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How Do CryptoPunks Work?


What Are CryptoPunks?

The CryptoPunks are the 24×24-pixel, 8-bit-style unique avatar that's a non-fungible token (NFT) image. They're considered a piece of art and a form of asset tokenization that's highly valuable in the NFT marketplace. They sometimes sell for millions of dollars.

There are 10,000 of these pixelated, punky-looking images that depict both male and female characters, as well as some that mimic zombies, apes, and aliens. Each punk is one of a kind. Sometimes they're sold by individual owners, on NFT marketplaces, or through prestigious auction houses, such as Christie’s and Sotheby’s.

The record sale to date occurred in February 2022 when Deepak Thapliyal, chief executive officer (CEO) of cloud blockchain infrastructure startup Chain, paid nearly $24 million (at the time), or 8,000 ether (ETH), for CryptoPunk 5822. In September 2022, CryptoPunk 2924 sold for nearly $4.5 million worth of ETH in. There have been many more CryptoPunk sales in excess of $1 million—with all sales totaled, the Ethereum NFT collection has generated more than $2.67 billion worth of trades.

Ownership of a CryptoPunk is limited to one person at a time on the Ethereum network. The developers initially gave the “punks" away before they became well-known and valuable.

Key Takeaways

  • CryptoPunks are a type of non-fungible token (NFT) that can be worth millions of dollars.
  • Each of the 10,000 “punks” is a 24×24-pixel image, a form of asset tokenization.
  • “Punks” are considered an art form and have been sold at the auction houses Sotheby’s and Christie’s, as well as by individual owners.

History of CryptoPunks

Two developers at the New York City mobile software company Larva Labs released CryptoPunks in 2017. Larva Labs makes apps for iOS and Android devices. The blockchain developers gave away 9,000 punks for free at first, and the blockchain kept 1,000. The only requirement for ownership at the time was to have an Ethereum-compatible wallet.

Larva Labs makes money by selling the NFTs it owns. The company declines to disclose how many CryptoPunk NFTs it possesses.

The developers began the project as an experiment with the idea of entertaining people, but it quickly turned into something much bigger and more valuable.

What Do the Punks Look Like?

The punks are pixelated images created to look like the characters that inspired them. There are also punks that look like zombies, apes, or aliens. There are five types altogether.

A CryptoPunk's attributes can increase its value. A punk character's worth can go up if it wears a hat the creators called a beanie—a multi-colored hat with a propeller on top. There are only 44 of these.

What Determines a Punk's Value?

The value of a CryptoPunk depends mostly on how uncommon its attributes are. There are only nine alien punks, so they tend to be worth more in the marketplace than male punks, of which there are 6,039. There are five punk types:

  • Alien
  • Ape
  • Zombie
  • Female
  • Male

There are more than 90 attributes a punk can have. Punks can have multiple attributes, and you can find them with up to seven. Here's how many total punks there are with multiple attributes:

  • No attributes: Eight
  • One: 333
  • Two: 3560
  • Three: 4501
  • Four: 1420
  • Five: 166
  • Six: 11
  • Seven: One

As you can see, the ones with the least and the most attributes are the most rare. It seems that rarity is one of the biggest factors behind a punk's price.

How Do You Buy a CryptoPunk?

It’s easy to buy a CryptoPunk if you can afford their prices:

  1. Download a Web3 browser plugin for Chrome, like MetaMask, and connect your Ethereum wallet.
  2. Convert your cash into ETH and send it to your digital wallet so you have the means to buy a punk.
  3. Search for a punk using the plugin interface.
  4. Find a punk you like and put in a bid for it via the extension.

Alternatively, you can bid for CryptoPunks on an NFT marketplace like OpenSea.

Controversy Over Real CryptoPunks

Larva Labs had to walk back a mistake it made in February 2022. Due to a glitch in the original smart contract for CryptoPunks, Larva Labs had to ditch the first edition and reissue the NFTs in a second edition.

The second edition had the punks that became valuable and famous, but some of the first-edition punks remain in the market and have increased in value. Larva Labs has been sending mixed messages about the first-edition punks, claiming they were not the real CryptoPunks while selling them off.

Who Started CryptoPunks?

VIDEO: Crypto Punks Explained In Under 60 Seconds
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Developers at Larva Labs, John Watkinson and Matt Hall, created 10,000 CryptoPunks, and they were released in 2017. They created them as an experiment and were meant to be entertaining, but the punks became valuable to collectors, some of whom have paid millions of dollars for them.

What Was the Inspiration for the CryptoPunks Look?

VIDEO: What are CryptoPunks: popularity explained | NFT Collectibles
Slance

Watkinson and Hall modeled the punks’ offbeat effect after the mid-1970s London punk scene, the 1984 science fiction novel Neuromancer by William Gibson, the 1982 science fiction movie Blade Runner, directed by Ridley Scott, and the cyberpunk movement inspired by the French electronic music duo Daft Punk.

Which CryptoPunk Has Sold for the Most to Date?

VIDEO: Explained In 100 Seconds: What Are CryptoPunks?
Indiatimes

Chain CEO Deepak Thapliyal paid 8,000 ETH, worth $23.7 million at the time, for CryptoPunk 5822 in February 2022. The digital avatar wears a blue bandana and is an alien type, one of the rarest among CryptoPunks, and sold for $17.66 million in 2022. Only two punks have this combination.

The Bottom Line

CryptoPunks are digital art and a form of asset tokenization that can sell for millions of dollars in the NFT marketplace. There are 10,000 of these images of these 24×24-pixel, 8-bit-style unique avatars. They are pixelated, punky-looking characters that depict male and female characters that mimic humans, zombies, apes, and aliens.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.

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