Before 2021, most people don’t even know what “non-fungible” meant. Now, big-time celebrities and superstar athletes have bought or launched their own NFTs. So how did NFTs explode in popularity in such a short time?
To gain some insight, let’s take a look at how it all started.
A Brief History of NFTs
In 2012, Colored Coins were created and were arguably the very first NFT to exist. Colored coins are smaller denominations of a bitcoin and are used to represent a multitude of assets. Colored Coins represented a significant advancement in Bitcoin’s capabilities, but their drawback was that they could only represent specific values if everyone agreed on their value. Despite its flaws, it paved the way for more experimentation and laid the foundation for NFTs. Since then, numerous advancements were made to address these flaws.
In June 2017, an NFT project called Cryptopunks was created. It generated 10,000 unique characters on the Ethereum blockchain and anyone with an Ethereum waller can claim it for free. All 10,000 characters were claimed right away and then people started buying and selling them.
Several months later, in October 2017, Cryptokitties was launched. It’s a blockchain-based virtual game that allowed players to adopt, raise, and trade virtual cats. People then started to make huge profits through trading. This game became so popular that it even clogged the Ethereum blockchain at one point.
CryptoKitties also became the first project to ever use the NFT Standard ERC721, the technical standard for NFTs on the Ethereum blockchain. ERC721’s main purpose was to track ownership and movements of individual tokens in the block, allowing the chain to recognize NFTs.
The NFT ecosystem experienced massive growth from 2018 to 2019. The number of projects within the space increased significantly and NFT marketplaces like OpenSea and SuperRare were starting to gain traction.
Endless functionalities for NFTs are now being introduced, including digital collectibles, plots of virtual land, event tickets, in-game items, royalties, exclusive membership access, and more.
Why Are NFTs Popular All of a Sudden?
Cryptocurrencies took the world by storm in 2021. It was also the year when NFTs truly went mainstream. Let’s look back at the time when NFTs started to make headlines.
The most expensive NFT
In March 2021, Everydays: the First 5000 days, a collage of 5000 digital images made by artist Beeple, was sold for $69.3 million at Christie’s. While this is not the most expensive art ever sold (that title belongs to Leonardo Da Vinci’s Salvator Mundi), it is the most expensive piece of digital art to date.
What is so special about this jpeg file?
The price tag was not for the artwork itself but for the NFT associated with it. It means that since it is in digital format, anyone can easily download and reproduce copies of it. In fact, the current owner of the artwork, Vignesh Sundaresan, a cryptocurrency investor, even said that he’d be happy if everyone downloaded a copy of Beeple’s “Everydays: the First 5000 Days”.
Why would you want to pay for something that you can easily download for free?
Some people argue that this is just a marketing stunt and a scam even. But Vignesh says that the reason why he was willing to pay such a high price is that he wants information to be free. Because right now, artworks, music, videos, and other assets that are released on the internet are being pirated. And fighting piracy takes so much effort.
But with NFTs, you’re not giving importance to the file itself but to something else which is much bigger. There could be millions of copies online of a particular artwork or song and that’s okay. Only one has the bragging rights to say they own the NFT for it but that shouldn’t stop everyone else to enjoy it.
Other Popular NFTs
A lot of celebrities are talking about NFTs and are making a buzz on social media. For instance, The Bored Ape Yacht Club NFT Collection has several celebrity owners from across the entertainment and sports world. Holders include Stephen Curry, Madonna, Eminem, Snoop Dog, and Jimmy Fallon to name a few.
Buying a Bored Ape would mean that you’ll be a part of the same group that many famous celebrities are a part of. It also serves as access to exclusive parties for Bore Ape Yacht Club members.
Also, since there are only 10,000 Bored Apes that are available for purchase, people have to compete to get one. This is just one of the aspects that makes NFTs such as the Bored Ape, extremely valuable.
Aside from virtual characters, digital artworks, and other collectibles, NFTs can also be associated with tweets. Twitter founder Jack Dorsey sold his first-ever tweet as an NFT for $2.9 million last year.
Endless Possibilities
More and more companies worldwide are joining the trends and are offering to make digital versions of their assets and offering them to customers in exchange for NFTs. Truly, NFTs are no longer a “hype”, and with increasing appeal and acceptance, it is becoming a serious trend.
In our next blog, we will talk about what the future holds for NFTs and the pros and cons of investing in them. So stay tuned!