The History of NFTs and What is Next?

NFT is the keyword on the top trending search among the crypto community in 2021. 2021 is the year of NFT, a year that NFT has explosive growth against other competitors of the crypto world. But to know more about NFT, we have to look back to 2012, when NFT was just an unrealistic idea. Let’s take a trip over the history of NFTs and the main milestones of NFT development over the last decade with Tokenize Xchange!

>>>Read more: What is NFTs?

Before 2017

Colored coin

The desire to repurpose Bitcoin, with many people, artists, and projects involved, eventually led to colored coins. Color Coins are tokens that represent real-world assets on the blockchain and can be used to prove ownership of anything from precious metals to automobiles to real estate and even stocks and bonds.

The idea of ​​the NFT originated as a so-called “colored coin” originally issued in 2012-2013 on the Bitcoin blockchain and implemented via various protocols such as OpenAssets, ChromaWay, or Colu.

Counterparty

In 2014, Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty, an open-source decentralized internet protocol and a peer-to-peer financial platform built on the Bitcoin blockchain.

Counterparty had a decentralized exchange that allowed for asset creation and provided users with the ability to create their own tradable currency. Counterparty, on the other hand,  was created by the community in a decentralized way without an ICO. The way it was built had a huge impact on subsequent projects.

2017 – 2018

Ethereum was launched in 2015 with the intention of becoming “the next generation of world computers” thanks to its novelty smart contract. These programs allow you to create almost any application in a decentralized manner.

However, in summer 2017, Cryptopunk was the project that marked the first turning point by providing 10,000 unique avatars, and today it is considered the first real NFT project on Ethereum in the form of  ERC20 and ERC721 tokens. 

ERC20, the most widely accepted standard for Ethereum tokens, has rules that allow tokens to interact with each other but are not suitable for creating unique tokens. ERC721, which might become the standard for NFTs on the Ethereum blockchain. ERC721 helps track ownership and movement of individual tokens in a smart contract.

2018 – 2021

Since “The First 5000 Days (Beeple)” was sold for $ 69.3 million, or the game Axie Infinity reached a market capitalization of up to billions of dollars, the NFT market has suddenly become more exciting than ever.

According to the 2020 report, the value of the digital art market has grown by 299 percent in the past year, but that’s just the tip of the iceberg because the rest has not been fully calculated: video games, music, or related to sports teams.

The report also notes that many NFTs are sold for horribly high values. Like Jack Dorsey’s first tweet in the form of NFT, which sold for $ 3 million, or the meme Nyan Cat (a rainbow cat) also sold for $ 600,000. Almost any digital asset in the form of an NFT can be sold for such a high price.

In addition, NFT also has great potential in its application to daily life. Artists can attach certain rules to their work, to ensure that they will gain benefit from every sale or price increase of the product.

NFT can also overcome the problem of counterfeit goods, especially for collectibles, sports, souvenirs, event tickets, contracts, or legal documents related to ownership. And there will be many more applications than we have thought of up to now!

Because its trend overpowers the market, 2018 to 2021 can be considered as an explosive period of NFTs.

What’s next in 2022?

Since the advent of Bitcoin, people have made great strides in creating new financial systems based on decentralized technology using blockchain technology. This was really revolutionary in many ways. Investors across the globe have a whole new opportunity to gain profit besides the traditional market. And various individuals who do not have a bank account are accessing financial services for the first time. 

However, despite these advances, there are still some drawbacks that exist in the blockchain world. Cryptographic funding methods such as ICOs, IDOs, or IEOs have high upfront costs. This makes many projects inaccessible to the required capital. Also, due to the legal and logistical challenges associated with traditional token raises, many projects are choosing venture capital routes.

However, NFTs can help investors access better investment opportunities and open new avenues for startups to raise capital. New types of funding methods are efficient and cost-effective for projects to raise capital without the challenges of traditional investment gatekeeping and other types of token raising. This can be the motivation that makes NFT become different in 2022.

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