This essay came out of a memo I originally wrote for Boost VC’s investment into Punks, and outlines why we believe punks are a generational blue-chip asset. Boost VC has been backing crypto founders and companies since 2013, and we’re excited to add punks to the portfolio.

To begin lets state the obvious: NFTs are dead.

Well… sort of. Organic liquidity entering the NFT market remains quite low relative to what we saw last cycle. At the same time, NFT natives are continuing to develop the space, through a process of collective identity discovery that eventually begins to resemble its own form of performance art.

And yet somehow, digital artists are still continuing to gravitate to NFTs. Recently I was lucky enough to collect the NFT of a photograph from an artist named Joey Lawrence, who I’ve been following for over 12 years now and shaped my own personal love of photography. Joey is an established and respected Canadian photographer, who’s created some amazing portraits of people from across the world. He recently started minting some of his most important photographs as NFTs, after witnessing the success of his wife (also an acclaimed artist) when minting her work. Despite the digital medium, the work couldn’t feel more human.

These days, the world of art and design is changing fast, in the face of new tools like generative AI that commoditize creative work and shorten the half-life of the content that we deem important.

NFTs stand in the face of this by helping artists create structure and meaning around the interactions someone can have with their work, when minting or collecting it on-chain. NFTs are a way for art consumers to fight this erasure of meaning and state proudly: THIS WORK MATTERS. THIS MOMENT SHOULD BE REMEMBERED. They happily pay a steep price of gas on chain to ensure this inscription persists on thousands of people’s computers across the globe.

In the context of art history, NFTs are a completely new medium that shifts the paradigm around how art is created and consumed, similar to other technological innovations that came before it like cameras and the printing press. The art world has always cringed when some new technology disrupts their status quo, until they can figure out how to integrate it into their existing systems.

These kind of shifts are relatively rare, and when they come around they’re extremely valuable for the people who purchase the right pieces at the right time. You want to be the one buying all of Monet’s Water Lillies back in 1900— no matter how alike they all seem, or how difficult you find it to discern their meaning.

In the modern age, we admire these works and appreciate their aesthetic beauty, but back then they were viewed as a passing trend, a fad that would quickly disappear. Only later can we recognize that they were in fact ahead of their time. This is the very reason why they were good investments— collectors were rewarded by the free market for having correctly predicted the most influential pieces 100 years in the future, before the rest of the market had properly accounted for their importance.

Going back to NFTs. Whether or not the traditional art world likes them, they’ve already proven to be a valuable tool for artists, and show no signs of going away despite the decrease in mainstream interest.

When I asked Joey about what he thought about bringing more non-NFT-natives into the space, he told me this:

“I see it as inevitable, but we don’t have to convince them. The new generation of art collectors will have wealth generated from this industry and we don’t need to recreate what has already been done.”

If we accept that NFTs are indeed inevitable, and we study what’s happened during previous paradigm shifts in the art world, we see that in an ideal world, we want to own the pieces that are most likely to be included in conversations which occur about this paradigm shift. When art historians eventually describe the development of the NFT movement in 50 years, which collections will be top of mind? On average, across all encyclopedia entries on NFTs, how much space do you expect will be devoted to a given collection? We see from the traditional art world, that the vast majority of value accrues to the collections of the top 5-7 artists within each domain — there’s only so much room at the top.

All Roads Lead Back to Punks

It’s impossible to tell the story of NFTs without starting with CryptoPunks — not only because of their superlative earliness but more importantly because of their outsized impact on the culture of NFTs more broadly.

In the shadow of punks, we saw a tens of thousands of artists launching 10k pfp collections — a relatively novel concept even for digitally native art, which showed a keen awareness of the specific surfaces on which digital art lives online (i.e. profile pictures). Punks are digital art for the social age.

Visually, punks also pioneered their own unique set of attributes which have reverberated throughout the NFT space broadly, via collections that pay homage to punks by riffing on these traits. From 3d glasses to propeller hats, to head bands and VR headsets, to aliens and apes, these items and attributes have risen to the status of becoming core symbols of the NFT movement itself.

When making an investment like this (while the punk floor is down 66% from its 2021 peak), one has to ask themselves: if all of this is so obvious and inevitable, why isn’t this already priced in?

When we look to the traditional art world, we see that adoption of NFTs has been continuous but slow. Despite the trope that the art world takes a long time to adapt to new trends, large auction houses have done surprisingly well to adapt to modern digital trends (including live-streaming their most popular auctions). Nonetheless, the long tail of established art galleries and critics have spent minimal energy exploring the NFT space by choice, outside of the specific instances when the world thrust this movement upon them. In speaking directly to people I know who work at galleries in NYC, it’s clear that many of these professionals simply do not have the language to be able to critique these works yet— to describe the elements which distinguish the few valuable and important collections from the awesome-but-less-valuable long tail. Part of this is because the market at large hasn’t quite figured it out either. This kind of language needs to develop organically over time, and the seeds of it will come from the NFT native artists and collectors who are continuing to build a culture around creating and collecting on chain, even during this NFT bear market.

Finally when we look back to the crypto world, we return back to where this essay started. NFTs are dead!

Seriously, it’s truly a marvel that the digital art world was able to capture so much attention and liquidity in the first place, by turning art into an asset that anyone could speculate on. The people who made the most money trading NFTs were the ones who were able to get in early, but who still maintained the least amount of attachment to their collections (in order to sell while prices peaked). This ever shifting pool of high-risk capital made its way into the NFT world, but has long since departed. Right now, the high-risk capital is in meme coins, and shows no sign of returning back to NFTs any time soon. The result is a market that’s had significant sellers (who never understood the intrinsic value of these assets in the first place), combined with very few new buyers entering to hold for the long run. It’s not clear when (if ever) this speculative capital will erupt back into NFTs, and it’s entirely possible that blue-chip NFTs will face a long and slow road towards mainstream adoption within the art world more broadly.

Nonetheless, we at Boost believe that NFTs are inevitable, that all roads lead to punks. We know that truly great investments can often take many years before the market realizes their inherent value, and we’re excited to hold our punks for many many years to come.

Disclaimer: I’ve been a punk holder since Feb 2021.