Introduction

CryptoPunks are recognized as trailblazers in the NFT world and were among the first art collections developed on the Ethereum blockchain. Secured by blockchain technology, these NFTs sparked a significant wave of interest in the industry. Their unique, randomly generated traits were key in shaping the ERC-721 standard, setting the stage for later NFT projects like Bored Ape, Meebits, and Art Blocks.

This article will explore key concepts surrounding CryptoPunk NFTs, how they are created, and why they have become highly valued by crypto enthusiasts and NFT collectors.

What is CryptoPunk NFT？

In June 2017, inspired by the London punk subculture, the cyberpunk movement, and electronic music artists like Daft Punk, two Canadian software engineers, Matt Hall and John Watkinson, created a series of collectible digital artworks as tokens on the Ethereum blockchain. This collection consisted of 10,000 8-bit pixel-style punk characters. At the time, NFTs were still an emerging concept, and crypto enthusiasts were primarily focused on Bitcoin and the growing blockchain landscape.

When these unique digital assets were launched, they immediately sparked much debate in the industry. People began questioning how a few lines of code could become an asset with valuable ownership. And what’s the point of purchasing these digital items? However, back then, CryptoPunk NFTs did not have the large crypto audience they enjoy today, as NFT adoption was still relatively low.

After releasing CryptoPunks, Matt and Watkinson offered their first set of NFTs (about 9,000), aiming to attract buyers with the product’s uniqueness and scarcity. They also held back 1,000 NFTs, planning to release them later to maximize profits when the market heated up.

Three years later, CryptoPunk NFTs became highly coveted by crypto enthusiasts and collectors, and their value skyrocketed. These NFTs began to be sold through auctions at Christie’s and Sotheby’s, with buyers competing for the highest bid.

As one of the leading NFTs in the space, CryptoPunks also caught the attention of celebrities, influencers, and business leaders, who purchased them at premium prices and proudly displayed them as profile pictures on social media. CryptoPunks are now widely recognized as trailblazers in the crypto art movement, helping to establish the ERC-721 standard, which enabled large-scale NFT minting and paved the way for future NFT projects. As demand for NFTs grew alongside their rising value and recognition, the total NFT trading volume surged past $1.56 billion in a relatively short time.

Types of CryptoPunk NFTs

CryptoPunk NFTs are generally classified into two main categories:

• Human Punk NFTs: This category consists of 6,039 male punk characters and 3,840 female punk characters. Since they are relatively common and available in large numbers, their market prices are generally lower, with only a few rare cases selling for higher amounts.
• Non-human Punk NFTs: Matt and John tweaked their software algorithm to create several rarer types of CryptoPunk NFTs, the most sought-after within the entire CryptoPunk collection. \
  Non-human Punk NFTs include 88 green-skinned zombie punks, 24 furry ape punks, and nine light-blue-skinned alien punks. Among them, the alien punks are the rarest and are sold at the highest prices. \
  Moreover, each 24x24 pixel CryptoPunk NFT is entirely unique, featuring randomly assigned traits like headbands, hats, hair color, pipes, and masks, making every punk figure truly one of a kind.

Why CryptoPunk NFTs Are So Expensive

The market demand and value of CryptoPunk NFTs largely depend on several key factors

• Uniqueness: As pioneers in the NFT space, CryptoPunks sparked an NFT craze among crypto enthusiasts, while also the first to showcase the exciting potential for anyone to purchase and own verified digital assets.
• Scarcity: In any market, supply and demand significantly affect pricing. For example, Ferrari produces a limited number of cars aimed at an elite group of wealthy buyers, making rarity a major factor in driving prices. This principle also applies to CryptoPunks—non-human Punk NFTs are in limited supply, which naturally increases their value.
• Rarity: Non-human Punk NFTs, such as those featuring aliens, apes, and zombies, come with rare traits, making them more valuable and leading to higher market valuations.
• Investment Potential: In the crypto world, purchasing NFTs is seen as an investment. Blockchain technology ensures the security and transparency of these transactions, so your funds remain safely protected while being stored as digital assets.

How to Buy a CryptoPunk NFT

To buy a CryptoPunk NFT, you’ll need an Ethereum wallet, such as MetaMask. Once your wallet is set up, you can connect it to an NFT marketplace like OpenSea, a leading platform for secondary NFT sales, making transactions easier. After linking your wallet, ensure you have some Ether (ETH), as CryptoPunks run on the Ethereum blockchain. You can either buy ETH directly through your wallet’s service or transfer it from an exchange like Gate.io to your wallet.

Once your wallet is funded with Ether, you can visit a verified official site to purchase a CryptoPunk. After you confirm your purchase, the platform will deduct the necessary Ether from your wallet to complete the transaction. Once the payment is processed, the NFT will be transferred to your wallet. During the transaction, double-check the marketplace’s address and ensure your wallet is securely connected to the correct, legitimate browser page.

Fractional Ownership

CryptoPunk NFTs often sell or auction for such high prices that only the wealthiest investors can afford to own them, making it nearly impossible for most retail investors to buy in.

To address this, fractional ownership emerged, allowing retail investors to own a share of expensive CryptoPunk NFTs and potentially profit from future sales. Fractional ownership allows an NFT to be divided into smaller pieces, making it accessible to a wider range of investors, owners, and even artists like Beeple, who may want to purchase part of a desired NFT.

By splitting an NFT into fractions, anyone can buy a small portion of a digital asset that fits within their budget, and profit from future transactions. This also helps provide much-needed liquidity in the often illiquid NFT market.

Brief Analysis of Fractional NFTs (F-NFTs)

One of the best-known examples of a Fractional NFT (F-NFT) is the Zombie CryptoPunk NFT. In 2021, this NFT sold for 1,144 ETH, equivalent to $3.2 million. Instead of being owned by a single individual, the artwork was collectively owned by around 480 buyers.

Once the Zombie CryptoPunk NFT was purchased, each buyer received ERC-20 tokens representing their artwork share. F-NFTs are also typically stored in smart contract vaults on decentralized platforms.

CryptoPunks IP Management

After Yuga Labs acquired CryptoPunks, they granted CryptoPunks holders the same commercial rights as BAYC and MAYC holders. However, Greg Solano recently announced plans to decentralize CryptoPunks fully. Yuga Labs emphasized that they are not directly involved in the issuance of NFTs, but this decision sets a strong example for opening up the copyright of CryptoPunks. As CryptoPunks become more decentralized, this could encourage more collaborative opportunities in the future.

In addition, CryptoPunks teamed up with the renowned American jewelry brand Tiffany & Co. to launch their first NFT project, NFTiff. Any CryptoPunk holder who purchases the NFT can redeem it for a custom gemstone pendant.

What The Punk

The film “What the Punk” premiered in June 2024. It chronicles the rise of Crypto Punks and reflects on their impact on the crypto art world. It highlights the allure and challenges of blockchain art while underscoring the enduring spirit of the crypto-punk movement. Directed by Hervé Martin-Delpierre and produced by Marc Lustigman, the film explores how this crypto art project, originating from the gritty streets of Brooklyn, became a global sensation.

“What The Punk” goes beyond CryptoPunks’ success, featuring insights from prominent figures in the crypto art community, including Noah Davis, former head of digital art at Christie’s, Dada art expert Yehudit Mam, collector Dan Polko, and long-time Punk Discord moderator Tschuuuly. Together, their stories and perspectives reveal how this project has transformed the art world.

Rather than delving into the technical intricacies of blockchain, “What The Punk” focuses on CryptoPunks’ influence and artistic significance. The film also touches on the story of the V1 Punks, early versions that were abandoned due to technical flaws but still exist on the blockchain, becoming a notable part of the CryptoPunks phenomenon.

Conclusion

CryptoPunk is a landmark project in the NFT space, setting the stage for the future growth of the NFT market. It has revolutionized how people own NFTs and transfer digital assets, empowering artists to fully express their creativity and increase the economic potential of their work.

As recognition of fractional NFTs grows, the market for these assets has expanded significantly. Demand for CryptoPunk NFTs has also risen. Through fractionalization, anyone can buy a small share of a digital asset within their budget and earn profits from future transactions, helping to provide much-needed liquidity in the often illiquid NFT market.

Additionally, after an initial dip in floor prices and valuations, Yuga Labs’ acquisition of the project further boosted the value and demand for NFTs.