Most of the digital art and collectibles that trade on the Ethereum Blockchain use what is known as the ERC-721 token standard. The Cryptopunks, one of the earliest Ethereum NFTs, was the inspiration for the ERC-721 standard that drives the majority of NFT transactions. As NFTs went mainstream, these computer-generated 8-bit character valuations skyrocketed.
In the beginning of 2021, I fell deep into the Ethereum rabbit hole and now believe blockchain technology will find its way into most global sectors. I documented my path in the post, Self Reflection – My Journey with NFTs and Ethereum.
To celebrate my new found passion, I invested 25.97 Eth ($70,000 USD) in a Cryptopunk in March, 2017.
Since investing, the CryptoPunk traded as high as 140 Eth, but has since retraced down to 78 Eth. A newer project started to gain traction in mid-2021 and surprisingly, was getting close to the valuation of CryptoPunks. How could that be?
The project was called the Bored Ape Yacht Club and saw exponential gains moving from below 1 Ether to over 80 Ether, all while the CryptoPunk price was trading lower.
IP Ownership Rights in the NFT Market
CryptoPunks were losing value relative to the NFT market because CryptoPunks did not come with any owner rights, or IP commercial rights, which entitle holders to zero ownership rights. Larva Labs, the company behind the project, kept the IP of the entire project under their control.
When a derivative collection would sell on Opensea.com, Larva Labs threatened legal action. Alternatively, the Bored Ape Yacht Club granted full ownership of the IP to holders of its NFT.
When Bored Apes were copied, the community found the derivatives funny, and they embraced them. This was what Web 3.0 was supposed to look like for many.
The Bored Ape Yacht Club went on to raise somewhere between $4 billion and $5 billion from Marc Andreeson. On Friday, it was announced that the company behind Bored Apes had acquired the Cryptopunks (and Meebits) Intellectual Property.
Here’s what they announced:
“Now that we own the IP for Cryptopunks, and Meebits, here’s what we’re planning to do with it. As a first step, we will soon be granting CryptoPunks and Meebit holders the same commercial rights that Bored Ape Yacht Holders owners enjoy.”
This is a monster acquisition in the NFT space. If you’re thinking, what does IP give you?
What is it worth to own 1/1,000 of one of these characters below?