A brief look at the BAYC and Crypto Punks NFT projects and why they might be worth what people are paying.
A quick search online for NFTs will reveal lots of new terminology for a first-timer and is almost guaranteed to include two of the most pivotal projects in the NFT landscape: the Bored Ape Yacht Club (affectionately abbreviated to BAYC) and Crypto Punks. You’ll also find a slew of other projects that seem strikingly similar, yet are not anywhere near as valuable. So what makes these two projects so notable and pricey? Just like most things in the NFT world, it’s all about the right combination of a few traits.
Value is a subjective thing, especially in art. With NFT projects it fluctuates due to a project’s timing within the market, its community, and how it continues to provide value to its holders. These projects have a unique place in NFT history, as you’ll see, and provide many underlying benefits that are hard to discern at first.
Both Crypto Punks and BAYC derive a healthy portion of their value from being early projects in the NFT space. Crypto Punks is widely viewed as being one of the first NFT projects as we know them, making its debut in 2017. Being in the scene so long, Punks have become foundational to NFT projects and many are modeled after them.
While the BAYC project is newer (late April, early May 2021), it pioneered a different style of art and came with a new form of utility. Both projects have an element of “first-ness” associated with them.
This doesn’t necessarily mean that they were the very first NFT projects ever, but they pioneered the NFT movement and got enough exposure to cement that perception. When people buy an Ape or a Punk, they’re able to own a little piece of history. Much like the affluent can purchase old relics and house them in museums, these projects have come to symbolize the birth and development of the NFT movement. This adds significantly to the value but still isn’t the whole picture. Historical significance certainly accounts for a portion of the latest Ape sale (as of writing) which was over half a million dollars but isn’t the entire story.
Owning history is fun, but having an exclusive membership adds to the asset as well. Being capped at 10,000 tokens means that, in the scheme of the world, there are very few membership opportunities.
Both Punks and the BAYC bring together like-minded people and provide a distinct image that publicly communicates community membership. Because both projects have achieved such notoriety, the images associated with them have become status symbols (much like cars or watches). NFT’s in this sense are commonly compared to Rolexes as an expensive way to communicate status. Why not just screenshot an image and claim that you own one? The blockchain provides an indisputable public record of ownership. Doing so would be like taking a picture in front of a mansion and claiming it’s yours, but everyone knows that your name isn’t on the deed.
With this community comes networking opportunities in addition to a feeling of inclusion. If one BAYC holder does something notable, all BAYC holders have the potential to benefit from that publicity. As more celebrities join the BAYC or represent a Punk as their profile picture, more people want a chance to say they’re in a club with famous people. A sense of inclusion and status are both driving factors in the value of these projects.
These projects aren’t just about status and art though. They come with side benefits often referred to as “utility”. Sometimes that utility is exclusive access to future NFT drops. For instance, owning a BAYC token allowed holders to participate in the “kennel club” where they received the ability to mint a free doggy companion NFT for their apes (minus gas fees). Other times it’s the ability to create, buy, and sell project-related merchandise. There have even been real-life meetups and parties where being a BAYC member was a requirement for admission. These parties have included famous people and even a performance by The Strokes!
As the Metaverse becomes more mainstream, more and more utilities for NFTs will pop up. Arguably the most valuable utility yet, however, is the type of community that the BAYC is cultivating. They have a reputation for reciprocity, meaning if an Ape holder has a business or runs into a problem, other BAYC members will go out of their way to support them. Helping each other out where they can and creating more opportunities for their members is a core aspect of being a BAYC holder.
Value is a complex equation and is influenced by many different factors. While at first glance it can be hard to see why these two projects are so popular and expensive, it becomes clear that they are more than just JPEG images. They represent the ability to own a piece of history, provide access to a growing and vibrant community, and have utility that goes beyond the blockchain.