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.

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.

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