CryptoPunks Proved People Will Pay Lots of Money for Digital Tokens

If you think about it too much, it seems kind of crazy that anyone would drop six figures for a digital rendering of a punk. But the surprise success of CryptoPunks showed that people will do exactly that and anticipated the rise of a new form of digital asset.

Created by artists John Watkinson and Matt Hall of Larva Labs, CryptoPunks are a set of 10,000 one-of-a-kind, pixelated illustrations of characters sporting mohawks, smoking cigarettes, and generally looking colorfully countercultural. On June 23, 2017, Larva Labs made non-fungible tokens (NFTs, or digital proof of ownership) representing each of the Punks available for free to anyone with an Ethereum blockchain wallet.

Though they started out free, the Punks quickly became sought after collectors’ items trading for thousands and later even millions of dollars. To date, total sales volume of CryptoPunks is $2.93 billion, according to Yuga Labs, the Miami-based web3 company that acquired the IP rights to CryptoPunks in 2022.

CryptoPunks: Free to Claim, a forthcoming monograph from art book publisher Phaidon, charts the rise of CryptoPunks, which turned out to be on the forefront of a boom in NFT art. The movement brought up questions about what makes art art and what it means to own a work in a digital-first world. Significantly, owning an NFT has built in scarcity (there one-of-a-kind) but it is not the same as owning the copyright to the underlying work–the NFT holder can’t prevent people from copying or reusing the affiliated image.

Buyers, undeterred that they were essentially paying for a few lines of code, formed a new kind of online community amid the pandemic-era excitement over decentralized finance and the concept of virtual worlds we briefly referred to as the Metaverse. “We designed something where we just push the boat away from the shore, and then we’re just like everyone else,” Watkinson says in CryptoPunks. “The community defines what it is and what it will be.”

Interest in NFTs went mainstream in 2021, when a set of nine Punks sold for nearly $17 million in a Christie’s auction. That’s also the year Yuga Labs launched the wildly successful Bored Ape Yacht Club NFTs and serious art museums and collectors began investing in NFT art.

Bored Ape and Punk owners used them as Twitter avatars to signal membership in an exclusive—or at least expensive—club. Celebrities like Heidi Klum, Snoop Dogg, and Jay Z bought Punks. And Punks are now part of the permanent collections at the Centre Pompidou in Paris and LACMA in Los Angeles.

While some of the frenzy has died down in recent years, not the least because for a minute, people were turning anything into an NFT: Jack Dorsey’s first tweet, a photo of the sandwich from the Fyre Festival.

But CryptoPunks were at the forefront of the boom—today, CryptoPunks sell for a minimum of about $100,000—and proved that it was possible to create value out of a digital collectible. Ahead of the 2024 election, president elect Donald Trump began selling his own trading card NFTs.

Reddit co-founder turned investor Alexis Ohanian, who was an early investor in crypto exchange Coinbase, says in an interview in CryptoPunks that he “really saw the light” when he observed “the way people were talking about Punks: the artistry, the provenance, the fact that this technology had something novel to show the world.”

“I really do hope that crypto can live up to its full potential,” Ohanian, who purchased a few Punks himself, says in the book. “To create value for artists so that they’re not just cogs in a machine and can enjoy the benefits of people loving their art forever.”