A snapshot of a part of the CryptoPunks collection

What are CryptoPunks, how did they start the NFT craze and why are they so valuable?

CryptoPunks is one of the Ethereum blockchain’s first non-fungible token projects. The project consists of 10,000 24×24 pixel portraits generated by an algorithm with random attributes such as a person wearing a hat or smoking a pipe.

Although you could initially get a CryptoPunk for free (aside from a transfer fee), the scarcity of the digital portraits, combined with the increased demand for NFTs, has driven up the price. Let’s try to break down where CryptoPunks came from and why they became such a phenomenon, reshaping the entire history line of NFTs.

CryptoPunk #3100

Larvalabs

CryptoPunk #3100 is currently for sale by the owner for $116.07 million
CryptoPunk #3100 is currently for sale by the owner for $116.07 million

While you could originally acquire a CryptoPunk for free (aside from a transfer fee), the rarity of the digital portraits and the increased demand for NFTs has sent the price skyrocketing.

CryptoPunks launched as a fixed set of 10,000 items in mid-2017 and became one of the inspirations for the ERC-721 standard. They have been featured in places like The New York Times, Christie’s of London, Art|Basel Miami, and The PBS NewsHour.

How was CryptoPunks started?

CryptoPunks was created by Larva Labs, a two-person development team working on all sorts of projects from mobile games and utilities to web infrastructure to digital design and art. The team developed a pixelated character generator with inspiration from 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. They’d only have to pay the gas fee to cover the computing energy, which was considerably lower before NFTs and DeFi took off. Larva Labs kept 1,000 portraits for themselves, but the rest were quickly claimed. The only way to acquire a CryptoPunk today is to purchase it directly from its owner.

What makes CryptoPunks special

There are a few things that make CryptoPunks special as a project.

First of all, it’s one of the earliest NFT projects on the Ethereum blockchain. It started months before the launch of CryptoKitties, a popular cat-breeding blockchain game/NFT project. Being one of the first projects of its kind gives it value.

Second, only 10,000 CryptoPunks will ever exist. This creates scarcity among collectors.

Some CryptoPunks portraits may be more valuable than others based on their attributes (or lack thereof). There are just nine aliens and 24 apes, 44 wear a beanie, 48 wear a choker, 78 have buck teeth, and 128 have rosy cheeks. Eight CryptoPunks have no defining attributes, and one (#8348) has seven attributes.

A CryptoPunk with multiple rare attributes can be worth a lot. For example, CryptoPunk #7804, an alien (9) wearing small shades (378), a hat (254), and smoking a pipe (317), fetched more than $7.5 million.

But rarity isn’t the only factor in how much a CryptoPunk is worth. Some portraits are desired merely because a collector likes the look.

How to buy a CryptoPunks NFT

Before you can buy an NFT, you’ll need to set up a cryptocurrency wallet such as MetaMask. Your wallet is a unique address on the blockchain that anyone can see the contents of, but only you are able to access it.

Once you’ve established your wallet, you need some Ether. You can either buy the token through the service provided by the wallet, or send Ether you already own on an exchange such as Coinbase to your wallet address.

Make sure you set up your wallet to work with your web browser using its extension.

With Ether in hand, so to speak, you’re ready to purchase a CryptoPunk. You can view CryptoPunks for sale on Larva Lab’s website. When you find a CryptoPunk you’d like to purchase, click on it, and then click the buy button on its page. Your browser will ask you to connect your wallet and confirm the transaction.

Once you confirm the transaction, the Ether will go to the seller, and you’ll see the NFT show up in your wallet.

What the future looks like for CryptoPunks

CryptoPunks benefited from the boom in collectors’ items during the COVID-19 pandemic combined with the increased interest in cryptocurrency and other blockchain projects. It was a perfect storm to send prices soaring.

Ultimately, the price of CryptoPunks portraits is determined by supply and demand. With supply fixed, the question NFT investors must ask themselves is whether they think demand will continue to increase or if we’ve reached a peak.

It’s possible CryptoPunks will go from relatively fringe collectors’ items to mainstream art since several have been up for auction at Christie’s and Sotheby’s. That could bring in new bidders for the popular NFTs. But it seems more likely that those interested in the tech/art project already know about it. 

In other words, we may have already hit peak demand for the NFTs. That said, it’s still possible for individual CryptoPunks with especially desirable attributes to maintain or climb in price even if the overall market might not be as valuable as its peak.

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