When she was alive, my mother used to love to visit antique shops and art galleries. While her artistic streak did not rub onto me but if five years ago had someone told me that pixelated JPEGs would sell for hundreds and thousands of dollars, I would have laughed in their face. To be fair for me (and indeed for a vast majority of people), a Picasso painting or a rare stamp is the kind of thing that would sell for $100k+. Instead in 2021, pixelated cartoonish JPEGs are selling for thousands and even hundreds of thousands of dollars. This is the strange and unusual world of NFTs for you- where art meets gaming meets the cryptocurrency world.
What Are Non Fungible Tokens (NFTs)?
Non-fungible tokens (NFTs) are cryptographically unique tokens linked to digital content, such as artwork and music. So in layman terms, a non-fungible item would be a rare stamp or a stamp with some kind of an error/blunder on it whereas ordinary stamps are fungible tokens (one unit is easily interchangeable with another). The "Inverted Jenny" is a misprinted 24 cent U.S. postage stamp issued in 1918 that shows an inverted image of a blue aeroplane. In 2007, an "Inverted Jenny" sold for more than $900K (and as you can imagine normal Jennies and other run-of-the-mill/fungible stamps never have such luck). This example of a unique stamp in some way explains the present NFT craze. NFTs are "one-of-a-kind" assets in the crypto world that you buy or sell like artwork or even a house, but which have no tangible form of their own. The digital tokens can be thought of as certificates of ownership for virtual or physical assets (and these are held on blockchains). NFTs are usually created on the very blockchains that underpin some of the most widely used cryptocurrencies, typically Etherum ($ETH) and now increasingly Solana ($SOL) and Cardano ($ADA). While NFTs have been around since 2014, it is only now they have exploded in popularity with the NFT art sales exceeding $3 billion in 2021. As you can see, it has been quite a phenomenal rise compared to 2020
A variety of different NFT platforms are in existence including OpenSea and Rarible. Additionally, the usual crypto exchanges such as Binance and FTX have launched their own NFT marketplaces. However, in between their inception in 2014 to breakout in 2021 came the punks during the crypto winter of 2017. I am referring to the Cryptopunk NFTs, a creation of the Larva Lab that was released as one of the first non-fungible tokens (NFT) on the Ethereum blockchain in 2017.
The Punks Are Here: What Are Cryptopunks?
Cryptopunks started as an experimental crypto art blockchain project which was inspired by the London punk scenes, the cyberpunk movement and William Gibson's novel Neuromancer, Johnny Mnemonic, Blade Runner and electronic music artists Daft Punk. Only 10,000 of these 24 x 24-pixel images are in existence (which contributes to their scarcity) and generated using computer code with the proof of ownership existing on the Etherum blockchain. Cryptopunks served as an inspiration for the ERC-721 standard for NFTs and the modern crypto art movement, which has since become an ever-expanding part of the cryptocurrency and decentralized finance ecosystems on multiple blockchains.
To say they revolutionized both the NFT and cryptospace is an understatement. These were originally for free and the buyers had to only pay the ETH gas fees, which was negligible at that time. Their estimated price now varies from $7,000,000 to-9,000,0000 (they can only be purchased via secondary marketplaces). Now you must be wondering why would someone pay so much for pixelated images which can even be downloaded off the web, then its worth keeping in mind the concept of flex equity. In the real world, an ordinary stachel provides the same service as an expensive Louis Vuitton handbag (personally my crossbody bag with its broad strap is a much better choice for walking long distances with all my stuff than a designer bag with its itsy-bitsy straps). However it is a designer label such as Louis Vuitton with its position as a stsus symbol that is a must-have if you want to part of certain social circles. in the same sense, NFTs such as Cryptopunks are a social currency whose ownership confers social status within the crypto community. So the rise of these pixelated social status symbol is as much a reflection of our evolving society as it is of the mainstreaming of cryptocurrnecies and crypto tokens such as NFTs.
Why NFT-Newbies Love Cryptopunks To Pieces
Gucci shoes and LV bags are a status symbol in many settings and so are Cryptopunks. The cult-status enjoyed by designer brands has fuelled the rise of a multi-billion dollar counterfeit products industry ( I am not condoning counterfeit products in any way) and growing popularity of NFTs such as Cryptopunks is fuelling the phenomenon of fractionalised NFTs. As the name suggests, fractionalised NFT projects allow users to buy a proportion of well-known NFTs at a lower price- essentially ordinary NFT enthusiasts can buy shares of their favourite collectibles the way more conventional buy shares (and even fractional shares) of their preferred stocks. One such fractionalising project is spearheaded by the blockchain company Otis which is fractionalising Cryptopunk #543 to be sold for $1/share. Some other fractional companies include Fractional and Unicly. While the NFT space is infamous for its illiquidity, fractions are more relative and available on blockchains. Buying fractions of a unique digital asset offers a much higher chance of getting in and out while using volatility in your favour. As the NFT space grows, so will the demand for fractional NFTs. Hence Cryptopunks and other iconic NFT fractions are worth keeping on one's radar.
