CryptoPunks and the Meme Economy
In September 2019 I wrote a blog post, Those that know, don’t predict, and in it I wrote my Top 4 predictions for crypto by the end of 2020.
They were:
Bitcoin would see its market dominance drop to about 50% (got this wrong, it’s actually at 61%)
Ethereum would hold strong in the number two position by market cap (held true)
Binance would move from eighth to third (true, off by 2 months)
An NFT would sell for over $1m (this happened yesterday)
Number four is the most interesting to me.
Yesterday, we saw CrytoPunk 6487 sell for $1,054,240 or 550 ETH.
What’s even more interesting is that this isn’t the first CryptoPunk to sell for over $1m. Just three days earlier, CryptoPunk 6965 sold for a cool $2m, and the day before that CryptoPunk 4156 sold for $1m, making it, the first CryptoPunk to breach the $1m mark for the rare NFT.
You may be thinking, WTAF? I can just take a screenshot of this image or copy it and I have it. Why would anyone pay over $1m for this?!
It’s a good question and goes back to the core thesis that blockchain and decentralization enables: assets in the digital world can now become rare, provably scarce, unique and own-able. The technology acronym behind these are NFTs (non-fungible tokens, you can read about them here).
Your next logical question would be.. OK, well what makes these things valuable? How do you determine which of them will become the most valuable? Won’t there just be millions more of these coming onto the market? Is it just a function of scarcity? Or is there something more to it?
My belief: The ones with the greatest story behind it will ultimately win.
Why stories?
Yuval Harrari (in his book, Sapiens) explains:
Humans think in stories rather than in facts, numbers, or equations, and the simpler the story, the better.
CryptoPunks started with a simple story.
Creating crypto art that plays a tribute to the crypto movement.
It asked: What if there was a way to create digital art that played tribute to cypherpunk’s who paved the way for bitcoin? What if they could be made provably scarce on a blockchain? What if they were mathematically generated and no two are alike?
And so, it kicked off its first story.
CryptoPunks is the story of the tribute to the cypherpunk movement.
To enable that story, 10,000 CryptoPunks were distributed (for free) to anyone with an Ethereum address and that would claim them. From there, people within the crypto movement started to build on that story by sharing it with others and with time, that story began to embed within it, it’s own culture and the myths that come along with it.
Today, if you own a CryptoPunk then you are buying into that story. You are buying into the story of cryptography, you are buying into the story of bitcoin and blockchains, you are buying into the story of the cyperphunks, and you are buying into the story of digital art. You can’t own a CryptoPunk without believing in that story and once you do, you are going to want to tell it. Over time, as more and more people believe in that story, it becomes a myth.
Yuval Harrari says it again:
Large numbers of strangers can cooperate successfully by believing in common myths. Any large-scale human cooperation – whether a modern state, a medieval church, an ancient city or an archaic tribe – is rooted in common myths that exist only in people’s collective imagination.
But what is different about today is our ability to accelerate that story-to-myth journey. That journey from an imagined idea, to a story that can be shared and repeated, happens now on a cycle faster than we’ve ever seen before.
In the past, people needed to interact with one another to share their stories. They had to physically converse and go into details about the story to hear it and understand it.. But today, with Facebook, Twitter, Whatsapp, TikTok and other social networks, those stories have been broken down into small bite size chunks or memes and are able to spread globally as fast as communication on the internet. Once those stories take hold, they become self fulfilling prophecies and both literally, and figuratively, get memed into existence.
That, is how we’ve been able to see something like CryptoPunks go from an imagined idea, to myth, to meme, and to a 24x24 pixel sell for over $1m (in just over 3 years).
Punks United.
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