As prices of collectibles skyrocket — from Blastoise cards to Batman first issues — the cryptocurrency world is no exception. But crypto markets, as usual, are taking things to new extremes: The latest hot collectible changed hands for over $760,000 worth of Ether a few days ago.
The collectible in question is something called a CryptoPunk. It’s an algorithmically generated portrait rendered in a pixelated eight-bit style, and it’s going for tens of thousands of dollars on average via the Ethereum blockchain, with the highest bids getting close to a million dollars.
But what makes a CryptoPunk valuable? Most collectors will say it’s because of cryptographically guaranteed scarcity. The supply of CryptoPunks is limited to 10,000 characters for all time, according to its maker, Larva Labs. Characters bear different randomly bestowed attributes, such as “luxurious beard,” “alien,” or “cap.”
Those 10,000 punks could be claimed by anyone on the internet when they were initially released in 2017. They were quickly claimed, and then started to be traded among collectors, changing hands for as littles as $50 in late 2019.
CryptoPunks also served as an inspiration for a better known crypto collectible: CryptoKitties, which clogged up the Ethereum network with their popularity in 2018. In fact, the punks birthed an entire genre of collectible crypto-tokens, known as non-fungible tokens or NFTs, that have become a mainstay in the subculture.
(Read BoB’s interview with the founders of NFT-focused blockchain startup Nifty Gateway here)
Today, some $30 million worth of punks have been transacted since their release, according to data from the Ethereum blockchain. Prices rose sharply in the final months of 2020, to thousands of dollars on average, as the cryptomarkets began a historic rally. Bitcoin eventually topped out at nearly $42,000 on January 8, an all-time high.
As for the most expensive punk of all time? It’s known as CryptoPunk 2890; one of nine “alien” punks in circulation. Its buyer is something called Flamingo DAO, which stands for decentralized autonomous organization, a popular construct in cryptocurrency circles (disclosure: I’m an unpaid and pretty inactive ‘curator’ there).
Luckily, there are humans behind DAOs, like Aaron Wright, a Cardozo Law associate professor who is a member of Flamingo, to explain why the DAO paid so much for CryptoPunk 2890. “Before CryptoKitties, there were CryptoPunks. They are the bitcoin of NFTs,” Wright tells the Business of Business. “So when we saw an opportunity to get the rarest of the original pieces of work, it was a very special moment.”
Wright likens today’s experiments with crypto art to Amazon’s origins as a humble bookseller. “Just as Amazon figured out e-commerce starting with books, we’re going to figure out digital property on the internet with art. People are discounting it because it looks like crazy images and music but it’s a much bigger iceberg underneath,” he says.
What’s next for CryptoPunk 2890? A display in a virtual museum, perhaps? Wright says Flamingo owns several parcels of land in blockchain-enabled metaverses, on which they might build galleries to display its art collection. “We’re thinking of ways for this alien to live as an autonomous agent that lives online and interacts with other people,” Wright says. “We want to make sure lots of people can appreciate it.”