The top-selling NFT avatars were created four years ago, when blockchain still had “a raucous, anti-establishment spirit,” CryptoPunks’ creators say. Now they’re a plaything of the wealthy.
August 23, 2021, wasn’t a good day for punk’s street cred. First, Sex Pistols frontman Johnny Rotten lost a lawsuit seeking to stop a British TV show from using his seminal punk band’s music. Then Visa launched an NFT consulting business with the Twitter announcement that it had bought a CryptoPunk avatar for $150,000.
The credit card and payments giant’s mohawk-sporting, green-clown-eyed CryptoPunk with hot red lipstick — also known as No. 7610 — was an addition to its “collection of historic commerce artifacts,” the company said in a tweet.
Needless to say, Rotten — formally John Lydon — and the Sex Pistols were vastly more legitimately punk than the 10,000 24x24 pixel, 8-bit, punk avatars generated by an algorithm in 2017. But, they both came from a not-too-dissimilar place in the zeitgeist of their time: Kicking over the mainstream bucket while simultaneously profiting from it.
(Don’t forget: For all the violence, obscenity, and addiction, the Sex Pistols were signed by major music labels — EMI briefly, A&M Records very briefly, and Virgin Records.)
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Mildly Annoy the Power
CryptoPunks were created at the height of the 2017 crypto boom by John Watkinson and Matt Hall, cryptocurrency enthusiasts who go by the name Larva Labs.
At a time in which the blockchain community was shifting rapidly from the anti-establishment, crypto-libertarian Bitcoin movement to the decentralized finance (DeFi) industry aiming to cut financial middlemen out of the business of moving money while making a fortune with often dubious initial coin offerings, Wilkinson and Hall were experimenting with anti-establishment art.
And they were doing it on Ethereum, the then-new blockchain that brought the smart contracts that made complex and immutable financial transactions carried out and recorded on blockchain technology feasible.
According to Christie’s — which sold nine of Larva Labs’ CryptoPunk collection on May 11 — the pair felt, “there was a raucous, anti-establishment spirit to the early days of the blockchain movement,” the auction house said before the sale.
“They needed to be a collection of misfits and non-conformists,” the pair told Christie’s, which is about as “establishment” as it gets in the art world. “The London punk movement of the 1970s felt like the right aesthetic.” They also cited the dystopian visions of Blade Runner and William Gibson’s genre-creating cyberpunk novel Neuromancer as influences.
Christie’s sold those nine CryptoPunks for nearly $17 million, more than twice the $7 million to $9 million estimate.
The Road to CryptoKitties
CryptoPunks were created on a picture generator Watkinson and Hall were playing with. Base heads of various sexes and skin colors were randomly adorned with scores of attributes, from beanies and hand-rolled cigarettes to earrings and mohawks. They threw in a few rare — and now fantastically valuable — alien, ape and zombie heads, then minted the full run and offered them all for the few pennies worth of gas then required for an Ethereum transaction.
A limited run of 10,000 of the digital images was created, with some features kept rarer than others: Just 44 are wearing a beanie, while 147 have a red mohawk, 288 have a mustache, 461 have an eyepatch, and 2,459 have an earring — far an away the most common attribute. Only eight have no attributes while 4,501 have three. A single CryptoPunk has seven.
The 10,000 digital images were given away in what is widely considered the first non-business use of a non-fungible token — which is simply a type of cryptocurrency in which each token is unique, rather than a Bitcoin, each of which is indistinguishable from any other.
This was a few months before a similar but more advanced NFT game called CryptoKitties that involved breeding cat avatars with a variety of attributes that created kittens with different attributes launched. It went wild, gaining so much attention that it short-circuited Ethereum, driving gas prices up and transaction speeds to a crawl.
Becoming ‘A Thing’
Initially, the June 2017 CryptoPunks launch fizzled, with just a few dozen claimed. Then Mashable wrote up CryptoPunks under the prescient headline: “This Ethereum-based project could change how we think about digital art.”
The entire CryptoPunk collection was claimed in a matter of hours. One sold the day after for about $3,500 in ETH.
"The whole thing is pretty weird, and that's kind of why we did this," Hall had told Mashable. "There's like a weird intersection here between these virtual, digital things and an artificial rarity, but a rarity that is real and valuable in some sense."
Of course, Watkinson and Hall were sure to keep 1,000 CryptoPunks for themselves, “just in case it becomes a thing,” Hall said.
Three years and nine months later, on March 10, 2021, a pipe-smoking, blue-skinned CryptoPunk known as “Wise Alien” was sold at Christie’s auction house for about $7.5 million.
Less than a day after that, Christie’s sold an NFT of a collage by digital artist Mike “Beeple” Winkelmann called Everydays — The First 5,000 Days for $69.3 million, making him the third-highest selling living artist and bringing the story of NFT art to every major news outlet.
On June 10, another rare alien CryptoPunk — No. 7523, wearing a beanie and a very timely medical mask that gave it the nickname “Covid Alien” — sold at auction at Sotheby’s for $11.8 million.
The OG NFT
CryptoPunks may have started the NFT art movement that now has Damien Hirst offering art buyers the choice between a physical painting and an NFT image of it, with the original burned, and Miami’s Institute of Contemporary Art adding one to its collection.
Visa bought its collectible “to recognize the role that CryptoPunks have played as an historic NFT project, bridging culture and commerce,” the company’s head of crypto, Cuy Sheffield, said in an interview released along with news of the purchase.
“What began as an early artistic experiment has quickly become a cultural icon for the crypto community,” Sheffield said. “We wanted to collect an NFT that symbolizes the excitement and opportunity of this particular cultural moment.”
It’s also a moment that is ripe for selling Visa consulting services, Sheffield added.
“We expect a huge range of new cases in the years ahead,” he said. “The ability to track and leverage a digital asset in multiple environments could mean exciting new opportunities in ticketing, gaming music, art, and beyond.”
Bigger and Smaller
CryptoSlam! now lists more than 100 NFT projects with sales of more than $1 million, and it all started with CryptoPunks.
But despite — or rather, because of — their position at the top of the NFT art buyers’ wishlist, CryptoPunks don’t actually account for much of the NFT market’s business — at least by volume.
CryptoPunks have only been sold 17,000 times in more than four years, according to CryptoSlam! The top NFT seller by volume is NBA Top Shot, digital video highlight clips that have sold and been resold nearly nine million times. The top seller overall is Axie Infinity, a play-to-earn video game which has 3.4 million sales for $1.5 billion, nearly twice CryptoPunks’ $835 million.
The problem is this: They have soared well out of most people’s price range this year. Larva Labs says the lowest price paid for a CryptoPunk in the past two weeks was $49,000, with no other sale under $100,000.
Then Visa purchase hit Twitter and crypto news outlets. CryptoPunk sales jumped 1,000% on August 23, from 39 the day before to 380, at an average price of $267,000. Halfway through August 24, sales numbers were heading back to normal normalizing but prices had skyrocketed, averaging $446,000.
While that’s far higher than the beginning of the year, when CryptoPunks were averaging $12,000, if you go back a year to August 2020, the average price was under $500.
