CryptoPunks - The digitalisation of collectibles
The CryptoPunks are 10,000 uniquely generated characters. No two are exactly alike, and each one of them can be officially owned by a single person on the Ethereum blockchain.
The CryptoPunks are 10,000 uniquely generated characters. No two are exactly alike, and each one of them can be officially owned by a single person on the Ethereum blockchain.
Over the last few days it has sent shockwaves throughout the investing social hubs with pop-culture figures and entrepreneurs buying and selling these NFTs (Non-Fungible Tokens) that resemble pixilated characters, for 5, 6, sometimes 7 figures.
What was free a few years ago now costs a minimum of $90,000 USD. Because every transaction is public, some people have gone as far as bribing administrators to buy 5 CryptoPunks simultaneously to avoid market hysteria. While its perfectly possible that this NFT market has entered a deception driven bubble (mass excitement about potential change in broad trends), big names such as Gary Vaynerchuk still see long-term appreciation in this market of digital collectibles and have decided to make a purchase.
Blockchain Revolution or Evolution?
The collectibles industry has been around for centuries ranging from classic cars, paintings and baseball cards. So NFTs are really just another addition to the long line of collectibles that mainstream brands have already sunk their teeth into. Luxury fashion brands such as Louis Vuitton, Dolce & Gabbana, Gucci and Burberry have released their own line of NFTs.
Its interesting that the NFT market has taken this long to pick up a 'hype' factor seeing as its probably the most tangible route for adoption of blockchain technology. Although, the idea of digital art does sound a bit stupid. But I guess it's stupid for the same reason people think art is stupid and you can make millions by buying and selling paintings.
CryptoPunks appeals to a community that has long been associated to vintage figurines and rare playing cards. It really draws on the 'nerdy' (for a lack of a better word) drive and the artistic values of the broader culture which is why it has drummed up so much interest.
What's in it for us?
While the CryptoPunks could fall in value, I think it's safe to assume that most of us aren't going shell out six-figures on this particular range of NFTs.
What we can do is realise that we are at the very beginning of this trend cycle and what may be extremely cheap today could grow exponentially in value over the course of a decade.
It's like a classic/vintage/antique car. What was considered average 100 years ago would be considered a prized possession today. The most popular car of the 1940s was a Cadillac Series 62. The 1947 edition was worth $2,553 (the equivalent of $32,556 today). However if you try to purchase this car today you would be quoted a price over $120,000 (that's an annual return of 5.35% per annum for those wondering). Not exactly a great investment but the point still stands: Even a poor pick in NFTs today will likely yield positive results in the long-term.
Websites called Rarible and OpenSea are marketplaces for a wide range of NFTs if you're curious. You can even create your own digital art and sell them to prospective buyers. Its worth noting that you need an Ethereum wallet to purchase these collectibles and one of a kind digital art works although there are many cryptocurrencies which facilitate other NFT vendors but Ethereum is home to the biggest NFT stores.
Takeaways
NFTs interest is on the rise as Youtube coverage of CryptoPunks has set the market on fire
The concept is a digital evolution of the collectibles industry that has existed for centuries
The barrier to entry is extremely low and a poor decision might still make you money in the long-run
Coming Soon...
A Bubble Ready to Pop?
Exploring Crypto World #3