The Rise of Non-Fungible Tokens & How We Got to Where We Are Today
On March 11th, 2021, the digital artist Beeple sold an NFT called “Everydays—The First 5000 Days” for a jaw dropping $69 million at the iconic auction house Christies. The huge price tag made headlines around the world and was followed by other notable sales, including a CryptoPunk for $11 million, Edward Snowden’s ‘Stay Free’ for $5 million, and XCopy’s ‘Right-click and Save Guy’ for $7 million — among others.
Before long, NFTs like the Bored Ape Yacht Club were rendezvousing on late night TV shows like the one hosted by Jimmy Fallon, and we were caught trying to explain what non-fungible means to our families over dinner. Suddenly overnight, non-fungible tokens were on everyone’s radar.
But while 2021 was the year NFTs entered the world’s consciousness, the technology had been evolving for some years prior. In this article, we’ll look at the brief history of NFTs and some of the most important projects that helped us get to where we are today. Let’s get started.
The Beginning of NFTs
When we ruminate on the early days of non-fungible tokens, names like CryptoPunks, CryptoKitties, and NBA Top Shot come to mind. But while those are certainly some of the most important NFT projects, they weren’t the first.
Here are a few of the earliest recognized NFT projects:
- Colored Coins (2012). This project was based off a whitepaper written by the Israeli Bitcoin Association’ president Meni Rosenfield, where he proposed a way of segregating a certain number of coins by adding color to them, thus enabling niche applications on Bitcoin. The tokens could hypothetically represent any real-world asset, like real estate, fiat currency, equities, and more — and could be transferred. Essentially, Colored Coins were regular Bitcoin with a mark that designated how they would be used.
- Quantum (2014). Largely credited as the first NFT project, Quantum was a generative art piece created by Jennifer and Kevin McCoy and minted in 2014 on Namecoin. The reason the husband-and-wife team minted the NFT was because they wanted to have ownership over their digital artwork.
- Spells of Genesis (2015). Created by EverdreamSoft, Spells of Genesis was the first blockchain-based trading card game on Bitcoin, and the first game to give players ownership of their digital assets. It was a mobile arcade-style game where players collect and trade cards to create the strongest deck to fight enemies. It’s a precursor to many play-to-earn (P2E) and blockchain based games that followed.
- Rare Pepes (2016). This project consisted of 428,919 Digital Collectible Cards minted on Bitcoin using Counterparty, an early peer-to-peer (p2p) decentralized finance (DeFi) network built on Bitcoin. The rarest Pepe Series 1 Card is called the Nakamoto Card, and holders (there are 300 in total) were granted entry to the “300 club” — the first example of token-gated access.
Today, these projects are recognized as some of the early, pioneering projects in NFT history. There were others, like Eggs (2014), SaruTobi (2016), Digital Zones (2017), and MoonCats (2017). But most of these projects didn’t get much attention at the time and none of them reached widespread popularity.
Instead, it wasn’t until the first NFT collections launched on the Ethereum blockchain in 2017 that NFTs started to really blast off. The reason Ethereum opened the door for NFTs is because of its smart contracts. Smart contract functionality on Ethereum enabled token creation, trading, programming, and storage to be built into the blockchain itself, making the process of creating an NFT much easier.
And that’s when things started to get interesting.
2017: The First Big Year for NFTs
In June 2017, two software developers interested in cryptocurrencies and NFTs launched a digital art project on the Ethereum blockchain called CryptoPunks. The question they hoped to answer when they gave away their collection of 10,000 pixelated punk-like PFP characters for free plus the price of gas was — Could digital art minted on the blockchain have value?
Now, CryptoPunks is considered to be the OG generative art PFP NFT project, responsible for a wave of similar projects like Bored Ape Yacht Club, World of Women, and hundreds more.
A vital component of the collection is that each Punk was generated algorithmically and is entirely unique, possessing a variety of traits that vary in rarity. Among other things, this was a precursor to rarity rankings (our speciality here at Rarity Sniper). Today, CryptoPunks is one of the most famous and sought after NFT collections of all time.
Then in November 2017, Canadian studio Dapper Labs launched CryptoKitties. CryptoKitties NFTs were virtual cats that players could breed and feed, buy, sell, trade on the Ethereum blockchain. Each cat had unique traits, some rarer than others.
CryptoKitties became the first blockchain-based game to really catch on. One of the reasons for its popularity is it allowed players to resell their NFT cats on secondary markets, potentially earning profit by playing the game.
CryptoKitties was so popular that at one point it functionally broke the Ethereum blockchain, and eventually led to the standardization of ERC-721 token standard — a standardized protocol to build NFTs on Ethereum.
CryptoPunks and CryptoKitties were two huge pillars of the NFT craze that would fully come to fruition in 2021. They laid a baseline for what was to come. But they weren’t alone. Some of the noteworthy NFT projects that followed CryptoPunks and CryptoKitties include:
- Axie Infinity (2018). One of the first blockchain-based play-to-earn games to reach mainstream popularity, especially in countries like the Philippines. It was developed by Sky Mavis, a Vietnamese studio. Players collect NFTs that represent axolotl-inspired digital pets called Axies. The pets can be bred and battle each other. It is currently the most played NFT game of all time.
- Decentraland (2020). A browser-based 3D metaverse where users can buy and sell plots of virtual land in the form of NFTs. The decentralized metaverse was created by two developers in Argentina, and is currently is run by the Decentraland DAO. Items in the game, like avatars, wearables, real estate plots, houses, artwork, etc. can be sold and owned. It is now home to many celebrities and big brands.
- Artblocks (2020). A generative art project that curates artists like a traditional gallery, and collaborates with creative coders to make the best quality in digitally generated NFT artwork. It helped streamline the creation of generative art NFTs.
- NBA Top Shot (2020). The National Basketball Association partnered with Dapper Labs to become one of the first major sports league to sell NFT collectibles in the form of player highlight reels. NBA Top Shot helped onboard thousands of basketball fans to Web3 in the early days, making the NBA the most pioneering professional sports league in the space.
And then it all popped off.
In April 2021, Yuga Labs launched the Bored Ape Yacht Club, a collection of 10,000 generative bored-looking Apes minted on the Ethereum blockchain. The price of a Bored Ape at mint was 0.08 ETH, or around $190 at the time. But by 2021, rare Bored Apes were selling for millions of dollars, and celebrities like Snoop Dogg, Eminem, Paris Hilton, Justin Bieber, and Jimmy Fallon were ‘aping’ in.
The Bored Apes were the first generative NFT collection that became known to the world, and its success inspired the launch of other generative NFT collections shortly after, including World of Women, Pudgy Penguins, Doodles, Azukis, and others. Those collections, along with Bored Apes, still dominate the weekly charts for NFTs.
The rest is history.
As we wait out the bear market, it’s helpful to remember that though the history of NFTs is brief, it didn’t happen overnight. Since the launch of Quantum in 2014, the NFT space has persisted through all sort of ups and downs to arrive at where it is today.
As the space continues to evolve, new NFT projects are launching every day in a myriad of industries and sectors. Occasionally, a project comes along that will belong in the next ‘History of NFTs’ article. Because the fact remains, the history of NFTs is still being written.