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How did NFTs go from a group of randomly generated pixel art with a strange name like @cryptopunksbot to being sold for $69.9m by @ChristiesInc, one of the world's oldest art auction house?
Follow along for a brief history of NFTs and where I think they are heading
Follow along for a brief history of NFTs and where I think they are heading
The creators of CryptoPunks - John Watkinson & Matt Hall, both Canadians who met while attending college in Toronto, started Larva Labs originally to make iOS and Android apps for companies like T-mobile, Google & Microsoft.
In December 2016, Watkinson began playing with a pixel-art character generator. He randomly mixed a group of characteristics, like skin colors, hair types etc., to come up with 10,000 24 x 24 8-bit style pixel art called "punks".
The name was meant to be a homage to the early 90s cypherpunks, co-founded by the late Timothy May - an early crypto pioneer & author of the Crypto Anarchist Manifesto.
Initially, Watkinson & Hall just wanted to create a mobile game, just like the dozens of other mobile games they've created. Little did they know, they were changing the very concept of art ownership.
There are exactly 10,000 CryptoPunks in total, each with their own combination of distinct features - every single one of them is unique but certain types of punks are rarer than others.
https://www.larvalabs.com/cryptopunks/attributes
https://www.larvalabs.com/cryptopunks/attributes
When CryptoPunks were first released, they could be claimed for free by anybody with an Ethereum wallet, but all 10,000 were quickly claimed. Now they must be purchased from someone via the marketplace.
According to Larva Labs, average sale price of each Cryptopunk currently stands at ~16 ETH (~$33k) and the total volume traded all sales so far is ~134k ETH (~$280M). https://www.larvalabs.com/cryptopunks
On 19 February 2021, CryptoPunk 6965, a fedora-wearing ape, sold for 800 ether (~$1.6M), the highest recorded sale ever at the time. The record was broken just 3 weeks later on 11 March, when CryptoPunk 7804 & 3100, were sold for the equivalent of ~$7.5 million each.
So why is CryptoPunk so important?
CryptoPunks pioneered the way for NFTs and the design of their smart contract served as inspiration for the ERC-721 standard that powers most digital art and collectibles today. In fact, the ERC-721 whitepaper refers to CryptoPunks by name.
CryptoPunks pioneered the way for NFTs and the design of their smart contract served as inspiration for the ERC-721 standard that powers most digital art and collectibles today. In fact, the ERC-721 whitepaper refers to CryptoPunks by name.
A project that is also mentioned in the whitepaper is @decentraland, another NFT pioneer and the only project that has surpassed CryptoPunk in total transacted volume (in ETH) according to @opensea.
https://opensea.io/rankings?sortAscending=false&sortBy=total_volume
https://opensea.io/rankings?sortAscending=false&sortBy=total_volume
Decentraland is an Ethereum blockchain-powered virtual world, where users purchase plots of land that they can later navigate, build upon and monetize. https://decentraland.org/
After a $24m ICO in 2017, Decentraland launched its closed beta in 2019 and opened to the public in February 2020.
Decentraland uses two tokens: MANA and LAND. MANA is an ERC-20 token that must be burned to acquire non-fungible ERC-721 LAND tokens. MANA tokens can also be used to pay for a range of avatars, wearables, names, and more on the Decentraland marketplace.
Decentraland is also experiencing rapid user growth - there are currently more than 80,000 unique token addresses hodling MANA with 20% of them hodling for more than 2 years.*
*data from @nansen_ai
*data from @nansen_ai
Decentraland is central to the NFT movement for many reasons, which I will explore in the later parts of this thread, but one of the key reasons is that it brought awareness to the idea of the Metaverse
A term coined by Neal Stephenson in his 1992 sci-fi novel Snow Crash, where humans, as avatars, interact with each other and software agents, in a three-dimensional space that uses the metaphor of the real world.
In fact, one of the biggest early financier of Decentraland (and Snow Crash fan) is Metakovan - the man who bought Beeple's EVERYDAYS: THE FIRST 5000 DAYS for a mind-boggling $69 million. https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx
Undoubtedly, the purchase was in part a PR stunt. Millions of people all over the world were introduced the idea of the Metaverse almost overnight as they watched in awe & confusion an art transaction that equalled the value of a Bombardier Global 7500 private jet.
(Btw I've been a fan of Beeple's work long before the $69M sale. This is my favourite piece 
)
https://www.instagram.com/p/CDxnwKjghok
)https://www.instagram.com/p/CDxnwKjghok
Obviously the NFT space is growing insanely fast and there's a lot of (ridiculous) $$ going around. Before we get carried away, here's an unpopular opinion, especially coming from a huge NFT believer:
I think the vast majority of current 'collectibles' type NFTs will lose its value.
For NFTs representing digital art and collectibles, as @Naval mentioned - the creator cannot enforce scarcity, it’s up to a surrounding community to imbue the authorized NFT with scarcity and prestige within the context of that community. https://twitter.com/naval/status/1378955377396477954
The community could also gradually lose interest or stop believing that there's prestige in holding something that serves no practical purpose. But NFTs with a strong brand & fan base behind it will retain some of their value, for e.g. sports focused NFTs like NBA TopShot, Sorare
