I just sold a CryptoPunk for $10,000.
In some ways, this doesn’t surprise me at all, but in other ways it still does. $10,000 for a 24x24 pixel image anyone can screengrab etc etc!
But I also understand people (like me) assign real-world value to digital assets and that value is purely a function of the value other people assign to similar digital assets.
In other words, a CryptoPunk has value because enough people act like it has value.
In terms of the $10,000 price point, there’s been a lot of activity around CryptoPunks in 2021, thanks mainly to NFT whale Pranksy who has just announced a 150 punk giveaway via lottery.
To-date the most expensive CryptoPunk sold for $750,000 so the sale of my base level punk was small beer on that basis.
Also, this wasn’t a knee-jerk sale. I set the price for my punk (in ETH) months ago. Obviously back then the ETH/USD ratio was very different so I was prepared to sell at a much lower (c.30% lower) fiat valuation that eventually transpired.
Lucky me!
Future vs present
Knowing that the price of CryptoPunks has been rising, I did consider increasing the sale price of my punk.
I didn’t because I actively wanted to sell it. I would have been happy selling at a low USD price earlier in 2021 so why would I want to squeeze more financial value out of it now?
Of course, the counter-arguement is that when the price of the cheapest CryptoPunk rises to $100,000 or $1 million etc, I’m going to feel pretty stupid.
And maybe I will. (Disclosure I have another CryptoPunk.)
But having been in the blockchain space now for three years, I hoped I’ve learned to know my mind better on such issues, focusing less on the price of objects and more on the value to me of NFT ownership, even when the price goes up subsequently.
I don’t want to be labeled as Oscar Wilder once quipped about cynics, someone who know ‘the price of everything and the value of nothing’.
Comparative values
So why did I want to sell my CryptoPunk?
One argument would be - sure, the price of CryptoPunks will go up, but will they go up as much as other NFT projects? Maybe but I actually think some projects will now be better investments.
More importantly, there are other projects I’ve actively wanted to reploy value into.
For example, I’ve been interested in MyCryptoHeroes for years. I’ve played the game but really love the art style of the NFTs, particularly the historic figures such as Kafta, Newton, Schrödinger, Marie Curie, Schubert etc, all of which I have now bought.
Now I know these will not a better investment than CryptoPunks but I want them more than owning a CryptoPunk.
I’ve also bought a HashMask I don’t think is ugly.
The remainder of the value I’m keeping for future projects, minus a slice I’ve cashed out for taxes and charity; both of which are easy to forget in the heat of the moment.
So, back to the original question - how to value NFTs?
For me the process is trying to make valuation more about personal value than financial value. Obviously there is a connection between them but while financial value is a dynamic peer-driven process, personal value is (mainly) controlled by me.
And this, in turn, boils down to three statements I try to enforce rigorously.
I never buy an NFT I don’t think is beautiful.
I never buy an NFT only to try and flip it for more value.
I never regret selling an NFT.
After all, you can have too much money, but you can never have too much self control.