CryptoPunks – the phenomenon synonymous with NFTs, and that is now primarily in the hands of Crypto Whales.
But what is a “Crypto Whale?” There are no clear definitions of how much capital or assets make a crypto whale, however, what we can agree on is that a crypto whale is an entity capable of creating price fluctuations and market volatility to their advantage.
A crypto whale can be anyone from a wealthy individual to a company with a considerable amount of crypto holdings. And we’ve seen many whales appearing in NFT land in the past six months.
CryptoPunks Gone Wild
One of the first and most popular NFT projects which has been taken over by whales is CryptoPunks. The 10,000 unique, pixelated Punks which were initially claimed for free when the project launched on the Ethereum blockchain in 2017, have now been changing hands for millions of dollars in some cases.
But it was only recently that the Punks started fetching in eye-popping amounts of money. For several years, there was a relatively small but passionate community around CryptoPunks. That is, until a few months ago when the NFT market took off and Punks caught the eye of some heavily stacked investors. So what has caused this sudden rise in Punk popularity? The explosion of NFTs in general has certainly played its part, as well as the cryptocurrency bull market, and Dapper Labs’ NBA TopsShot.
We’ve seen all kinds of people dropping major dollars on Punks, from prominent business personalities, to famous YouTubers, venture capitalists and CEOs. According to CryptoSlam, CryptoPunks are consistently in the number one spot with the largest trading volume, which is at more than 300 million to date, and expected to soar to 400 million rapidly.
The Humble Beginnings
The creators of CryptoPunks, John Watkinson and Matt Hall, built a pixelated character generator back in 2017. In a few months’ time the generator had made over 10,000 unique characters, some were aliens and some apes, each with their own hairstyle, glasses or hat. But the Punks were not an instant hit, and what’s interesting, and not known to many, is that a writer at Mashable played a massive role in the initial success of the Punks.
At the time (2017), the community was very, very small, and the gas fees on Ethereum were almost non-existent (think $0.11). However, even after it was announced that anyone can claim a free Punk, and that the only fee to pay is a small amount of gas, only about 30 Punks were sold. That is, until Jason Abbruzzese, Business Reporter at Mashable, published an article about CryptoPunks called “This ethereum-based project could change how we think about digital art.” In a few hours after the article, the Punks were all claimed. Some users got as many as 100 Punks, but few hit multi-millionaire status since many sold their Punks before the NFT market boom.
It’s also worth mentioning that up until recently, it was widely believed that CryptoPunks was the first and oldest NFT project on the Ethereum blockchain, and many purchased Punks because they believed this is why Punks are so valuable and will continue to hold on to their value long term.
But in the past month we’ve seen many old NFT projects emerging from their caves, such as Etheria and Curio Cards. However, neither of these projects have taken off massively yet, since they have not yet formed a solid community, which has an important role in making a project a success in the NFT space. And even though CryptoPunks may not be the oldest, it is way ahead of the game in terms of community.
The Big Question – Is It Purely a Whales Game?
Due to crypto whales jumping in, the floor price of CryptoPunks has risen at an unprecedented speed, created a barrier to entry for those that can’t afford to spend at least $30,000 on a Punk, and also encouraged the creation of a number of CryptoPunk clone projects. At this point, the lofty entry barrier and CryptoPunks cult status have become a kind of flex for rich people, with many wondering if it is a whales game more than anything else?
Some say they buy Punks as a form of investment and to build up their crypto portfolio, while others believe it is just a game. Mike McDonald, a 31-year-old professional poker player who recently purchased his first Punk said to TechCrunch “I think that with each year that passes the definition of what is gambling and what is investing move closer and closer together.” And this is certainly true for the NFT space, which is still in its very early stages and where there are no clear definitions as to what makes something valuable or not.
For example, what makes some CryptoPunks sell for a few million, and others for $30,000? Of the 10,000, there are 6,039 male Punks and 3,840 female Punks. A total of 696 wear hot lipstick, while 303 have muttonchops. There are 286 Punks with 3-D glasses, 128 rosy-cheeked Punks, 94 Punks with pigtails, 78 Punks with buck teeth and 44 beanie-wearing Punks.
The prices for these Punks are largely dictated by the community and buyers, and their interpretation of which properties and traits make a Punk more valuable than another Punk. But even so, these evaluations are not consistent, sometimes Punks that have attributes that are not as rare as other attributes still sell for more. It seems that the CryptoPunks universe has its own trends of which Punk is currently “in” and which one is “out”, and this could very well be dictated by whales in the game.
According to Etherscan, the 10,000 Punks are spread across almost 2,000 wallets. However, some of the Punks belong to addresses that haven’t moved in over three years, meaning that many of them might be lost forever, making the supply even more scarce.
What Does The Future Hold?
Stay tuned for the upcoming part two tomorrow, where we take a look at the effects of CryptoPunk clone projects, prices, investment, and what we can expect in the future.
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Ivelina is an NFT and Blockchain lover. She has a knack for putting complex concepts into simple words.