Before I dive into my most expensive online purchase ever (68 ETH ~ $218k), let’s first find out what exactly is a Crypto Punk.
They are a unique collection of 10,000 pixelated art images with 24×24, 8-bit resolution. Conceptualized by Matt Hall and John Watkinsonas a funny art project, they were officially launched on June 23, 2017. Which makes them the first ever to start the PFP NFTs trend.
They are created by using a software program, each punk differs from the other by possessing distinctive and randomly generated attributes. The rarest one, Crypto Punk #8348, has seven attributes or traits, while other special Crypto Punks include green-skinned zombies, light blue aliens, and so on.
Each punk is an NFT, whose ownership and transactions are recorded immutably on the Ethereum blockchain. But what makes Crypto Punks valuable? Primarily, there are three aspects.
Scarcity: there are only 10,000 punks in all, making them scarce.
Historical significance: punks are considered proto-NFTs, developed far ahead of their time.
Social Proof-of-Stake: serving as digital status symbols, punks give their owners credibility and substantial leverage for making profitable business deals.
Profile Picture (PFP): Digital flexing your PFP NFT on social media, like Twitter, or the metaverse, for status.
My First 4 Weeks as a Crypto Punk
Now that you know a bit more about the history of punks, let me share some insight on my first 4 weeks as a punk, after safely storing it on my Ledger first of course.
The NFT industry never sits still, and I must say my first month with punks has been quite eventful.
At the time I purchased my first Crypto Punk, yes I say first because more might follow, the floor price sat around 62 ETH. Within the first 10 days, the floor climbed up to 79 ETH. Not a bad start, right?
While I’m writing this blog, the floor dropped back to 64 ETH. Even though I’ve been following punks for a while now. The volatility of the asset price still slightly surprised me. Here’s what happened.
V1 – V2 Drama
There’s a little more to the history of our favorite pixelated art than I wrote above. The punks are the first of their kind. To create a collection like this, the developers created a new sort of token standard that we now know as ERC-271.
However, when they first released the collection on the Ethereum blockchain there was an error in the code. When one of the NFT owners sold their Crypto Punk, they wouldn’t receive the ETH they sold it for.
Larvalabs, the company behind the punks, found this out, fixed the bug, and deployed a new contract with new Punks. Each punk owner received a new one, and the buggy version was left behind. Which is sort of (but not completely) comparable to a “hard fork“.
In January, there were a couple of collectors who still held the old version of the Punks, who “wrapped” their punk into a new smart contract and offered them on the secondary market (Opensea) as “Version 1 wrapped Punks”. Claiming to be the original Punks with historical value.
The secondary market does its thing like always, and quickly we saw the floor of v1 Punks above 10 ETH.
LarvaLabs Poor Response to V1
A hard fork usually results in a community split. As community members have to pick a side to support. People who hold big bags of the V1 were loud on social media claiming to be the real punks. While the majority of the Crypto Punk community called it bullshit and ignored them.
Larvalabs usually don’t mingle in community things. Actually, they are by far the quietest team out there. But on the V1 Punks they first tweeted something along the lines of “we do not support V1 version, we own 1000 of them and will dump on the market”.
This ruffled a lot of feathers, even of the V2 holders.
Not long after, they came out by saying their original statement was a mistake. Whichever profit they made on the dumping is donated to charity and they will pursue legal actions towards V1 for copyright infringement. Not long after, V1 punks were removed from Opensea.
This is a short summary of what happened. My opinion on the matter is that V2 is the real punks. They are the fixed code, the v1 Holders got their new punk back in 2017 and the punks we know today are the V2 ones. The only reason V1’s exist is that some big bag holders tried to financially benefit from old broken Punk contracts they still owned.
Nevertheless, some Punks left the community after this drama.
Investment funds, the super-rich (Mark Cuban, Winklevoss twins), and celebrities have been buying Punks for a while now. The latest notable addition to the Crypto Punk community is Heidi Klum. A super-model and brand that is known by almost every person on planet earth.
8000 ETH Sale
By far the highest sale of a Crypto Punk or any PFP NFT for that matter is the latest Alien Punk. It sold for 8000 ETH, or nearly $24 Million on February 12th.
Surprisingly, a few Alien Punk holders came out saying they refused the offer of 8000 ETH on their Alien Punks…..
Punk 5822 bought for 8,000 ETH ($23,702,160.16 USD) by 0x69c488 from 0x7eb28b. https://t.co/n9OIDRY3WB #cryptopunks #ethereum pic.twitter.com/tFSy3bRX6n
— CryptoPunks Bot (@cryptopunksbot) February 12, 2022
On February 23, Sotheby’s started an auction for 104 (!!!) Crypto Punks in 1 package. The reserved price was set at $14 Million, however before the auction ended the owner of the Punks withdrew the offering and tweeted:
nvm, decided to hodl https://t.co/WdQ5H7I0fl
— 0x650d (@0x650d) February 24, 2022
Rumors in the Punk discord say that he didn’t receive a bid to meet the reserved price. It could have been a historical sale, but it turned out to be a historical rug.
I believe there will be some backlash drama in the short term as a result of this.
Hello Crypto Punk 2498
As you can read, it’s been a rollercoaster ride the first few weeks. If you got this far into the blog, you might wonder why I purchased it in the first place. Well, I broke it down on Twitter before, but I’ll give you some insights into my investment thesis right here.
I believe Punks are & will be the holy grail for the NFT community because of their historical significance and is the first of its kind of 10k PFP collections. It’s a bet on the past and the future.
The punks floor is 50% from its ATH, while The Bored Ape Yacht Club (BAYC) surged 100% in December and January. The goal is to eventually own both. With the current price action, imo punks are the value bet right now. As a Mutant Ape (MAYC) holder, I feel like I’m already part of the Ape Family
Punk owners are the OG collectors in the space, so it’s time to join this circle. That being said, I want to thank the legends @peruggia_v @seedphrase @ punk6529 @banks, and many more, for all the knowledge they have shared this year.
With a Total Value of All Sales (Lifetime) 650.33KΞ ($1.92B) and the record-breaking $23.7 M Alien punk sale. I’m eager to find out what’s coming in the future and be a part of it. LFG!
I’ve been window shopping for weeks before my purchase, but when @Twitterblue released their NFT verification, it felt right to pull the trigger on the punk that I’ve been low-key admiring. I immediately put a hexagon on my PFP so the world can see it’s not a ‘right-click-save-jpeg’.
As a venture builder and serial entrepreneur, you can bet your ass Crypto Punk 2498 is going to be doing a lot more than just sitting in a dark vault somewhere.
While I’m slowly building out my personal NFT vault, I will start to accept outside investments into it so I can expand it quickly. Friends and family who want to participate in NFTs, but don’t have the know-how or time to dive deep into this are already asking me to invest on their behalf.
I’ll be setting up a legal structure to make this happen over the next few weeks.
Or on the other hand, I might get a proper offer from The Migos, as Young Take Off already owns one that resembles mine. Maybe I’ll take it 😉