The evolution of NFTs How it started

As people became more open to crypto, the digital market experienced a surge in success worldwide. With Bitcoin (BTC) paving the way as the pioneering digital currency, more digital assets also became a huge hit in the crypto market. 

The overall success of the crypto industry introduced innovative concepts that challenge standard transactions and help many industries grow. Among these groundbreaking developments, non-fungible tokens (NFTs) became one of the key aspects that have emerged as a catalyst for crypto’s success.

Unlike other coins that are interchangeable, NFTs represent unique digital assets, ranging from artwork and collectables to music, videos, and virtual real estate. These tokens leverage blockchain technology to create a proof of ownership, record transactions, and provide a secure environment for trading. 

Here’s a guide on everything you need to know about NFT history: 

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Who started NFTs?

The origin NFT can be linked to Kevin McCoy’s NFT Quantum in May 2014. However, it wasn't years after that people started taking an interest in NFTs when more NFT collections emerged.

One of the earliest and most influential NFT projects was the CryptoKitties game which was released in 2017. It was created by Canadian company Dapper Labs with the goal to introduce the concept of collectable digital cats as unique tokens on the Ethereum (ETH) blockchain. 

The game gained massive success and showcased the potential of NFTs to represent and trade digital assets with unique features. After the initial success of CryptoKitties, more NFT projects were developed. 

Over time, a vibrant ecosystem of NFT marketplaces, platforms, and communities emerged, expanding the use of NFTs beyond collectables. Artists and musicians also started tokenising and selling their digital artwork and music as NFTs. This helped them create new revenue streams and engage directly with their audiences as NFT price history grew.

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NFT’s timeline

Just like other coins, NFTs have slowly grown to success through the years. At the beginning of the NFT timeline, people didn’t have an idea of its concept and how they could take advantage of it. But as more NFT projects came to be, more people started taking an interest in it. 

To give you an idea of how NFT slowly became a success, here’s a timeline of events in the history of NFTs:

The launch of NFTs (2012 to 2016)

In 2012, a study by Meni Rosenfield suggested the Colored Coins proposal for the BTC network and became the inspiration for NFTs. Coloured Coins are similar to conventional BTC but with an extra 'token' aspect.

These coins aim to lay out methods for storing and handling real-world assets on the blockchain to verify ownership of those assets. Although the Colored Coins project was never implemented due to BTC's constraints, it paved the way for the creation of NFTs.

In May 2014, Kevin McCoy, a digital artist, created the first-ever NFT called Quantum released in the Namecoin network. Quantum is a pixelated digital artwork that features shifting colours. 

After the release of Quantum in the market, more extensive research was conducted that led to the creation of platforms based on the BTC blockchain. To help the development of digital assets, the Counterparty platform also known as Bitcoin 2.0 was launched and quickly gained success.

When the Counterparty became a huge success, it became a pioneer for the distribution of more virtual assets such as Spells of Genesis. In 2016, Counterparty urged the launch of many Rare Pepe NFTs, ushering in the era of meme coins.

However, the BTC blockchain was never meant to be used as a database for tokens expressing the ownership of assets. This soon sparked the massive migration of NFTs to the ETH blockchain.

The rise of NFT projects (2017 to 2020)

The launch of token standards allowed the migration of NFTs to ETH. This made it possible for developers to issue their own tokens. The token standard is an offshoot of the smart contract standard that details the process of creating and producing NFTs that are compatible with the blockchain.

Inspired by the success of the Rare Pepe NFTs, programmers John Watkinson and Matt Hall released their own generative series of NFTs on the ETH blockchain under the name CryptoPunks. Some of the earliest and most popular NFTs were known to be CryptoPunks which were distributed for free upon their launch. 

The Vancouver-based entrepreneurial studio Axiom Zen also unveiled CryptoKitties. These are virtual games where users can adopt, breed, and sell digital cats that are kept in crypto wallets and are powered by the ETH blockchain. 

CryptoKitties quickly became viral to appoint where thousands of people made immense profits. After the meteoric rise of CryptoKitties, interest in NFT games began to gain traction and progress.

Decentraland, a decentralised virtual reality platform built on the ETH blockchain, was the first initiative in the spotlight related to NFT gaming and metaverses. This platform is an open-world gaming that allows you to discover, earn, and construct on the blockchain and uses the token MANA. 

Another popular NFT token that followed MANA was Enjin Coin (ENJ). This allows the tokenising of in-game assets on ETH and provides real-world value. Due to its unique tokenising feature, ENJ was quickly adopted by other platforms and games. Not long after the success of ENJ, Axie Infinity (AXS), another player-owned and blockchain-based trading and battle game rose to prominence. 

NFT becomes a success (2021)

The year 2021 was a prosperous year for NFTs as their supply and demand soared. With the immense success of NFTs, major auction houses such as Christie's and Sotheby's jumped into the trend. These auction houses not only moved their auctions online but also began selling NFT paintings, sparking widespread disruptions in the art market and industry.

This resulted in a massive sale of Beeple's Everydays: the First 5000 Days NFT that was sold for $69 million at Christie’s auction house. Due to this record-breaking NFT purchase, the market NFT received more recognition. 

Since then, the demand for NFTs grew which led to other blockchains such as Cardano and Solana getting involved in creating and starting their own NFTs. As more blockchains opened their doors to NFTs, people started demanding more of these tokens which led to the growing success of the market.

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What do NFT 1.0 and NFT 2.0 mean?

The terms NFT 1.0 and NFT 2.0 are not widely used or officially defined concepts. However, they can be used to describe certain developments or trends within the NFT ecosystem.

NFT 1.0 often refers to the initial wave of NFT adoption and development that took place around 2017 to 2018 with the launch of projects like CryptoKitties and CryptoPunks. It represents the early stages of non-fungible tokens when they gained recognition for their ability to represent unique digital assets on the blockchain. During this period, NFTs were mainly linked with digital collectables and art.

On the other hand, NFT 2.0 is used to describe the next phase of NFT development which is more advanced features beyond simple digital ownership. NFT 2.0 often refers to the expansion of NFT use cases into areas such as decentralised finance (DeFi), gaming, virtual worlds, and metaverses. 

NFT 2.0 involves the use of smart contracts and programs to enhance the use of NFTs. Overall, it represents the evolution of non-fungible tokens as a versatile tool for representing and trading various digital assets.

The future of NFTs

With their unique features, NFTs are believed to hold a huge potential for further innovation and expansion. They are also expected to extend beyond digital art and collectables. 

NFT users can expect more token integrations in various fields such as music, literature, fashion, and virtual reality. As NFTs continuously improve, they opened unique experiences to their users and allowed fractional ownership of physical assets and the creation of immersive virtual worlds.

However, there are environmental issues raised due to the increasing popularity of NFTs such as its mining process. NFT’s mining process can add to carbon emissions if non-clean energy sources are not utilised. 

In the future, it’s expected that there are more efforts to develop more energy-efficient blockchain solutions that will address the environmental impacts of NFTs. This includes the adoption of proof-of-stake (PoS) consensus mechanisms which can help mitigate the footprint of NFT transactions.

Many believe that with the rich NFT history, its future will be bright and will continuously evolve. As the ecosystem matures, NFTs have the potential to reshape industries, redefine ownership, empower creators, and transform the way people interact with digital assets.

Frequently asked questions about NFTs

Looking for more information about NFTs? Learn more about what NFTs are with these frequently asked questions:

Why are NFTs valuable?

The value of an NFT is determined by factors such as its uniqueness, scarcity, and demand. Some NFTs gain value due they are created by well-known artists and brands. 

Can I sell or trade NFTs?

Yes, one of the perks of NFTs is that they can be bought, sold, and traded on various marketplaces.

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