It’s been just 2 weeks since I started my fall down the NFT rabbit hole… and it does feel like at least 6 months, to be honest.

Things move at a neck break speed and there is so much to learn, so many people to speak to and so many projects to follow. 

It does feel like a roller coaster ride… 

As you already remember I had been looking at the NFT collectibles market and as a result wrote a piece about the Bored Ape Yacht  Club. But each day new collectibles are appearing just like the mushrooms after the rain and it is so hard to keep up with all of them. 

Since my latest article, we have had the Cool CatsFame Lady Squad, and Devious Demon Dudes.

But I won’t be writing about them today.

As some of you probably know, CryptoPunks is one of the first NFT collectibles. Punks were released in June 2017 in the midst of the ICO hype by Larva Labs and eventually became the inspiration for the ERC-721 standard for NFTs. There are only 10k unique Punks out there and today CryptoPunks are probably the most expensive collectibles in the market and we keep hearing stories of people whose lives have been completely changed as a result of that.

But today’s post is not dedicated to CryptoPunks either… today I want to focus on CryptoPhunks instead.

At first glance, it looks like yet another collectible, maybe even a copycat… but once you zoom in so many fundamentally important issues emerge that transformed the project as the story unfolded. 

Let me try to explain.

The back story

CryptoPhunks were born as a result of a few  NFT enthusiasts (who could write code and design) getting together and deciding to “parody the CryptoPunks and test the limits of how firmly Punk owners believed in the concept of provenance on the blockchain. By doing so they wanted to poke fun at Punks and kickstart commentary around the wild prices in the NFT space today and what it really means to “own” an NFT.”

The project’s narrative was revolving around “The Flippening” of Punks.

To illustrate this point the whole concept of CryptoPhunks was very simple – they literally flip the CryptoPunk images from one side to another.

”Through purchasing a flip, one was able to flip a completely randomized Punk. Phunks face left, because the other way just doesn’t feel right.”

Other than the above the NFT does not have any special utility and the whole humorous approach on the homepage copy shows that the project is not serious… Kind of reminds me a bit of the story of how DodgeCoin started.

Can you guess what happened next?

Just like any NFT collectible project the team spins out the website, social media accounts I suppose, and lists the NFTs on platforms such as OpenSea, Rarible, and others. 

As you can see below they even got pretty impressive results at some point on OpenSea.

But then… OpenSea delists CryptoPhunk. 

To be fair I was a bit confused since I thought OpenSea claimed to be a decentralized platform. But since I wasn’t sure I went to the good old Google and asked…

I am not a tech person, but as far as I know, a decentralized and peer-to-peer platform does not have a central authority that can interfere, make decisions and act upon them. So technically it is impossible to list or delist anything on a fully decentralized platform.

But that’s what happened.

So here let’s pivot a little bit and look at things from the broader perspective. 

NFTs help you get rid of the middlemen and gatekeepers, right?

The beauty of blockchain technology is revolving around decentralization and not needing middlemen/gatekeepers and centralized authorities. 

And let’s be fair – the NFT space is not there yet.

I am sure it will change with time, but right now it is more-less where the crypto was a few years ago. 

If you remember until recently we had only centralized exchanges (eg. Coinbase, Kraken, etc.). If you look at its core, apart from the fact that one traded and kept cryptocurrency instead of Fiat, those exchanges acted just like banks. Theoretically, they too could freeze or shut down your account and they too had a centralized authority that would be making decisions and acting upon them. 

But later, the decentralized exchanges came across and brought the boom of DeFi as a true illustration of what a decentralized peer-to-peer marketplace should look like. 

So in this story, we should bear in mind that it feels like there are no decentralized NFT marketplaces out there yet and as NFT creators, although we are bypassing many middlemen (such as record labels or agents for example) we still depend on centralized marketplaces (like auctions or galleries in the “real” life).

Now let’s get back to OpenSea. 

I can understand that if it’s a centralized platform then OpenSea should bear responsibility for their users, and it seems like the main concern has been the risk of some of those users thinking that these were the real CryptoPunks and not the flipped CryptoPhunks… 

I think at this point you could check the Twitter thread here from Nate Chastain head of product at OpenSea where he is explaining their positioning about “minimally-altered derivatives or homages”. 

After everything above though seems like OpenSea kept listing and delisting the CryptoPhunks (I think 3 times…) and at the moment, while I am writing this is where their Opensea link takes us to.

Maybe that’s a result of the email below which OpenSea received from Larva Labs that I found in CryptoPhunk’s tweet? 

What is strange is that meanwhile this project in here called MirrorPunks is still up for sale.

Oh wait – and there is another one here too called Left Facing Punks.

Anyway… currently, people can trade Phunks only on Rarible (which too delisted the Phunks once and put them back up after a review), Cargo, and NFTX.

What’s the result of all the above?

I think it’s no secret by now that I am a passionate believer in communities and know that the community is what breaks or makes a crypto project. It has been proven times and times again before (and probably that topic itself will turn into a separate article in the future). 

Alongside that, the projects that have a purpose that resonates with their communities are strong and with big potential.

It seems that the obstacles that CryptoPhunks faced turned the project from being just a parody and an experiment of testing the limits into something bigger. 

Now, as a result of all the above, they have a story. A story that many relate to – including some of the Punks it seems!

I have a feeling that the project has a stronger message now and is transforming into a movement. 

Now Phunks have a Manifesto where you can read the team’s version of the story and what they stand for. Now it has become a movement that has stronger emotional and philosophical components than just apeing into pixels. 

“The Phunks are marching forward to defend decentralization” and a few thousand Phunks have already joined that mission.

What’s next?

It’s hard to predict how things are going to develop from this point on, but I have a feeling that the story is not over yet. 

In the end, I guess it’s worth highlighting few things that I think are worth remembering:

  • When projects are backed by strong communities it will keep going no matter what
  • When projects represent more than just digital pixels they become stronger
  • NFT space still needs to develop further in order to achieve true decentralization since we are not there yet and the NFT marketplaces are centralized and have the power to act as gatekeepers whether you like that or not (btw I think it is not only relevant to projects – theoretically any crypto artist’s account can be frozen or shut down or NFTs delisted).
  • The copyright issues in the NFT space are still not very clear and NFT derivatives are tricky 
  • No matter whether in the NFT space in particular or in life in general it is always worth fighting for what you believe in

This was just a short snippet from my fall down the rabbit hole.

It illustrates that when you scroll and see yet another collectible there may be way more behind those pixelated images. All you’ve got to do is move the curtain and look behind the scene. 

Disclaimer: I am not a lawyer, neither do I own a CryptoPhunk or have been following the project closely before. This article reflects my personal view of the story based on my own observations and research, facts, and a few quotes from the CryptoPhunk team.

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