The "Bitcoin" in the NFT world? A Brief Analysis of the Fundamental Drivers Behind CryptoPunks Valuation
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Original source: Nansen
What are CryptoPunks?
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What's behind the value of CryptoPunks?
Many observers have had a hard time understanding the prices collectors are paying for CryptoPunks recently and see a speculative bubble forming. Others believe that the value of CryptoPunks is driven by factors other than the hype surrounding NFTs, and that the recent trend may just be the beginning of a revolutionary wave for art collecting.
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The self-proclaimed first NFT project in history
The first fundamental driver behind CryptoPunks valuation is its narrative as the first NFT project in history. This narrative makes CryptoPunks the only collection of its kind in the NFT space.
That sounds impressive, but what exactly does it mean to be the first NFT project? Why is this important? This means it is the first project to use blockchain technology to represent the ownership of unique assets. This had three seminal effects:
First, CryptoPunks revolutionized art and the art market. By utilizing blockchain's proof-of-ownership technology, CryptoPunks has eliminated third parties involved in the art trade. Artists can now interact directly with their audiences to buy and sell their work. The application of blockchain technology to art in particular makes digital art and collectibles scarce in the digital world, as their replicability prevents them from existing in a rare and valuable manner.
Second, the model set by CryptoPunks more generally allows for the emergence of a new asset class: NFTs. While art is one example, there are other non-fungible assets (jpegs, memes, certificates, patents, etc.) that use proof-of-ownership techniques to become scarce and valuable.
scarcity
scarcity
Not only are CryptoPunks culturally significant in the NFT space, but they're also scarce. They're worthless without the 10k cap making it hard to get one.
CryptoPunks are scarce at the collectible level, but also within collections, as some Punks are considered scarcer than others.
The value of a punk depends on its type, number of attributes, combination of attributes, and subjectivity. There are 5 Punk types (Alien, Zombie, Ape, Male, Female), 87 different attributes, up to 7 attributes per Punk.
Generally, the types considered more valuable are aliens, zombies, and apes. In fact, the average price of an Alien is 16 times the average price of a male Punk.
In terms of stats, Punks with 0, 6 or 7 stats are generally considered more valuable.
The most sought-after traits are usually the weirdest and most Punk-loving ones. Currently, the traits with the highest average price are as follows:
peas
pilot helmet
hoodie
necklace
necklace
top hat
orange edge
3D glasses
welding goggles
gold chain
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Social currency within the OG community
As mentioned above, CryptoPunks have a unique narrative and a limited supply. This scarcity is fed by the fact that CryptoPunks constitute a social currency in the OG community and in the NFT space.
When you buy a CryptoPunk, you're not only buying an image, but a membership to one of the coolest and most OG clubs in the NFT space. Membership in this club is strong. It communicates your early involvement, your recognition of the historical significance of the project, and your popularity in the NFT space. It also unlocks access to social networks, exclusive chat, free claims to other NFT collections (like Meebit at launch).
Increased demand for OG and entry of new market players will drive up prices
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Top 5 CryptoPunks Holders
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Types of NFT Collectors Buying CryptoPunks Over Time
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Total number of unique addresses owning CryptoPunks over time
Among these new entrants are high net worth individuals, investors, celebrities and influencers. We can expect them to be incentivized by short/long term profits as well as the social currency associated with CryptoPunks.
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Overall growth in the NFT market cements Cryptopunks' first-of-its-kind status
Like other successful series like Autoglyphs, The Bored Apes Yacht Club and ArtBlocks, came out and traced their origins back to CryptoPunks, which CryptoPunks will appreciate.
As the NFT space matures and merges with the Metaverse, VR and AR, CryptoPunks will become part of something bigger and gain utility.
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CryptoPunks must become a store of value
in conclusion
in conclusion
All in all, the extraordinary growth in the value of CryptoPunks can be explained by fundamental drivers such as their narrative as the first NFT project in history, scarcity, and associated social currency. The aforementioned elements will continue to push the value of CryptoPunks to even greater heights. While we can expect some short-term volatility that reflects the ups and downs of the crypto space, in the long run the value of CryptoPunks will only go in one direction. CryptoPunks will remain one of the most mature collections of Bluechip NFTs.
This is just the beginning. The NFT space will continue to exist, and CryptoPunks will always be considered the origin of NFTs, capturing more value over time. Despite the incredible growth in value of the series, it's likely that by 2025, Punks will be worth even more.
