A beginner's guide to CryptoPunks NFTs

Nonfungible token (NFT) collections became a phenomenon for crypto enthusiasts and investors in 2021. However, the first series of NFTs was created on the Ethereum blockchain as an experimental art project in 2017 and were called the CryptoPunks.

Over the years, CryptoPunks have been ranked among the most popular and expensive artwork collections, with prices soaring to millions of dollars for some of the unique art images. 

This collection of 10,000 Ethereum-based NFTs was worth nothing when collectors first claimed them, but in just a few years, they started to compete with physical artworks in terms of popularity and monetary value. 

CryptoPunks have paved the way for other crypto art collections such as the CryptoKitties, Bored Ape Yacht Club (BAYC) and CrypToadz. They have also catalyzed interest in digital art and blockchain-based collectibles, but what are exactly these NFTs and why are they so popular and expensive?

What are Cryptopunks?

The New York-based software firm Larva Labs is behind CryptoPunks. It created 10,000 unique collectible images of characters with proof-of-ownership stored on the Ethereum blockchain as an experimental proto-NFT project.

They are 24x24 pixel, 8-bit-style art images, each randomly generated from several different attributes and traits inspired by the cyberpunk movement and electronic music group Daft Punk. Accessories like hats, facial hair, glasses and earrings make each item from the collection unique; no two CryptoPunks are precisely alike. 

CryptoPunks are images of males or females with punk features, like spiked or shaved hair. However, rarer variations include non-human Apes, zombies and alien CryptoPunks and are among the most valuable pieces of digital art ever sold. 

Stored and secured on the Ethereum blockchain, they were developed as ERC-20 tokens — unlike the future NFT collections that were built as ERC-721 — and inspired the creation of the CryptoArt movement for a more accessible, equitable and inclusive art market. 

Holders of a CryptoPunk can prove ownership through the Ethereum-based smart contract hash, which is basically the unique digital key confirming they are the rightful owners. This key allows them to buy, sell and trade digital NFTs in the same way physical collectibles can be traded.

History of Cryptopunks

Cryptopunks started as an experiment in 2017 when software engineers Matt Hall and John Watkinson, Larva Labs' founders, built a program to create thousands of unconventional pixelated images to be used in smartphone apps or games. 

CryptoPunks were initially issued for free, as it was enough for an Ethereum wallet holder to claim any of the nine thousand available images by simply paying the minting gas fee. One thousand of them remained in the hands of the developers. 

When the demand for digital images with ownership rights on the blockchain soared, CryptoPunks became the most sought-after NFTs because of their rarity and limited supply. 

Due to such valuable features, they were sold for high prices on the open market and at auction houses like Christie's and Sotheby's.

Prices also reached millions in the secondary market, such as the OpenSea marketplace, where CryptoPunks generated over $2.5 billion in total traded volume alone in the first quarter of 2022.

Who owns the Cryptopunks NFT now? In March 2022, all of the Cryptopunks' intellectual property was sold by LarvaLabs to Yuga Labs, the company that owns the Bore Ape Yacht Club. In August, the company announced that it was granting full commercial rights to the owners of the CryptoPunks, who could use their NFT to build and create services or products freely.

In Aug. 2022, Cryptopunks also appeared in the luxury goods market, with Tiffany's release of a CryptoPunk pendant, marking the LVMH-owned American jeweler's formal entry into the Web3 space. 

What makes Cryptopunks unique?

CryptoPunks were the first NFT collectibles that moved from simple discussion topics in online forums to exorbitant prices in prestigious auction houses. What makes these NFT projects unique is the attributes and traits of each punk, taking inspiration from the cypherpunk subculture, the extreme advocate for privacy through encryption and the London Punk movement of the 1970s.

CryptoPunks already sell at high prices, and the ones with rare attributes can be even more valuable. These traits can be accessories and physical features like a mustache, a cowboy hat, pigtails or rosy cheeks.

Cryptopunks quickly became emblematic figures for celebrities who started adopting their images as profile pictures on social media channels and inspired newer NFT collections like World of Women, Cool Cats and the most famous Bored Ape Yacht Club.

CryptoPunks are also rare NFTs to be entirely stored on the Ethereum blockchain. Due to the light images requiring little block space, the CryptoPunks could be stored on-chain, as opposed to most NFTs nowadays held in a non-blockchain-based repository for convenience.

Storage in Ethereum's blockchain makes the CryptoPunks even more worthwhile, as the robust Ethereum network secures their longevity and durability. Being one of the first projects of its kind gives CryptoPunks value, and having a limited supply is one of the drivers for their spectacular popularity.

While CryptoPunks express the exclusivity of the most lucrative art collections, each NFT is far from accessible to the average investor. A campaign promoted by NFT company Unique Network had the idea to fractionalize ownership of one of the CryptoPunks – #3042 – to over 56,000 addresses that have signed up to acquire a share. This way, those interested in NFTs can have a stake in the most valuable NFTs without spending millions of dollars.

While anyone can theoretically screenshot or produce a physical printout of a CryptoPunk — like individuals can create a physical copy of the Mona Lisa, for example – it's the original version that counts and holds all the value. CryptoPunk collectors are interested in the uniqueness of individual CryptoPunk NFTs and will only give importance to the original — not an imitation or copy.

Why Cryptopunks is so expensive

A combination of elements, notably individual traits and limited supply, has made the CryptoPunks expensive across the crypto community and beyond as they integrate digital art and blockchain technology.

Only 10,000 unique items will ever exist. Therefore, getting hold of one of them must be extremely attractive to collectors, especially among crypto enthusiasts. As their image continues to be used across various industries for brand recognition, like in the case of sports and luxury companies, their price may continue to increase.

The five most expensive Cryptopunks 

Below is a list of the top five most expensive CryptoPunks with the corresponding amounts investors and art collectors have been happy to pay to snatch one of the rare NFTs.

How to buy Cryptopunks NFTs?

Since NFTs exploded in popularity, different marketplaces have emerged to deal with the public's demand to acquire one of the CryptoPunks or any other NFT collections. NFT trading became as popular as cryptocurrency trading in 2020 and 2021. As with other NFTs, CryptoPunks are available in several NFT marketplaces, including OpenSea, Rarible, Nifty Gateway and LooksRare, which hosts the famous BAYC. 

They can also be bought through the LarvaLabs website until the new acquisition from Yuga Labs is completed and the whole collection is transferred from the LarvaLabs to the Yoga Labs' website.

CryptoPunks can only be bought with cryptocurrency; therefore, the first step required is to connect an Ethereum-based wallet, like MetaMask, to access the chosen platform and obtain the necessary permissions to bid on, buy, and sell CryptoPunks. 

The LarvaLabs platform allows users to observe the status of each CryptoPunk NFT based on their background color. The CryptoPunk with a blue background implies that it is not for sale and has no open bids. The punk with a red background means that the owner of the Punk has placed it for sale, and a purple background indicates an active bid. 

The Ethereum-based wallet will need ETH, Ethereum's native cryptocurrency, to buy a Cryptopunk; if not, it will need to be acquired through an exchange. With ETH, the buyer can bid, buy, and sell CryptoPunks using the CryptoPunks marketplace just by clicking on the punk and tapping ‘buy.' Once the transaction has been confirmed, the punk will appear in the wallet.

The future of Cryptopunks

What the future will reserve for CryptoPunks is difficult to say, as it largely depends on related factors. They have launched a movement and in just four years, they have gone from zero value to millions of dollars worth, earning themselves a place in the history of digital art collections.

The CryptoPunks creators have said in the past they won't release any more of these NFT items, so their limited supply will continue to be one of the drivers of their popularity. However, their value will depend on the public's demand. They can become mainstream again once the economy has recovered and the cryptocurrency bear market is over, or they can turn into pieces of a collection relegated to just a few enthusiasts.