A Brief Explanation On CryptoPunks
These minute, pixelated faces in tiny squares don’t appear to be particularly appealing at first glance. Some people are puffing on pipes, while others are wearing hats, and some of them are even aliens. However, looks can be deceiving when it comes to NFTs. You could buy everything from a tiny apartment to a large mansion just by owning one of these goofy-looking punks. These CryptoPunks are a collection of NFTs that are in high demand now. They don’t fight, stake, or do anything other than act like little punks. CryptoPunks is also one of the earliest NFT projects that have been created.
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Who Created CryptoPunks?
Matt Hall and John Watkinson are the founders of the New York-based software company Larva Labs, developed a software application in 2017 that could generate thousands of diverse and strange-looking characters. They initially believed they had the makings of a smartphone application or a game application. Instead, they came up with a paradigm-altering strategy for the digital art market as well as a challenge to the very concept of “ownership”.
When CryptoPunks originally launched their initiative a few years ago no one could have predicted how spectacular it may become. Now, on this date, these topics are one of the most talked-about in the NFT community. It’s worth noting that they were among the first non-fungible tokens to hit the market. They’ve now been sold for millions of dollars. The startling news of all time is that a sample of this pioneering work will be auctioned off at a traditional auction house. As a result, it’s spreading rapidly into the real-world art industry.
Non-fungible tokens are high in demand right now; however, if you’re new to the NFT craze, you could find it difficult to grasp their significance. Most individuals outside of this community have no idea what these punks are talking about. According to history, humans have always relied on materials to determine their identity and personality. That is to demonstrate the unusual artefacts discovered in early civilization cities. Crypto collectables are one-of-a-kind digital valuables held on a Blockchain are the latest trend to capitalize on this odd human nature.
Also Read: 10 Top Crypto Artists Of 2021
What are CryptoPunks?
CryptoPunks constitutionally are art images with a resolution of 24x24 pixels. In addition, these are largely punk-looking people with some unusual variety of genres thrown in for good measure. Impressionists, Apes, Aliens, and Zombies are among the several genres. The most realistic and fascinating fact is that each punk is one-of-a-kind which is why these CryptoPunks are so precious in the NFT market call- it’s a brand-new approach to Asset Tokenization. You can view each punk’s official webpage to learn what features or traits they hold as well as their current market value.
Another distinguishing attribute of these CryptoPunks is that there are only 10,000 of them in total. The creators will not manufacture presently or have control over the distribution of these punks. On the Ethereum network, a single punk is possessed by a single person. The punks were given away for free by the company before they grew popular. As a result, anyone having an Ethereum wallet might acquire the punk. To purchase CryptoPunks, you’ll have to keep track of their marketplace and other third-party NFT marketplaces for when someone posts their punk for auction.
Also Read: 5 Best NFT Marketplaces To Sell
Over 8,000 sales had been recorded in the prior 12 months as of early April 2021 with an average sale price of 15.45 Ether ($30,412.40). The total value of all sales is 127,360 Ether ($251,620,000), and it’s boosting every day. CryptoPunk 6965, a fedora-wearing Ape Punk sold for 800 Ether ($1.5 million) in February, along with CryptoPunk 7804, the pipe-smoking ‘wise alien’ was sold for the equivalent of $7.5 million on March 11, 2021- the highest price ever paid for a Punk at the time.
Because of CryptoPunks’ specific characteristics, all of the punks may be distinguished and their Attributes play a big part in making these digital artefacts stand out. The construction of a unique digital item is aided by a huge number of permutations and combinations of these different characteristics. It’s worth noting that punks can have 0 or many qualities at the same time. The punks listed above have 0 or multiple (maximum of seven) qualities. Gender-specific attributes are also possible. Beanies, for example, are exclusive for male CryptoPunks while some hairdos like the red Mohawk are only for female CryptoPunks.
How does CryptoPunks work?
The ERC-721 token protocol which is now used for NFTs did not exist at the time of the introduction of the project. Larva Labs had no choice but to work with what they had i.e., ERC- 20 protocol. The team ended up changing the ERC-20 code just enough to generate non-fungible items in a punk fashion which served as motivation for the development of the ERC-721 shortly after.
On Etherscan we can see that the token has a maximum total supply of 10,000. So even if the punks appear to be ERC-20 tokens, they are not identical tokens. By hashing each CryptoPunks reference image and comparing it to a certain image hash in the token’s contract you can confirm its legitimacy. Larva labs generated a composite image featuring all 10,000 punks because the photographs are too huge to be kept on the Blockchain. The CryptoPunks token contract contains a hash of this.
However, how can you tell which one you have? Each punk’s token has metadata referring to its position in the composite image. So CryptoPunk #7804, for instance, is the 7804th punk in the huge composite image.
How are CryotoPunks valued?
Several factors determine the value or price of an NFT. Thus, the following are the most important elements to consider while pricing CryptoPunks:
- Supply and demand: Currently, only 10,000 CryptoPunks are available, and each one is unique. As a result, CryptoPunks are extremely rare as the popularity of NFTs is growing each passing day, the demand for them is growing faster than the supply resulting in a CryptoPunk scarcity. Scarcity is frequently followed by price hikes, resulting in a new equilibrium. Because inflation is unlikely, you should always keep in mind that the value of CryptoPunks may continue to rise.
- Type of NFT: CryptoPunk’s estimated value is influenced by the type of NFT used. In-game assets real-world tokenized items such as documents, virtual real estate, and collectibles are all examples of NFTs. Some NFT kinds are more popular than others; CryptoPunks are collectibles making them one of the most popular ERC-721 tokens. As a result, they are more likely to have a high value.
- Rarity: CryptoPunk’s value is mostly determined by its rarity. It is strongly tied to the limited supply aspect but it is also determined by the punk’s characteristics and type. For example, because Alien punks are extremely rare, they are often more expensive. Out of the 10,000 punks available, there are only nine alien punks. As a result, you should consider the rarity of a CryptoPunk while determining its value.
- Whale owners: When CryptoPunks originally came out they were completely free. Some investors took advantage of the situation and acquired a large number of CryptoPunks right away. The issue is that some of these CryptoPunk whales have been dormant for quite some time and because they may not be aware of the current market value, they may sell them for a considerably cheaper price (which would have been relatively high three years ago). This could disrupt the supply-and-demand equilibrium by potentially lowering the value of these items. When evaluating digital art, make it a note that whale owners may disrupt the typical price of a piece either purposefully or unintentionally.
- Liquidity: When it comes to investments, token liquidity is one of the most crucial aspects to consider. When a token’s price rises dramatically then its liquidity falls simultaneously. This applies to fungible tokens as well as NFTs. Transactions become inefficient when fungible tokens are used. Liquidity for NFTs is vital especially in the long run because you might have to convert your ERC-721 tokens into ERC-20 tokens by depositing your NFTs into a liquidity pool. As a result, you should be conscious of your CryptoPunks collection’s liquidity particularly in the long run.
- Value Estimators: You can utilize online NFT value estimators if you don’t want to go through each value determinant one by one and just want an estimated value for a CryptoPunk right now. These websites take into account all of the aforementioned elements and present you with an estimated NFT token value. For example, DappRadar is one of the most accurate and best NFT value estimators for digital art. All you have to do is paste in a CryptoPunk’s URL or NFT ID, and DappRadar will calculate an estimated value for you.
Is CryptoPunks a good investment?
CryptoPunks has piqued the curiosity of a growing number of investors in the last year and with good reason. Following the advent of the NFT subculture, the average CryptoPunks value has surged. Many portfolios increasingly include digital assets as a mainstay. The market has gotten frantic since CryptoPunks were handed away for free in 2017. The value of these tokens is rising every day putting CryptoPunk investors in control of a rare and precious asset.
While not all CryptoPunks will appreciate as much as others, their limited circulation of 10,000 ensures that they will remain a truly uncommon item. These types of assets are necessary for a broad portfolio to hedge against inflation while also allowing for wealth growth. The fact that CryptoPunks will continue to be cherished by NFT investors is perhaps the most compelling argument to invest in them and Crypto art projects will continue to evolve and grow shortly with each coin representing a piece of history.
Also Read: 15 Ways To Boost Engagement With NFTs
How to Purchase CryptoPunks?
While purchasing CryptoPunks may appear hard and find it complicated at first, but it’s very easy. The following steps will guide you on how to purchase CryptoPunks:
- The first step is to choose a Crypto exchange; then, you must buy ETH and transfer it to your Ethereum wallet.
- In the next step, you’ll also need a MetaMask wallet as you will be using the Ethereum network
- Go to Lava Labs and link your MetaMask wallet once you’ve successfully moved your ETH into it.
- After you’ve connected your wallet, you’ll be able to choose a punk and buy it. Remember, you may require more ETH to trade a punk because of the gas expenses associated with such services.
Because of the emergence of NFTs, collectibles like CryptoPunks have become one of the finest ways to make significant money. So even though CryptoPunks will be pricey, the return on your investment is likely to be well worth it. This has been the case for CryptoPunks so far, and it is expected to continue in the coming years.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.