Non-fungible tokens (NFTs) exploded into the cryptocurrency scene in 2021. After hitting a value of over $ 176 million in May, the market experienced a lull over the summer. And then, interest in buying NFT skyrocketed to over $ 1 billion spent on total sales in the seven-day period through August 29, according to data from NonFungible. A month later, sales remained above $ 200 million on a sliding weekly basis.
As one of NFT’s first collections, CryptoPunks are at the center of the hype. So what are CryptoPunks for and why have they become so popular? Let’s take a look at the value of CryptoPunks and the pros and cons of trading them as an investment.
What is a CryptoPunk?
CryptoPunks are a form of non-fungible collectible token (NFT) with proof of ownership stored on the Ethereum blockchain. The collection includes 10,000 unique 24×24 pixel digital art characters. The name derives from the punk style of the characters. There are also special characters from zombies, monkeys and aliens in the collection.
Each CryptoPunk NFT has a profile page showing its attributes and ownership status. The digital images of the CryptoPunks characters are too large to store on the blockchain, so the developers created a composite image of the 10,000 of them and took a hash of the image which they put into the smart contract. The hash can then be used to verify that a CryptoPunk is genuine by comparing the hash with the one stored in the contract.
CryptoPunks were initially given away for free to anyone with an Ethereum cryptocurrency wallet, but all CryptoPunks have been claimed and now the only way to get a character is to buy one in a marketplace. CryptoPunks were one of the catalysts in the development of the ERC-721 standard which enables the creation of unique NFTs for digital art and collectibles.
Where do CryptoPunks come from?
CryptoPunks was created in June 2017 by Canadians Matt Hall and John Watkinson, developers of US mobile software company Larva Labs. They didn’t care how to turn a CryptoPunk into an investment asset, but generated the characters using an algorithm as a “weird but cool experiment in digital ownership on the blockchain.”
CryptoPunks are among the oldest NFTs, predating CryptoKitties, launched in November 2017, and NBA Top Shot, which opened beta in June 2020.
What is their value based on?
According to Larva Labs, in the first three years after the founding of CryptoPunks, total sales volume reached $ 866,000. In the fourth year alone, the figure jumped to $ 361.7 million.
Sales have now reached a total value of over $ 1 billion, based on transactions of 515,420 Ether Coins (ETH).
The cheapest CryptoPunk for sale at the time of writing (September 28) was worth 104.99 ETH, or $ 323,000. The biggest CryptoPunk sale – of one of nine special alien characters – was in June 2021 for $ 11.75 million through London auction house Sotheby’s.
The value of a CryptoPunk is based on the price that buyers and sellers are willing to accept. The online community that has built up around them takes into account factors such as the characteristics of digital characters and their accessories such as glasses, caps and earrings, to decide which ones are most valuable. .
In May 2021, Hall and Watkinson sold a set of nine of their NFT CryptoPunks through traditional London auction house Christie’s, highlighting some of the features. The auction valued NFTs at $ 16.96 million.
Why have CryptoPunks become so popular?
The popularity of CryptoPunks has taken off as investors become more interested in buying and selling NFTs for profit. This interest has grown as the value of cryptocurrencies and NFTs has reached record highs this year.
Some traders and investors expect NFTs to become an established way of trading collectibles, disrupting the traditional art market. With the code stored on the Ethereum blockchain, anyone can verify the authenticity and ownership of each of the CryptoPunks. The transaction fees are low compared to traditional art transactions. For example, the most expensive cryptoPunk traded online, CryptoPunk 3100, was sold on March 11, 2021 for 4,200 ETH, valuing it at around $ 7.58 million. The bidder paid a transaction fee of $ 27 and the seller paid a fee of $ 16 to accept the bid, which equates to a commission of only 0.0006%.
CryptoPunks are especially valuable because they are rare – it will no longer be created beyond the 10,000 that already exist, and the existing ones cannot be changed. This increases the value as more investors look to purchase one of the limited edition characters.
CryptoPunks is the world’s second largest sales-based NFT collection of all time, behind Axie Infinity NFT-based online gaming, according to data from CryptoSlam.
As NFTs gained the attention of more investors and businesses, payments company Visa (V) bought its first NFT in August 2021 for 49.5 ETH, or $ 150,000.
Cuy Sheffield, head of crypto at Visa, said in a post on the company’s blog:
“We believe that NFTs will play an important role in the future of retail, social media, entertainment and commerce. To help our customers and partners participate, we need a first-hand understanding of the infrastructure requirements for a global brand to purchase, store, and operate an NFT.
Advantages and disadvantages of CryptoPunks
Are you interested in trading or investing in CryptoPunks? What are the pros and cons of buying and selling that you should consider?
What is the future of CryptoPunks?
The future of CryptoPunks will depend on the development of the NFT market. If NFTs are adopted as a secure way to buy and sell digital art for relatively low commission fees, CryptoPunks are likely to remain popular.
Larva Labs recently signed an agreement with the United Talent Agency in Hollywood for representation in publishing, licensing, film, television and games. The agency will also represent the other digital art projects of Larva Labs, Meebits and Autoglyphs. The deal is one of the first to bring cryptocurrency-related intellectual property into mainstream media.
In a corporate blog post, Cuy Sheffield said that Visa believed that “NFTs have the potential to become a powerful accelerator for the creator economy and to lower the barrier to entry for individual creators in order to win. their lives through digital commerce “.
“NFTs are starting to usher in a new form of social commerce that empowers both creators and collectors.”
However, some investors take a skeptical view of the NFT market. Prominent American broker Peter Schiff wrote earlier this year:
“The NFT rally should prove to be more fleeting than the rise of the cryptos themselves… I suspect this craze will soon be shown for what it is: a speculative bubble on steroids. Perhaps the ultimate collapse of the NFT market will be the pin that pricks the biggest crypto bubble. “
When choosing which financial assets to trade or invest in, we recommend that you always do your own research and consider the latest market trends, news, technical and fundamental analysis, and expert opinion. And never invest more than you can afford to lose.
How to buy CryptoPunks?
Are you bullish or bearish on the outlook for NFTs like CryptoPunks? Wondering how to buy a character yourself?
There are several online marketplaces where you can buy and sell CryptoPunks. The Larva Labs website lists CryptoPunks available for sale and displays their transaction history. You can trade CryptoPunks in markets like OpenSea, which is the largest NFT marketplace in the world.
Once you have an account, you can connect an Ethereum wallet, such as MetaMask, to the platform. You can then place a bid on a CryptoPunk for sale, and if your bid is successful, you pay in ETH from your wallet and become the owner of the CryptoPunk NFT. You can store the NFT in your wallet for added security. You can use the Larva Labs site, as well as sites like CryptoSlam and CryptoArtPulse, to track the price of a CryptoPunk. This will help you decide how much CryptoPunk is worth and how much you would be willing to pay for it.
In the meantime, if you are also looking to trade cryptocurrencies like Ether, which makes it easier to trade for NFTs like CryptoPunks, you can do so through Contracts for Difference (CFDs) on Capital.com.
CFDs allow you to speculate on the short-term price direction without having to buy and sell the actual coin. CFD trading provides the opportunity to try and profit from both bullish and bearish price action. You can either open a long position, if you expect the price of ETH to rise, or a short position, if you expect it to fall.
As a leveraged product, CFDs are designed to maximize gains, which can be significant on volatile commodities such as cryptocurrencies. However, you should be aware that using leverage increases the size of the loss if the price moves against your position. Make sure you do your own research before investing your money.
Make sure you understand how CFDs work before you start, and never invest money that you can’t afford to lose. Learn more about cryptocurrency CFDs with our comprehensive guide.
Create an account on Capital.com and stay up to date with the latest market news to help you identify the best trading opportunities.
Read more: Best NFT Projects: 10 Names Everyone Should Know In 2021
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