When people discover the term ‘NFT’ online, they feel like they found something new. The truth is – what they see 5 minutes ago has already been discovered in 2012.
And not only this, there has been a consistent growth of NFT every year.
So to know how NFT became so popular today, go through each year’s achievements:
2012-2013 – The Beginning of NFT
Who Created the First NFT?
It all started in 2012 when the first NFT was created.
On May 3rd, 2014, Kevin McCoy made history. He minted the first non-fugile token – Quantum.
Quantum is a pixelated image of an octagon. It’s filled with concentric circles, arcs, and several other shapes.
The shape is hypnotic and pulsing with fluorescent hues.
Sillytuna (pseudonym) paid a whopping amount of $1.4 million for this NFT.
Colored Coins – First Kind of NFTs Ever Made
Colored coins are like small denominations of Bitcoin. One such coin can be as small as the smallest unit of bitcoin – satoshi.
Here are some of the popular use cases of colored coins:
- Issue Shares: Issue colored coins as shares for trading, voting, and paying dividends
- Issue Coupons: Issue colored coins as coupons to reward employees
- Access & Subscriptions: Leverage colored coins to manage access and subscription services
The colored coins were safe to use in 2013. Since then, transactions have been highly secured as they’re all done on bitcoin blockchain.
Unfortunately, it had a drawback too.
The value of colored coins is dynamic. It depends on the people who are a part of the coin transaction.
If anyone disagrees with the value set, there will be a problem.
Let’s say 5 people agree that 1000 colored coins represent 1000 company shares.
But after some time, if 1 of their 5 people isn’t satisfied with the value, the entire system will fall.
With colored coins, putting real-world assets onto distributed ledger was a great idea.
But the implementation was a bit weak.
The world wanted a more malleable blockchain…
2014 – The Birth of Counterparty Brought A Revolution in NFT World
In 2014, Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty.
The platform extends bitcoin’s functionality by “writing in the margins” of normal bitcoin transactions.
You can create and trade any digital token on this platform.
With Counterparty, you can write specific digital agreements or programs called smart contracts. These contracts can be executed on bitcoin blockchain.
XCP is the official currency of Counterparty. It can be used to pay for the execution of smart contracts.
Let’s see how XCPs were created and what value they hold in the market.
XCPs were created by burning bitcoins. Burning bitcoin wasn’t a tough job.
In exchange for XCP, Bitcoins were sent to an unspendable wallet address.
This was done to ensure balance and fair distribution of currency.
In January 2014, about 2100 BTCs were burned to create 2.6 million XCPs.
When they were created, the value of 1 XCP was 0.0008076923 BTC. This means burning approximately 1 bitcoin made 1250 XCPs.
If we see the value of XCP today – 1 XCP = 0.00047603. That’s roughly an increase of 50% in the value of XCP.
Counterparty still wanted to further explore NFT and its potential.
In 2015, they thought out of the box and introduced an NFT based game…
2015 – First NFT Game Spell of Genesis Was Introduced by Counterparty
In April 2015, Shaban Shamee, the godfather of rare digital art created Spell of Genesis.
Counterparty saw this as an opportunity to enter the gaming world with NFT.
They partnered with the Spell of Genesis team and gave them a platform for trading cards.
By doing this, Shaban and his team were the only ones to issue in-game assets onto a blockchain via Counterparty.
Not only this, they also became the first ones to launch an ICO (Initial Coin Offering).
In return, the game launched its official currency BitCrystals.
This currency was used for all kinds of transactions. More importantly, it funded the further development of Counterparty.
Counterparty didn’t stop here, they went all-in for gaming and memes in 2016…
2016 – Expansion of Counterparty
Counterparty Collaborates with Force of Will
In August 2016, Counterparty decided to shake hands with Force of Will (FoW). At that time, Force of Will was the 4th most-selling game in North America.
The merger proved to be a success and made NFT a hot trend.
FoW experienced the power of blockchain or cryptocurrency for the first time.
Seeing the success of Force of Will led to an NFT revolution as many games started leveraging NFT.
Birth of Rare Pepes on Counterparty
When NFT was growing, so were memes. It was just a matter of time to see the merger of both.
In October 2016, artists started issuing rare pepes on Counterparty.
Rare Pepe is the meme that revolves around a frog that looks like this:
The fanbase for such memes grew to a great extent. In fact, there’s an exchange place for just rare pepes called Rare Pepe Directory.
So, now NFT started picking up pace and the revenue of the market started increasing.
2017 – A Major Growth in NFT Market
Rise of Ethereum Blockchain In NFT Market
March 2017 saw a merger of Ethereum blockchain and meme trading. An ethereum-based project “Peperium” was announced on a Bitcoin Forum.
Peperium was a decentralized meme marketing and trading card game (TCG).
The platform allows users to create memes that can live eternally on IPFS and Ethereum. The token associated with Peperium was called RARE.
From creation to paying listing fees, RARE was used for all the transactions.
Introduction of Ethereum Token Standards (ERC)
Ethereum was launched in 2015 and has been on a rise ever since. The ERC stands for Ethereum Request for Comment.
This means the ERC token has a set of rules that allow tokens to interact with each other in a predicted manner.
The 2 most significant Ethereum tokens are ERC-20 and ERC-721.
Here’s a little explanation about these tokens:
What is ERC-20 Token?
Fabian Vogelsteller created ERC-20 in 2015. The token is used for all the smart contract transactions on Ethereum.
ERC-20 is similar to bitcoin and other cryptocurrency to some extent.
According to CoinDesk’s December 2020 update, 350K ERC-20 tokens exists on Ethereum’s main network.
Although anyone can create ERC-20 tokens, not everyone needs it. These tokens are mainly used by organizations and tech-focused companies.
The created tokens have their own specific utility.
For example, an organization can leverage these tokens by granting them to its product users.
The users can then vote based on the future of the product and the updates to be made.
What is ERC-721 Token?
ERC-721 tokens are known as NFTs. In 2018, William Entriken, Dieter Shirley, Jacob Evans, and Natassia Sachs came together to create ERC-721.
These tokens brought NFT to the blockchain securely. They ensured the distinctive details about an asset remain as it is and became immortalized.
The major difference between ERC-20 and ERC-721 is – the latter is non-fungible and the former is fungible.
How CryptoPunks Became A Trend in June 2017?
Matt Hall and John Watkinson invented CryptoPunks.
As the owners of a New York-based software company, they generated thousands of weird-looking characters.
What started as an experiment, went on to become one of the most selling art forms online.
There are exactly 10,000 individual CryptoPunks. Every CryptoPunk is a combination of distinct and randomly generated features.
Let’s have a look at their demographics and diversity:
- Male: 6,039
- Females: 3,840
- 696 wear hot lipstick
- 303 have mutton chops
- 286 punks wear 3-D glasses
- 128 are rosy-cheeked punks
- 94 punks have pigtail
- 78 punks with buck teeth
- 44 punks wear a beanie
Other than these, there are 8 punks that have no distinctive features and are referred to as Genesis Punks.
CryptoPunks didn’t follow the ERC-721 rules as these were invented later. But interestingly, they also didn’t follow the ERC-20 rules completely.
That’s the reason CryptoPunks are described as an ERC-20 and ERC-721 hybrid.
The Rise of Cryptokittens in October 2017
Seeing the success of CryptoPunks, a Vancouver-based company, Axiom Zen launched CryptoKittens.
It’s a game where you can breed and collect adorable creatures called CryptoKittens.
Each cat is one-of-a-kind and can’t be replicated, taken away, or destroyed.
In 2021, Frontiers published an interesting article showing CryptoKittens transactions.
According to their data, the transaction span from November 23, 2017 to May 19, 2020 had the following numbers:
- 1,923,901 Kittens were exchanged
- 104,517 wallet addresses were involved in this transaction
- 5,173,521 transfer records were found
There are 9 types of transactions that took place:
You can get more in-depth information about their transactions in the CryptoKittens Transaction Network Analysis.
When the game was launched, people bred and traded CryptoKittens like crazy.
Seeing the success of CrypoPunks and CryptoKittens, people felt the real power of NFT.
Finally, the bubble blasted and NFT went viral…
2018-2019 – NFT Went Viral Across the Globe
2018 and 2019 have been the most prominent for the NFT’s growth. As you can see the graph, it’s kept increasing from 2017 to 2018.
And then later on, 100+ projects were launched in the NFT sector. Many new marketplaces came into existence like OpenSea and SuperRare.
You can read all about the marketplaces in this blog post.
Web3 wallets like MetaMask, Dapper Wallet, and Enjin made NFT transactions easier day by day.
Like crypto, NFT started gaining some traction. And last year, NFT reached a whole new level, here’s how….
2020 – Use of NFT in DeFi & Gaming
NFT and Decentralized Finance (DeFi)
DeFi makes financial products available on a public decentralized blockchain network.
This cuts out banks and brokers because people can directly participate in the transaction.
DeFi is a system via which the software written on blockchain lets buyers, sellers, and lenders interact with each other.
In June 2020, DeFi focused on just one thing – yield farming. DeFi lending protocol called Compound issued $COMP tokens.
As people saw its potential, the value of $COMP tokens increased exponentially. People started farming these tokens day and night!
But how did this benefit the NFT market?
In 2020, Alexei Falin and Alex Salnikov launched a platform called Rarible. The platform allowed decentralized exchange of NFTs.
Being decentralized makes this platform stand apart from regular marketplaces like OpenSea or SupreRare.
Decentralized exchanges devolve governance, for those who had $COMP tokens.
Integration of NFT and Gaming Industry Brought Out A New Revolution
2020 saw the entry of game developers in NFT.
It was obvious that the gaming industry would merge with NFT. That’s because each token could represent a card or a sword.
Even though NFT games were a thing before, the growth was decent in 2020. Here are some of the famous games that gained fame in no time:
- Gods Unchained: A card trading game with a market cap of $10 million
- Axie Infinity: Ethereum based collectible game raised $860,000 from a token sale in November
- F1 Delta Time: A piece of virtual race track of the game was sold for $223,000
You can read this guide to know more about NFT games.
2021 & Beyond
There’s no doubt that NFT will boom in the coming future. It’s an upcoming technology that is still getting tested.
But as of now, there are 2 possible use cases of NFT:
- Storage of Confidential Documents: Being unique token, it can store personal or confidential information in the form of document
- Data Forgery Safeguards: Check if the data in a file is intact or has been forged by some means
Apart from this, the current trends in NFT like gaming and DeFi will keep expanding.
In 5 years or so, NFT will be a big phenomenon and everyone in the world will start taking interest in it.