What Is a CryptoPunk and Why Are They Worth So Much?

Think NFTs are a joke? The price of a single CryptoPunk might change your mind.

Over the past year or so, words like "crypto" and "Bitcoin" have become household names. The cryptocurrency world has truly taken off, with hundreds of thousands of people now investing in this emerging industry.

A new way of thinking about digital assets has arisen with the crypto surge: NFTs (non-fungible tokens). One of the most popular NFTs is something known as a CryptoPunk, with these digital avatars trading for hundreds of thousands of dollars at a time. So, what is a CryptoPunk, and how are they worth so much?

What Is A CryptoPunk?

A CryptoPunk is a 24x24 pixel, 8-bit-style unique avatar that comes in the form of an NFT. Their creation began as an experiment, conducted by software developers Matt Hall and John Watkinson in 2017. The pair wanted to create a software program capable of generating thousands of unique avatars. The program produced a total of 10,000 avatars.

Hall and Watkinson initially thought they could use this software to develop an app, but these avatars soon became a brilliant leap in technology. This form of digitally-generated art is stored on the Ethereum blockchain. With this technology, Hall and Watkinson were able to change what it meant to 'own' something.

Related: The Best NFT Marketplaces for Buying All Kinds of Digital Assets

The avatars themselves were inspired by the 70s British punk scene, which reflected the rebellious, anti-establishment nature of the rise of blockchains. While anyone, of course, can take a screenshot of these avatars or download an image of them, only one person can officially 'own' any one avatar. And this is what makes them such a high-profile buy.

While every avatar in the collection is unique, some are considered to be rarer than others. This depends on the unique line of code used to generate each avatar. Over 9,000 of the avatars are human women and men, but a select few come in the form of aliens, zombies, and even apes. These rarer avatars often come in at significantly higher prices.

What's more, avatars with more accessories are more expensive. The most accessories any single avatar has is seven, and this makes it incredibly rare and incredibly expensive. So, why are these CryptoPunks so coveted by crypto-enthusiasts?

Why Are CryptoPunks So Desirable?

You've probably heard of NFT art pieces selling for millions at auction. In March of this year, an NFT created by the artist Beeple sold for over $60 million, and other NFTs have sold for similarly high prices. The case is the same for CryptoPunks. But why?

As you may already know, buying art in the form of an NFT makes you a unique owner, with documentation of all previous owners in the blockchain. This uniqueness makes CryptoPunks a wise move for investors who trust the NFT market.

Generally, an NFT's value will only grow with increased public perception and popularity. However, by the same measure, it's also possible for an NFT's value to drop drastically at any given time, so these investments can either be highly lucrative or a way to lose a lot of money. However, so far, the value of CryptoPunks has grown exponentially.

In 2017, when CryptoPunks were initially released, they cost between $1 and $34 each. However, now just one CryptoPunk can cost millions of dollars. The most expensive sale of a CryptoPunk was sold in June of this year for $11.7 million. This NFT was bought by Shalom Meckenzie, an Israeli entrepreneur and billionaire. Another was sold for $7.57 million to the CEO of Figma.

The original developers of the CryptoPunks kept 1,000 avatars for themselves before releasing the other 9,000 for sale, effectively making them millionaires in their own right. At the time of writing, the total value of all sales of CryptoPunks exceeds an incredible $250 million.

Given the boom in popularity that these avatars have received, there comes a kind of status that comes with owning one. This adds to the desire for these CryptoPunks. While they are a potentially lucrative investment, they're also a pretty cool thing to show off. The rarer the CryptoPunk, the more prestigious the ownership.

So, if you've got an extra couple hundred thousand lying around, you could grab yourself a CryptoPunk. But how exactly do you do this?

Can You Buy CryptoPunks?

Currently, you can only buy CryptoPunks via the LarvaLabs website. This site is owned by the original developers of CryptoPunks, Hall and Watkinson. On this site is a CryptoPunk marketplace, where you can buy avatars from other owners or sell them if you happen to have one! That'll be quite a payday.

On the LarvaLabs website, you can find hundreds of different CryptoPunks for sale. The cheapest of these avatars comes in at $139,000, still a pretty penny for most. However, there are CryptoPunks on the marketplace going for an unbelievable $3.19 billion. Maybe a bit of a high asking price compared to previous sales.

You can even find some of the rarer CryptoPunk zombie and alien avatars on the LarvaLabs marketplace. But these certainly aren't cheap. The most 'affordable' zombie avatar on the marketplace right now is going for $5.09 million. The cheapest alien avatar is going for almost $80 million.

Related: Real-World Use Cases for NFTs in the Future

There are also occasional auctions held for the sale of CryptoPunks. Just last month, Sotheby's held an auction to sell five avatars, all of which are human males and females. This is where one of the nine super rare alien CryptoPunks was sold for $11.7 million.

It's safe to say that you need to be pretty wealthy to bag yourself a CryptoPunk, with even the most basic avatars going for over $100,000. But don't be too dismayed. The popularity of NFTs has cooled down a lot since its height early this year, and with a decreased popularity, naturally comes decreased value. So, CryptoPunks might be selling for just a few thousand dollars each in the not-so-distant future if the NFT hype continues to dwindle.

NFTs Are a Game Changer

There's really no way of knowing how integral cryptocurrency might become in the average person's life in the coming years. While the hype surrounding NFTs might have reached a plateau, cryptocurrency certainly isn't going anywhere. It's exciting to think about where the wonderful world of crypto might take us next. We'll certainly be here to talk about it!

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