Pricing differences based on race and gender are emerging among CryptoPunk NFTs. What do the disparities mean?

The complexities of the real world are beginning to seep into the Metaverse, the virtual arena where identity functions as a reflection and determinant of social capital.

Differences in the prices of digital avatars based on race, gender, and skin color are emerging among a popular collection of NFTs known as CryptoPunks, giving the lie to the egalitarian, utopian ideals promoted by the tightly connected world of cryptocurrency. , decentralized finance, blockchain, and non-fungible tokens. .

According to participants and observers of the space, these price discrepancies are partly explained by a lack of diversity among investors who favor these status assets. It’s a demographic that skews mostly male and white. Female CryptoPunks and those with darker skin colors tend to sell for less than avatars with masculine features or light skin.

CryptoPunk investors say the price disparity is not a function of individual prejudice or racism, but rather the fact that people who are currently willing and able to pay the best price for digital goods are not bidding on avatars that don’t look alike. to them.

“If you look at the blockchain space, it largely tends to be white, it largely tends to be male,” said Tony Herrera, an immigrant activist in California who owns 60 CryptoPunks. “One punk might be dark and another might be light, and the lighter is the more desirable.”

To understand the role that identity plays in the virtual world, consider the case of Richerd Chan. The Vancouver, Canada-based engineer and entrepreneur wanted to solidify his reputation as a cryptocurrency pioneer, so he decided to buy a digital avatar.

At a cost of over $80,000, or 45 ETH in crypto terms, that JPEG file would become your biggest single expense. Chan spent two weeks searching for what would come to represent his perfect online persona. On March 31, he clicked the buy button on a pixelated image of a medium-skinned male avatar wearing 3D glasses and holding a cigarette.

“It’s a very natural representation of myself,” said Chan, 37. “The 3D glasses make him stand out and I don’t smoke in real life, but that makes him nervous.” Chan, who is Asian, said he appreciated that the skin color in the image was a bit darker. “I identify with that”.

Chan wasn’t kidding: In October, he turned down a $9.5 million offer from another online enthusiast for the avatar. It was a curious offer, he said, but his digital identity was not for sale.

This year alone, Chan has spent a total of 143 ETH (now worth over $600,000) on four pixelated avatars from a collection known as CryptoPunks, one of the most popular and prominent types of NFTs. To him, owning a CryptoPunk indicates that you are either an “OG” in the cryptocurrency space, or that you have the means to pay a high price to join an increasingly exclusive club.

In this digital world, the value of social capital encoded in your pixels is a function of different types of attributes. At the more expensive levels of NFT avatars, prices vary based on items like accessories, hairstyles and clothing, and skin color. In other words, not all punks are the same.

Investors say that uniqueness and scarcity are the main price drivers for CryptoPunks and similar NFTs in the free market for digital goods. Of the 10,000 CryptoPunks that exist, for example, there are only 9 “alien” characters. Sotheby’s, the auction house, sold one of those aliens for nearly $12 million. The 24 apes and 88 zombies in the collection are also priced higher than more typical punks, because they’re relatively rare.

The punks are also divided by sex: there are 6,039 men and 3,840 women, and there are fewer female punks in circulation. Since August, a total of 2,124 male CryptoPunks have been sold, with an average minimum sale price of 99 ETH, according to data from DeGenData. During the same period, 1,165 female avatars were sold for an average minimum sales price of 95 ETH.

Since August, when NFTs went mainstream, the average weekly minimum sales price of dark- and medium-skinned CryptoPunks has been below that of their lighter-skinned peers, according to DeGenData, a company that tracks the date of CryptoPunks’ sales. . So has the price of female punks, compared to male punks.

Male Pricing Demographics

Since August, the weekly average minimum sales price for darker-skinned male CryptoPunks has been below that of their lighter-skinned peers.

There are similar trends in the price of Meebits, avatar-like NFTs resembling 3D Lego characters. Meebits listings show that most of the lower-priced characters for sale on OpenSea, a digital asset marketplace, are designed to look like black ones. In May, Herrera tweeted that he was upset that lower-priced Meebits had darker skin. He challenged his followers to join him in collectively buying more tokens and raising prices. Herrera said he no longer believes there is any racial bias in the price swings, that they simply skew from the demographic that buys them.

“You can buy whatever you want as long as you have the budget to buy it,” Herrera said. “People of color are going to be limited.”

At one point, Herrera owned over 100 CryptoPunks. He started buying them when the tokens were available for less than $10. Back in 2017, when CryptoPunks were created, cryptocurrency enthusiasts could claim them for free. Come January, some Punks could be bought for what is now considered the reasonable price of a few thousand dollars.

Now, breaking into this corner of the crypto universe requires thousands and in some cases millions of dollars. Riding a wave of interest from companies like Visa and Christies, prices for CryptoPunks skyrocketed. As of December 1, the owners of CryptoPunks had put the tokens up for sale at prices ranging from nearly $400,000 to $24 billion. The highest value sale on record is north of $7 million.

John Watkinson, co-founder of Larva Labs, the company behind CryptoPunks, says he hoped to create a diverse collection of characters that would appeal to a wide group of collectors. “We are dismayed at the discrepancies in pricing along racial and gender lines among CryptoPunks,” Watkinson said. “Unfortunately, as the market is purely decentralized, we have no levers at our disposal to directly affect it.”

Natalia Karayaneva, founder of real estate firm Propy Inc., bought a crested CryptoPunk woman in March on the recommendation of her fiance. Karayaneva recently sold her punk for about $150,000, triple the price she paid for it.

“There aren’t that many women in a high-level position in the crypto community who can afford it,” said Karayaneva, noting that female cryptopunks tended to trade below male avatars.

Gender Dynamics

In recent months, female cryptopunks have been priced at a discount compared to their male peers.

Besides rarity, there are certain attributes that propel punks to the top of the price lists. Hoodies, 3D glasses, VR glasses, tiaras, top hats, and beanies are some of the attributes that investors are willing to pay to own. Most punks have two or three attributes, and generally the more attributes a character has, the more expensive they are. Just one CryptoPunk out of the fixed collection of 10,000 has seven traits: a cigarette, earring, mole, buck teeth, classic sunglasses, top hat, and a big beard. He is widely considered the most valuable CryptoPunk.

The plethora of attributes available means Investors can get creative with their Metaverse characters, including taking on completely different characteristics than their “real” identities.

The high price of each CryptoPunk means that most buyers have to be selective and tend to choose an avatar that they believe best represents them, according to Nick Kneuper, an NFT investor who regrets selling all three of his CryptoPunks in August. Plus, Kneuper says, even people who can afford multiple punks might not feel comfortable choosing an avatar with a different racial presentation than their own.

“Some people may be concerned about using a black punk as their avatar if they are white. I think some people are worried that they will be accused of digital blackface,” Kneuper said.

Female Pricing Demographics

Since August, the weekly average minimum sales price for darker-skinned female CryptoPunks has been below that of their lighter-skinned peers.

Longtime crypto bull and billionaire Mike Novogratz waded into this particular controversy when he tweeted that he was “upset” that real-world racial bias was making its way into the Metaverse. Novogratz’s tweet sparked a flurry of responses about what is and isn’t allowed in the Metaverse.

Novogratz’s tweet came a few days after Galaxy Digital Holdings Ltd., the cryptocurrency firm he controls, bought Punk 8466: a dark-skinned male punk with an eyepatch, headband and handlebar mustache. The punk sold for 98.50 ETH or $421,543 on Oct. 30, according to Larva Labs. A Galaxy spokesperson declined to comment on the company’s decision to purchase a dark-skinned Punk.

Black NFT investors are buying their way into the conversation. “As more black investors come into this space, which I think is happening, that dynamic will change,” said Web Smith, founder of media company 2PM Inc. Valued people who represent the broader diversity of America are they will move to this market and in six months we will not have this conversation”.

One such person is Ameer Suhayb Carter, a user experience designer who started a largely black group called Crypto Cookout. The 450-member club collaborated to buy two CryptoPunks through a buying model known as fractional ownership. Each of the Crypto Cookout members is a co-owner of the two Punks.

“We’re not really intentionally creating this type of imbalanced market,” Carter said. “It just happens as a result of us already seeing how black or black-identifiable things may or may not be cool until they are.”