TL;DR: With a new update or NFT collection being released almost every day, it’s clear the crypto ecosystem is constantly evolving. CryptoPunks is one of the NFT collections paving the road to the digital universe — but it’s just the beginning. Knowing what brought it here and why it was created will lead you to make better decisions when investing or simply interacting with CryptoPunks.
In this article, we’re gonna dive into the CryptoPunks lore, answer all the CryptoPunks related questions and even more. Prepare yourself for a fantasy story and a journey to the future of CryptoPunks!
What is CryptoPunks?
CryptoPunks is an NFT collection of 10,000 punky characters that live on the Ethereum blockchain. The collection features a varied mix of 24x24 pixelated characters facing right.
The project got its look from various influences, like the lively London punk scene, the ground-breaking cypherpunk movements, and the world of pixel art. Larva Labs specifically calls Punks “pixel art images” as a nod to subcultures, emphasizing that it’s more of an artistic exploration of digital ownership and identity than a speculative investment.
Each Punk is unique, with 87 different attributes like beanie, hair color, or glasses. No Punk can have more than seven qualities, making certain traits rare and highly sought after. While most Punks resemble humans, there are three rare types: Zombie (88 total), Ape (24 total), and Alien (9 total).
Owning an NFT is different than screenshotting a JPEG — just like holding an original Rembrandt is more valuable than owning a replica. As their name suggests, NFTs are non-fungible by design. This is different from digital tokens like Bitcoin and Ethereum.
Fungible assets can be exchanged for another asset of the same type, much like BTC, ETH, or even fiat. NFTs, on the other hand, are unique assets where their ownership details are documented on the blockchain, ensuring digital scarcity and unique attributes for each asset.
But how exactly is digital scarcity being enforced?
The concept of NFTs first emerged in 2012 with the creation of Colored Coins, which could be used to represent real-world assets on the blockchain. However, Colored Coins only worked in a permitted environment, making it more similar to a database than anything else.
As the crypto industry became more popular, people have continued to experiment with the idea of a digitally scarce asset. This led to the creation of ERC-721 and ERC-1155.
The ERC-721 standard is like a set of rules for making NFTs. These actions help in making special tokens with their unique information, making them different from one another.
Behind the scenes, ERC-721 smart contracts keep a list of who owns which token, making it safe to pass tokens from one person to another. The contract also keeps count of how many tokens there are altogether and how many each person has.
As previously mentioned, CryptoPunks NFTs are secured by the Ethereum blockchain. Ownership and transaction history are publicly visible on the Ethereum blockchain along with other important info such as the NFT’s metadata.
Understanding how to access an NFT’s metadata is essential for holders to grasp the specifics of what they’re buying.
Metadata usually includes visual attributes like color, type, wearables, and so on. On the blockchain, it looks something like this:
CryptoPunks have their own set of traits that make up their uniqueness. These are accessories and types.
As a result, you have CryptoPunks wearing caps, glasses, punky hairstyles, nerdy glasses, the iconic cigarette, and 90 other accessories.
When it comes to the type, there are 5 of them: male, female, zombie, ape, and alien.
Alien punks are the rarest of them all — only 9 in existence.
The CryptoPunks NFT collection has been autogenerated. This means that out of the potential combinations, only 10,000 CryptoPunks will ever exist!
What is the utility of CryptoPunks?
CryptoPunks make for an awesome avatar pic, but it’s also a historic piece of art.
What makes CryptoPunks so valuable is the fact that it’s one of the earliest NFT collections on the Ethereum blockchain. Owning a CryptoPunk is not only a sign of status in the Web3 world, but it’s also being recognized by avid art collectors.
This is where the utility of the CryptoPunk stops. Currently, there is no plan to reward the punk holders or to transform the intellectual property of CryptoPunks into something bigger.
Like with any OG collection, CryptoPunk holders gain access to a private Discord channel and get tickets to exclusive events. So, the next time you see a person checking in at an event with their CryptoPunk, know they are part of an elitist group.
Who created CryptoPunks?
CryptoPunks was created in 2017 by software developers and artists Matt Hall and John Watkinson. Most events revolve around the founders’ journey into software development and later on, in the crypto space.
Matt Hall completed his studies in computer science and mathematics at Trinity College in 1998. Following that, he held diverse roles in development. On the other hand, John Watkins earned his computer science degree from the University of Toronto and worked as a tech lead for different companies before the joint studio began.
The history of the founders goes way back in 2005 when they decided to establish Larva Labs. Back then, Larva Labs started as a 2-man software company, taking gigs from companies.
Years went by, and Larva Labs worked on various projects, such as large-scale web infrastructure, genomics analysis software, 8-bit roleplaying games, the Androidify app with Google, and many others.
Little did they know that an experiment with NFTs would propel Larva Labs to fame. Like any other ground-breaking project, CryptoPunk’s history came with unexpected turns.
In June 2017, the CryptoPunks made their debut with little excitement. Larva Labs kept the first 1,008 Cryptopunks for themselves and made the remaining 8,992 available to the public via a free mint. Within a week, over a hundred crypto enthusiasts snatched up the entire set. As listings started to pop up, a snag emerged. A glitch in the smart contract allowed users to “buy” a Punk, swap their ETH for the Punk, and then pull off a slick move by executing the withdraw command to get back the ETH they just spent.
The problem? That ETH shouldn't have been up for grabs – it was meant for the seller. All this fuss happened because of a tiny hiccup in the code, just one line gone wrong.
During a legit purchase, the early Punk claimer known as Hemba stumbled upon this glitch and took advantage, snagging dozens of Punks that were up for sale (Later on, hemba did the right thing by returning over 30 v1 Punks from the exploit to those affected).
A warning was sent out to owners, advising them to steer clear of the smart contract until the developers figured out a fix for the issue.
Larva Labs quickly alerted the community about the problem through a Tweet.
In response, Larva Labs rolled out a new smart contract, fixing the bug and adding bid functions. On June 23, 2017, they “re-minted” all the Punks and airdropped them back to the original claimants. It's important to note that both versions of the contract have identical Punks and IDs – v1 and v2 Punks look the same but are separate contracts, each unique and non-fungible.
Between 2017-2020, CryptoPunks has been on the fringe of anonymity – a few pumps here and there, maybe a couple of sweeps. Basically, no one wanted to pay attention, especially since the crypto market was in a deep, deep depression.
It wasn’t until 2021 when NFTs took the world by storm. No one knows exactly how and why it happened; people just wanted to get their hands on Web3 art and speculate on its price.
CryptoPunks quickly became part of mainstream culture, capturing the attention of not only crypto enthusiasts but also artists, celebrities, and the public. They've sparked discussions about digital ownership, the definition of art, and the limits of self-expression.
Notable CryptoPunk holders span various fields, featuring individuals like Alexandre Arnault, Odell Beckham Jr., Chris Dixon, Ben Horowitz, Jay-Z, Heidi Klum, Alexis Ohanian, Kevin Rose, Sia, Snoop Dogg, Gary Vaynerchuk, Serena Williams, and more.
As CryptoPunks rose to fame, the faulty V1 contract came to haunt them.
During the NFT boom in 2021 and 2022, Larva Labs faced internal conflicts within the CryptoPunks community. Disagreements arose over the handling of CryptoPunks V1 rediscovery, and confusion surfaced regarding the rights of individual Punk holders. Larva Labs initially implied owners could do anything with their Punks but later clarified they retained Intellectual Property ownership and hadn't granted commercial usage rights. The situation became more complex when Larva Labs signed a representation deal with Hollywood talent agency UTA in August 2021.
This uncertainty led some well-known CryptoPunk owners, including Punk4156, to sell their Punks and distance themselves from the community. The licensing approach of projects like Nouns, published under a CC0 designation, gained support from those seeking a more forward-thinking position.
Larva Labs had claimed that CryptoPunks were the first NFT, a statement criticized by blockchain historians as inaccurate. The claim was initially on their homepage but was later modified and eventually removed in July 2021. Matt Hall acknowledged the existence of earlier NFT projects during a 2018 event but there's no evidence that Larva Labs took steps to update their messaging. While CryptoPunks are among the first NFT projects on Ethereum, there are documented instances of at least six other NFT projects predating CryptoPunks on Ethereum and others on different chains. The debate underscores the evolving landscape of NFTs and their historical context.
Who is developing CryptoPunks now?
In an unexpected announcement on March 11, 2022, Larva Labs sold the entire CryptoPunks and Meebits projects, including all associated intellectual property, trademarks, copyrights, and NFT holdings, to Yuga Labs, the creators of the Bored Ape Yacht Club. This move sparked reactions within the community, as they had no idea what it would mean to the holders.
Specifically, holders were concerned about the implications of the acquisition. Would they retain the commercial rights to their Punks, or was it a takeover by Yuga Labs?
The deal faced criticism from some CryptoPunk holders who viewed it as a reminder of the potential consequences when the intellectual property of an NFT collection is owned by a company. Larva Labs suggested that the decision was influenced by a growing disconnect between them and the CryptoPunk community, emphasizing that their skills were not aligned with community management and day-to-day project requirements.
The transfer of around 500 CryptoPunks (V2 contract) and 1,082 CryptoPunks V1 from Larva Labs' wallet to Yuga Labs was completed on May 7, 2022. Subsequently, the entire CryptoPunks marketplace was migrated to the server owned by Yuga Labs. In June 2022, Noah Davis, the Head of Digital at Christie's, left his position to join Yuga Labs as the Brand Lead for CryptoPunks, signalling the intention to establish CryptoPunks in the fine art world.
Investors are also an important component of any NFT ecosystem. Although they don’t get involved directly in the governance of the project, they do exert an influence over the brand’s expansion into the mainstream.
In March 2022, Yuga Labs had raised $450 million from Andreessen Horowitz at a $4 billion valuation. As of 2023, Yuga Labs made no direct investment to advance the IP of CryptoPunks.
How does CryptoPunks make money?
Now, let’s get to the juicy part – how do CryptoPunks make money?💰 (No, flipping and rug pulling are not the correct answers)
The answer to this question is strongly related to intellectual property.
Think of popular trademarks such as Mickey Mouse, Spider-Man, or Coca-Cola. Every time you see movies, books merch, or posters with them, know that the owners of the IP get a share of the profits. The same thing goes with the NFT holders, in theory.
When it comes to NFTs, it’s quite challenging to fit them into the traditional framework of copyright law. To give more context, owning an NFT doesn’t mean holders have automatic control over the creative work. This creative control needs to be granted by the creator.
As such, NFT holders should pay attention to what IP rights, if any, come with owning the NFT.
On 15 August 2022, Yuga Labs published a license agreement giving Cryptopunk holders commercial rights to their punks and stated that this license only applied to the holders of punks from the V2 contract. Yuga Labs has no current plans for CryptoPunks V1 and commercial rights were not being extended to holders of punks from the V1 contract. While the license resolves some specific questions regarding Yuga Labs' intentions, larger questions about the IP of generative NFT collections remain.
As it stands, CryptoPunk holders have full commercial rights to the art in their owned wallets. There are no monetary limits on earnings on merchandise, derivatives or other commercial uses.
Another way of generating revenue is via royalties. As of 2023, CryptoPunks earns no royalties from secondary NFT sales.
Where can I buy CryptoPunks?
You can buy CryptoPunks on OpenSea, Rarible, Blur or Uniswap's NFT Marketplace (Gem).
