The battle for authenticity of non-fungible tokens or NFTs have been heating up for a while now. The intensity or the magnitude increases significantly when it involves none other than the world’s most popular NFT collection – CryptoPunks, as NFT trading marketplace OpenSea has taken down or delisted CryptoPunks v1 NFT collection on charges of copyright infringement of both the art and the CryptoPunks name.
It is a battle that stemmed from concerns pivoted around the basic economic correlation between supply and price. CryptoPunks v2 is the most popular NFT collection globally. A major part of the reason for its popularity is its scarcity, as only 10,000 Punks are in supply.
The Context
In 2017, Larva Labs created the CryptoPunks v1 NFT collection comprising a fixed supply of 10,000 items. However, users soon found out an underlying bug within the smart contract of the project that enabled buyers to withdraw their Ethereum after their purchase. This resulted in multiple theft-like situations.
Larva Labs quickly sprang into action and deemed the collection as inauthentic and launched CryptoPunks v2, again with a fixed supply of 10,000 Punk images. However, the move came only after the 10,000 Punks of CryptoPunks v1 were sold out. So, it resulted in a total supply of 20,000 Punks, with the authenticity of 10,000 of them disputed.
To further add to the confusion, Larva Labs cannot simply destroy the v1 project because, as a Twitter user pointed out, the smart contracts of both v1 and v2 are intertwined and point to the same file.
The whole issue remained below the limelight, as OpenSea had banned the sale of CryptoPunks v1, even though users wrapped them as ERC-721 tokens to overcome the underlying bug. However, the recent listing of the wrapped collection on rival platform LooksRare prompted OpenSea to lift the ban.
Nevertheless, blockchain enthusiasts remain divided over the authenticity issue and the existence of counterfeits can significantly affect consumer confidence in the original brand and affect the brand value.
Latest Development
OpenSea has once again delisted the CryptoPunks v1 collection, apparently due to a Digital Millennium Copyright Act takedown notice issued by CryptoPunks v2 developers Larva Labs to OpenSea.
Incidentally, Larva Labs is the developer of both CryptoPunks v1 and CryptoPunks v2, which makes the development quite strange and intriguing.
Developer Velinova.eth has claimed that they have spoken with a top tier intellectual property rights attorney from the US, who has advised them that they are lawfully able to carry on in the trade of these CryptoPunks.
The community, meanwhile, is also preparing a counter notice to the OpenSea takedown and iits existing developers have chosen to rename the collection as CryptoPunks v1 313 WPV1, partly to reflect the NFT’s wrapped nature for patching up the bug.
The Impact
The issue of authenticity of CryptoPunks NFT collections have huge financial consequences too. With a total of 824,9467.17 Ethereum or equivalent of US $2.55 billion being traded, CryptoPunks v2 is the world’s most popular NFT collection. With only 10,000 in supply, scarcity is one of the main reasons for its popularity, as mentioned above. Now, if an additional 10,000 is added to the supply, then it would obviously dilute the value of the brand and the collection.
As for CryptoPunks v1 collection, reports suggested the wrapped v1 collection had surpassed 315.44 Ethereum in total volume traded and it continued to operate on other marketplaces.
