Cypherpunk : Animoca Blog Post

Investing in Animoca Brands and NFTs: Cryptographically-Enforced Rare Digital Assets

Cypherpunk Holdings is an early pioneer in the crypto and privacy investment space. The company has a history of investing in emerging trends and technologies surrounding cryptography. This includes our $2m CAD investment in non fungible token, or NFT, platform Animoca Brands.

For hundreds of years, people have collected rare objects such as paintings, cars and coins, among other items. This has been done for emotional, aesthetic and economic value. Having ownership of rare items has always represented status and provides a special feeling of exclusivity.

With the evolution of commercially-used cryptographic technologies picking up pace, a new field of collectibles has emerged. This is known as non-fungible tokens, or NFTs. Built on top of cryptocurrency-based blockchain protocols, NFTs enforce the most important features of collectibles - scarcity, limit in quantity and uniqueness.

For example, a single NFT can represent a "tokenized" or cryptographically-enforced rare digital asset or a version of a real-world asset. The authenticity and ownership of this tokenized asset can then be easily confirmed with the help of the transparency blockchain technology enables.

The term fungibility represents interchangeability and lack of uniqueness in an asset. For example, a $50 bill can be easily switched with another $50 bill and most people cannot tell the difference.

NFTs are non-fungible. This means a digital asset such as an art image could be easily drawn by another artist and also be put on blockchain. Yet it will not be equivalent or interchangeable with the original in terms of ownership. This is because it is cryptographically secured and verified on-chain.

Among many uses for NFTs, one field that seems to be extremely promising for this innovation is gamification. In recent years the gaming industry is exceeding the movie and the music industries combined in terms of engagement. As such, games are being gamified with collectibles, some of them usable in games, an innovation that has emerged in recent years.

Enter NFTs, which open entirely new dynamics into the gaming industry. Prior to NFTs, players would purchase items yet were unable to trade or sell them anywhere, oftentimes not even in the game they were used in. This often resulted in a locked value or even a total financial loss when paying for these items after players quit playing a particular game.

NFTs solve this issue by being easily transferable and tradable on a marketplace. This incentivizes more people to purchase in-game items with reduced risk of illiquidity. Also, increased utility of items which can be used in several games instead of just one. In addition, NFTs can resemble items from real life. For example, many gamers dream of having game characters wear

their favorite brand of shoes. This is because emotional attachment has always played a key role in the gaming community.

Due to Cypherpunk Holdings' strong belief in cryptocurrency, privacy and cryptography tech, this is why the firm has become an investor in Animoca Brands.

Animoca is ranked by the Financial Times as one of the High Growth Companies Asia-Pacific2021. The company is an industry leader in digital entertainment, blockchain and gamification sectors. In addition to having well-known projects such as REVV and SAND tokens, it has invested and partnered with Sky Mavis (Axie Infinity), Dapper Labs (CryptoKitties and NBA Top Shot), OpenSea, Harmony, Bitski, Alien Worlds and others. Animoca also holds intellectual property rights to Formula 1, Marvel, WWE, Power Rangers, MotoGP to develop in-game items.

Among many exciting things, one of interesting developments is Animoca's SAND project partnering with celebrities. This includes well-known international artists such as hip-hop impresario Snoop Dog. SAND, a game similar to Minecraft, allows players to build and interact in a virtual world. For instance, they are able to buy land adjacent to Snoop Dog or participate in his VIP parties. This provides them with a unique opportunity to interact with celebrities in a virtual setting.

Cypherpunk Holdings is excited to be at the forefront of NFTs with Animoca Brands, a company that is the industry leader.