A brief history of the NFT and the market prospects [vol. 1]
Hi from 1MillionNFTs!
In this post, we would like to briefly talk about how the NFTs market has evolved, as well as where [in our opinion] it is headed. The article is quite extensive, so we decided to divide it into several parts. Today you will find the first of them.
In the second part, we will tell you about the place of 1MillionNFTs on the NFT-market and about the prospects for our community in the future.
What is a Non-Fungible Token (NFT)?
NFT is simply a unique digital asset. This is what sets it apart from, say, bitcoin. Every bitcoin is interchangeable and completely identical. If we’re talking about a non-fungible token, digital images are quite a good example. You can have two 100% identical pictures, but they are completely unique to the blockchain.
Now that we have defined NFT, we can talk briefly about the history of this token.
2012–2013: Colored Coins
It can be argued that colored coins are the very first existing NFTs. Colored coins consist of small denominations of bitcoin and can be as small as one satoshi, the smallest unit of this token. Colored coins can be used in a variety of ways, including:
- Ability to issue your own cryptocurrency
- Issue shares of a company
- Access tokens
- Digital collectibles
Colored coins were the trigger for the entire industry, but the drawback of this token was that they could only be valuable if everyone agreed on their price. The usual Bitcoin scripts were not designed for this kind of behavior on the network, and that is why Colored coins proved to be stronger. The logic is simple: if 5 people agree that 100 Coins are equivalent to 100 stocks, it will be so. But if at least one participant decides that they no longer want to equate Colored coins with stocks, then the entire system will fall apart.
And now, in early 2012, an important event happens. Yoni Assia mentions colored coins for the first time on his blog. In his post (“Bitcoin 2.X (aka Colored Bitcoin) — initial specs”) he discusses Colored coins, but not as assets. He argues that because colored coins are actually bitcoins that were part of the “Genesis transaction,” they are unique and separately identifiable.
The potential of these new assets did not appear to be seriously considered until December 4, 2012. At that time, Meni Rosenfeld published a paper entitled “An Overview of Colored Coins.”
A few months later, already in 2013, Yoni Assia, Vitalik Buterin, Lior Hakim, and Meni Rosenfeld published another important document. It was called “Colored Coins — BitcoinX.” This material was much more detailed and comprehensive.
The shortcomings of Colored Coins were evident; the system worked best in a resolved environment, making it often easier to use a conventional database.
Nevertheless, Colored Coins opened the door to further experimentation and laid the foundation for NFT. The tremendous potential to host real assets was obvious, but a more malleable blockchain was needed for implementation.
2014 — Counterparty
People began to realize the potential for asset issuance on blockchain, but they realized that Bitcoin in its current form was not designed to realize extra-power.
In 2014, Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty, a peer-to-peer financial platform and distributed Internet protocol with an open API built on the bitcoin blockchain.
Counterparty allowed the creation of assets had a decentralized exchange and even a cryptocurrency token with the ticker XCP. It had many projects and assets, including a trading card game and meme trading.
April 2015 — Spells of Genesis on Counterparty
In addition to pioneering the development of in-game assets on the blockchain through Counterparty, the developers of Spells of Genesis also initiated an ICO. What’s more, ICOs have come to be called crowdfunding.
Spells of Genesis funded the development by issuing a token called BitCrystals. It was used as in-game currency. And it was quite an important step in the industry because it provided a turnover of tokens.
August 2016 — Trading on Counterparty
In August 2016, Counterparty teamed up with the popular card game Force of Will.
As part of this collaboration, cards were released on the platform. At the time, Force of Will was the 4th best-selling card game in North America, behind only three competitors: Pokémon, Yu-Gi-Oh, and Magic: The Gathering.
Why did it matter? Because Force of Will was a mainstream company that had no prior experience with blockchain.
Integrating such a company into the ecosystem once again demonstrated the value of putting such assets on blockchain.
October 2016 — Rare Pepes on Counterparty
The emergence of memes on blockchain was only a matter of time, as meme culture became tightly embedded in the social environment and became a marker of relevance. If memes appear in an environment, it means there is a cultural exchange and social activity within that space.
In October 2016, people began releasing “rare pepes” on the Counterparty platform as assets. It was a group of memes popular at the time with the image of a frog character.
These memes have a lot of fans. There is even a meme exchange called the Rare Pepe Meme Directory.
Memes on the blockchain are the first step. It wasn’t long before the Pepe rare meme catalog had experts confirming the rarity of specific images. Quirks aside, this example proves that unique digital goods are in demand and can indeed be of value to people.
Many projects have been created on the Counterparty platform today, and many of them involve NFT-like assets.
Finally, we would like to say that the release of 1MillionNFTs is very close, and in the second part of this article, we will definitely share the prospects and features of our project for the NFT market.
More to come, stay tuned ;)