How to explain the popularity of CryptoPunks?

Basically, they are pixelated and minimalist figures, and their artistic aspect is not obvious at first glance. Still, CryptoPunks are the collection of NFTs that have had the most impact and some have sold for millions of dollars. How to explain such a passion for computer-generated characters?

Of all the collections of NFT uploaded, CryptoPunks is the most popular, with several dozen items selling for more than $1 million in ETH. And in the Top 10 best-selling NFTs are several CryptoPunks. For example, CryptoPunk #5822 was sold for $23.7 million on February 13, 2022. And in May of the same year, the minimum amount to acquire a CryptoPunk exceeded $100,000.

However, what characterizes CryptoPunks is their aesthetic minimalism: they are 24 x 24 NFTs pixelwhose appearance recalls that of the first video games. There are 10,000 in total and all of them were generated by an algorithm. Each coin has its own profile page showing its attributes and ownership status.

Launched in June 2017 by the New York edition Larva Labs, CryptoPunks started as an experimental project on the Ethereum blockchain to gradually become a phenomenon in its own right in the crypto sector. How to explain that these characters were able to acquire such a status and that a company like VISA wished to acquire its own copy?

A nonconformist project inspired by the punk scene

Behind the CryptoPunks are two software developers, Matt Hall and John Watkinson, the founders of software publishing Larva Labs. During their career, the two phenomena have worked on very varied types of software. They have carried out programs for major companies such as Google and Microsoftin particular a application cat for androidcalled AppChat.

At the beginning of 2017, Hall and Watkinson asked themselves a question that was original to say the least: would it be possible, from a few lines of computer code, to generate unique images, likely to induce a feeling of ownership? Without knowing it, they are giving birth to a movement which will later be referred to as CryptoArt.

Watkinson and Hall develop a generator of pixelated characters and what they engender enthusiasm: the figures resulting from the program have allure. They initially plan to make it a smartphone app.

As Watkinson and Hall would later state at a Christie’s auction on May 11, 2021, “ In the early days of the blockchain movement, there was a rowdy, anti-establishment spirit. We thought a collection of non-conformist misfits would fit in there “. They took as a model the London punk movement of the late 1970s, but also novels such as blade runner or The Neuromancer of William Gibson.

Over the months, the two programmers influence the algorithm so as to be able to generate a few “non-human” characteristics here and there: green or blue skin, the look of a monkey… From June onwards, they have layout 10,000 characters who differ from each other in their haircut, color of skin, various accessories: hats, glasses, etc.

Each character had to be unique “, told the creators. And it resulted from the experience of the results which surprised them even.

We ran the generator hundreds of times, reviewed the results, and made adjustments ”, explained Hall and Watkinson.

And then, the generator was started one last time. And there came out a collection that was original to say the least:

  • 6,039 male characters
  • 3,840 female characters
  • 24 monkeys
  • 88 zombies
  • 9 aliens.

While many CryptoPunks have similar paraphernalia in common, such as pipes, sunglasses, sun, caps and eye patches, each one is unique. Thus, #5822, mentioned above, door a bandana and is one of the nine aliens – the rarest type. In the collection, 286 wear lipstick, 128 have rosy cheeks, 94 sport a ponytail and 44 wear a beanie. The most common attribute is the earring which is worn by 2,459 punks.

Engraved in the Ethereum blockchain

In early June 2017, Hall & Watkinson linked the 10,000 CryptoPunks they had generated to the Etherum blockchain, via a smart contract (program). From there, each was recorded once and for all in this blockchain, with a code of its own and which attests to its uniqueness. Anyone can see them but also choose to own one – and as soon as they become their owner, this possession is in turn registered in the Ethereum blockchain. One of the goals for Larva Labs is then to be able to explore the potentials of scarcity, a concept hitherto unknown in the universe. digital where everything is, in essence copyable.

To this effect, in order to be able to make each character unique, Hall and Watkinson made some changes to the standard ERC-20 which rules Ethereum. In doing so, they come to define what a token non-fungible (unique) and the code they thus developed will become the basis of the ERC-721 standard which defines what an NFT is.

A new form of digital art?

Initially, CryptoPunks are offered for free to anyone with an Ethereum wallet – they just have to pay the gas fee (commission for processing a transaction), which was 11% at the time. Hall and Watkinson kept 1,000 for themselves, in case something happened.

During the day following the launch, only about twenty Internet users claim a CryptoPunk. ” At first the interest was minimalWatkinson said. We started to think it didn’t really have any potential. »

And then, on June 16, 2017, a article of Mashable change the game. It is titled: ” This Ethereum-based project could change the way we look at digital art. During the hours that followed, the entire collection of 9,000 CryptoPunks found a buyer. More surprisingly, the next day, one of the owners resells his CryptoPunk for the equivalent of 3,500 dollars in Ethereum. The scarcity effect has started to play its part.

A user, known as mr704, will acquire 703 – and since he still owns several hundred, his collection is now worth tens of millions of dollars. Another collector, Hemba, will be less inspired: he will go so far as to own 1,000 punks but will resell them one by one before the market begins its big take-off in 2021.

The big take off

From February 2021, things will get carried away. CryptoPunk #4156 becomes the series record holder, with a sale of $1.25 million. This is a monkey wearing a bandana. However, the record was quickly surpassed: the same month, another monkey, this time wearing a hat, sold for nearly 1.5 million dollars.

In reality, we haven’t seen anything yet. On March 10, 2021, CryptoPunk #7804 – an alien with a dark gray cap, black sunglasses and smoking a brown pipe, was sold for $7.5 million. It should be noted that Dylan Field, the seller of this NFT, had said of him that he hoped that in 100 years this punk would be perceived as ” the mona-lisa of the digital age “.

However the record of #7804 is quickly broken. The next day, CryptoPunk #3100, a blue-green skinned, hairless alien with a blue and white striped headband around his head, sold for $7.58 million at an auction held at Christie’s.

In fact, that day, Christie’s sold nine CryptoPunks for a total of $17 million, more than double its estimate.

The $10 million mark is exceeded on June 10, 2021. On that day, CryptoPunk #7523 is sold for $11.75 million, as part of an online auction organized by Sotheby’s.

And then on February 13, 2022, the aforementioned CryptoPunk 5822 was sold for $23.7 million.

Why such an interest ?

Why such a craze for pixel characters that a graphic design student could produce in spades? In the Discord forums dedicated to CryptoPunks as in various media, several buyers have expressed their motivations.

First of all, CryptoPunk is the oldest NFT project and this factor has been important in the eyes of those who have shelled out the dollars to acquire it. As explained by the Youtuber starring Paul Logan, in one of his clipsto interlocutors expressing their skepticism in front of his purchases of punks: they were the first and that makes them special. This is the very first NFT project “.

It is true that the purchase of a CryptoPunk can be misunderstood by those around him. A man named Chris said his girlfriend was exasperated to say the least to see that he had been able to shell out the equivalent of hundreds of thousands of dollars on such an NFT. At the same time, in theuniverse from geek, owning a CryptoPunk can participate in what is called social positioning, the idea that you are part of a group and that you have a high status there because you own a particular object. It turns out that, according to some testimonies on Discordsome use their CryptoPunks as avatar on their social networks. Yet most prefer to remain anonymous. A user who appears under the pseudonym thebeautyandthepunk confides that she has a collection worth millions and no one in her life knows anything about it, except her accountant.

Others see CryptoPunks more simply as a modernized version of the cards that could be traded in playgrounds.

Interesting point: it seems that these images arouse a real attachment.

You might think it’s easy to part with those little pixelated faces. I’ve sold a few myself and regretted every saleexplains Maegaard who nevertheless sold a punk for a million dollars. It’s a nice sum, but the fact remains that I really appreciated it. »

How can the price disparities between these various items be explained? While rarity certainly plays a role, some in the Discord community believe that part of it is the “punk aesthetic” factor.

The people decide the prices. If you’re willing to pay what’s asked, that’s the right price “, remarks a user.

For others, it is the taste of the game that comes online. This is what Mike McDonald says in particular, a professional poker player who, like other poker players, has invested heavily in CryptoPunks and sports an openly on his Twitter page. However, he clarifies that: As the years pass, definitions of what a game ismoney and what is investment are getting closer and closer. »

Of course, some see it, above all, as a potentially lucrative long-term investment. Thus, in August 2021, the VISA company announced that it had purchased a CryptoPunk worth $150,000: #7610. And following this purchase, the price of these NFTs began to skyrocket.

For the founders of Larva Labs, a page was turned in March 2022. On that day, they sold the intellectual property of CryptoPunks to Yuga Labs, which is the origin of another NFT phenomenon: the Bored Apes or jaded monkeys.

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How to explain the popularity of CryptoPunks?

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