The crazy JPG, where does its value come from?
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The crazy JPG, where does its value come from?
Don't underestimate these low-resolution, unartistic JPGs that document and represent historic moments.
Navigating Web3 tides with focused insightsBy LilyKing, Boundary
Peers and competitors in the private equity world are suffering a double blow from the collapse of their valuation frameworks.
The first blow comes from internet tech giants—assets they consider core holdings. Each time the market believes these assets are undeniably cheap, another policy storm arrives, pushing valuations to new lows that feel unbearable.
The second blow comes from what they see as incomprehensible bubbles: JPGs—profile picture NFTs.
The floor price of top-tier NFT CryptoPunks surged from $10,000 in February this year to $450,000 last weekend, now retreating slightly to around $400,000. Its 24-hour trading volume peaked yesterday at $143 million, creating overnight miracles of astronomical returns for NFT investors with diamond hands.
CryptoPunks' latest transaction records
Equity investors toss and turn, unable to understand why it's *them* who can't sleep at night—while those diving headfirst into the NFT market sleep soundly hugging pixelated, aesthetically marginal JPG avatars, waking up each morning to new asset highs.
As someone who has run barefoot from traditional finance into crypto, studying day and night, I’ve been re-evaluating my long-standing bias toward over-allocating to equity and under-allocating to NFTs. I always believed equities have underlying tangible enterprise assets—real people, operations, revenue—while JPGs are just pixels representing intangible consensus, like flowers in a mirror or moonlight on water.
But perhaps I overlooked something: precisely because equity assets are visible and tangible, they become subject to quantifiable valuation metrics. In contrast, historical significance and belief cannot be measured by numbers—and that’s exactly why they transcend traditional valuation systems.
Which Underlying Asset Is Stronger?
The foundation of equity investment lies in company founders, teams, and operations—all of which carry unpredictable risks: mismanagement, relentless competition, technological disruption, shifting policies, employee scandals, and more.
The foundation of a JPG like CryptoPunks is a pivotal moment in Crypto history. Its unique historical status is irreplicable, unalterable, and indelible. Even if its founding team, Larva Labs, deteriorates in performance going forward, it won’t erase its engraved legacy. As a historical badge, its value only grows over time.
Most companies must work extremely hard and get incredibly lucky to become “friends of time.” But a CryptoPunks JPG becomes a friend of time without doing anything—as long as the metaverse has believers, it remains a founding antique of the digital universe.
Market Volatility: Investor Community Consensus
Investing in seemingly valueless JPGs is actually a system that demands even greater insight and rationality from investors—it requires not just calculation of past data, but also forecasting the evolution of the world.
Many high-net-worth individuals invest millions in stocks, yet most lack emotional stability and expect outsized returns. Few investors spend millions on a single JPG. Those who do typically hold deep Crypto convictions and didn’t initially buy JPGs to profit (though recent windfalls have inevitably raised expectations). These investors exhibit the strongest risk resilience and mental fortitude during market downturns, rarely forced to dump assets due to liquidity pressure. In contrast, stock market participants often panic-sell at volatility peaks, amplifying price swings. Of course, crowdfunding and fractionalization may eventually impact JPG market volatility.
Unvaluable Faith and Social Capital
Beyond financial attributes, JPG assets offer social functions, identity prestige, and ideological foundations that equities simply don’t provide. Owning shares in a company doesn’t grant special status or change your social circle—unless you gain controlling interest and a board seat, which usually only signals deeper pockets, not shared belief. But elite JPGs have become gate passes into exclusive circles of China’s top-tier elites. The real entry barrier isn’t the JPG itself, but whether you possess pioneering insight and truly believe Crypto can reshape the world—whether you embrace an open worldview that allows JPGs into your valuation framework.
Faith cannot be valued. PE, PB—these are valuation frameworks for equities, but also their shackles. Belief operates beyond such constraints. And soon, JPG assets will be just like equities—available for collateralized loans, derivatives hedging, and more. This creates asymmetric opportunities: controllable risk (via staking and hedging), unlimited upside.
No Common Prosperity in JPGs
JPG assets are currently fringe investments, carrying lower regulatory risk than equities and not conflicting with common prosperity. JPGs don’t consume socially scarce resources or compete with ordinary people for livelihoods. No mass discontent arises from unequal JPG distribution. The public mostly responds to JPG investors with mockery.
Scarcity Enforced by Smart Contracts
JPG assets are scarcer than equities. Stocks can be endlessly diluted—this is obvious. Capital seeks scarcity; the origin of that scarcity matters less. The killer application of smart contracts turns out to be artificial scarcity—with hard caps that cannot be altered.
Viral Spread: Ultra-Low-Cost Social Amplification
JPG assets have far stronger viral potential than equities. For example, NBA superstar Stephen Curry recently changed his Twitter profile picture to a Bored Ape Yacht Club (BAYC). If a company wanted Curry to endorse them, they’d pay tens of millions—yet still might fail to convince him to change his avatar. At his peak, Curry was highly paid to promote Under Armour, briefly making it a challenger to Nike. Yet Bored Apes got Curry to endorse them for free, willingly spending nearly $200,000 of his own money on a monkey avatar.
Stephen Curry changed his Twitter profile picture to Bored Ape Yacht Club (BAYC)
Epilogue
After years in private equity, we’ve always cherished companies that truly transform the world—from biotech to clean energy and semiconductor innovation. We should continue investing in them, as they sustain and advance the physical-world infrastructure upon which both our bodies and the metaverse depend.
Yet we must not underestimate how the arrival of the metaverse will disrupt asset allocation and appreciation. This era will birth new categories of alternative assets—things that appear most dangerous and useless may turn out to be the safest and most valuable.
So don’t underestimate these low-resolution, non-artistic JPGs that capture and represent historic moments. But let me be clear: this applies only to the rarest, highest-tier JPG assets with irreplicable historical status. Over 99% of NFTs will be worthless in years to come.
Author Bio: Former General Counsel at an alternative asset management fund with over $40 billion in AUM, soon to join Cobo—the largest crypto custodian and institutional asset management platform in Asia—as COO. Dual-qualified lawyer in China and the U.S., with deep research in social policy, collaboration mechanisms, and institutional partnership frameworks.
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