crypto world, Cryptopunk owners are seen as a special community. With younger generations engrossed in virtual worlds and the metaverse, digital VIP passes are inevitable. Cryptopunks will be in demand from this younger demographic as they mature, alongside other respected NFTs.

Cryptopunks are also avatars that can be used in any domain. The simple pixel art style means they can be used across all social media platforms and are now being voxelised for use within virtual worlds. Cryptopunk avatars are already being used on crypto Twitter and Clubhouse, with some becoming synonymous with personalities, which can add value. This is a key driver of long-term value, especially as people get so attached that they will no longer sell them on, gradually reducing the already scarce supply.

The popularity of Cryptopunks is also due to their status as the first significant NFT collection. This is critical when looking at sustainable, long-term value. Other collections may sustain success over a long period, but Cryptopunks are already years ahead and will always be seen as the parents of all NFT collections and metaverse avatars.

Cryptopunks are also highly liquid compared to other NFTs and physical art. Whether selling on the Larva Labs marketplace (with zero fees) or wrapped punks on OpenSea, buyers can always be found. Decentralised finance protocols like NFTX allow users to instantly buy and sell floor punks and sometimes higher-value punks, and there are also projects that allow owners to fractionalise Cryptopunks to distribute ownership across multiple buyers.

Cryptopunks are becoming increasingly important to some businesses trying to attract them. They are often seen as being above average because they have access to digital goods and services that others do not. For example, Tiffany & Co recently sold out 250 customised pendants for Cryptopunk holders at $50,000 each. Cryptopunks are becoming the VIP passes of the internet.

Cryptopunks are avatars

Cryptopunks are a set of 10,000 generative, pixel art digital collectible avatars. They were created in 2017 by Larva Labs and were among the first non-fungible tokens (NFTs) to gain mass popularity. Cryptopunks are unique, with no two characters being exactly alike.

The avatars are easy to use, and people will pay real money for them if they appreciate their legacy. Cryptopunks can be purchased on the blockchain marketplace, with some selling for millions of dollars.

The value of Cryptopunks is also driven by their scarcity. There are only 10,000 Cryptopunks, and they are the first and most significant NFT collection. This means they are seen as the parents of all NFT collections and metaverse avatars, securing their value for years to come.

Cryptopunks are also valuable because of their popularity. They are becoming the VIP passes of the internet, with owners seen as a special community. With younger generations in particular engrossed in virtual worlds, Cryptopunks will be in demand from this age group as they mature.

Cryptopunks are liquid

Cryptopunks are highly liquid compared to other NFTs and physical art. There is always a buyer in the market for Cryptopunks, whether on the Larva Labs marketplace (with zero fees) or wrapped punks on OpenSea.

Decentralised finance protocols like NFTX allow users to instantly buy and sell Cryptopunks, and there are also projects that allow owners to fractionalise Cryptopunks to distribute ownership across multiple buyers. Cryptopunks can also be traded on decentralised finance platforms like Yam Synths, which offers more liquidity than traditional order books.

Cryptopunks have survived many crypto winters and remain liquid at the right price. There is also a FloorDAO that frequently buys and sells various NFT collections, including Cryptopunks, if prices fall compared to other NFTs.

Liquidity is an important consideration when investing in Cryptopunks, as there is no guarantee that a buyer will remain in the market. Liquidity can dry up quickly in cooler market conditions, and there is a risk of selling an asset for less than its worth.

However, Cryptopunks have high liquidity compared to other NFTs, and their status as the first significant NFT collection further adds to their value and desirability.

Cryptopunks are limited

The limited number of Cryptopunks for sale fuels intrigue and drives demand. They are seen as VIP passes, or luxury symbols, in crypto communities. Their status as the first NFT collection means that they are revered by crypto investors, and their value is expected to continue to increase over time.

The limited number of Cryptopunks also means that there are only a few available to purchase at any given time. This can make them difficult to acquire, and drives up the price. Cryptopunks can be purchased on the blockchain marketplace, or on Larva Labs' fee-free platform, or on OpenSea.

The limited number of Cryptopunks is also what makes them so expensive. The most expensive Cryptopunk sold for $16.9 million, and even the most common Cryptopunks trade for $30-50k each. The cheapest Cryptopunk available to purchase in August 2022 was priced at 66.66 Ether, worth about $222,000.

The limited number of Cryptopunks and their high value have also led to the development of platforms that allow users to buy a fraction of a Cryptopunk, rather than the whole thing. This makes Cryptopunks more accessible to those who can't afford to drop hundreds of thousands of dollars on a single NFT.

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