Updated: Aug 31, 2021
NFT - nowadays these three cherished letters can be heard more and more often. What is NFT? And why is there so much talk about it?
In simple terms, an NFT token is a coded link to a specific non-fungible digital product on the blockchain, such as digital files, images, audio, video, video game collectibles, and other objects. The uniqueness is the most important value of NFT and the difference from fungible cryptocurrencies.
Let's take a closer look at what non-fungibility is
To do this, first we need to say a few words about fungible assets, a typical example of it would be money, where each bill with a denomination of 1 dollar will be equal to the same dollar.
Non-fungible item is considered unique due to its exceptional characteristics and cannot be replaced with exactly the same one.
Example: You have a favourite pet - a cat, a dog or even a hamster, and under no circumstances would you like to replace it with another animal of the same species. It is your unique furry pet that you adore.
If we go back to the example with money, then in this case collectible coins may also be no-fungible.
With this, I hope it is now more or less clear. Then what is meant by the word token
A token is a digital virtual unit based on blockchain technology. The blockchain technology was created to implement decentralization while ensuring the operation of complex systems. This technology allows you to save information on thousands of computers, while it cannot be falsified or destroyed.
Cryptocurrencies were the first to appear on the blockchain, namely the sensational Bitcoins. This technology allows storing information about all transactions with cryptocurrencies on multiple computers, where it is constantly updated.
The blockchain system also greatly simplifyes the process of recording transactions and accounting for assets.
And since all participants have common access to a single source of reliable data, it is possible to view all information about transactions at any time, and on the other hand, you do not need any intermediary such as a bank.
The Ethereum revolution in the blockchain
The Ethereum platform made it possible to conduct complex transactions with various digital assets using smart contracts, which automatically realize the corresponding agreements, when the previously programmed conditions are fulfilled.
Thus, connecting all the above elements, we can say that NFT is a digital certificate that represents a certain unique object. The most in demand today are art tokens, game tokens and smart tokens. The most popular of them are pixel art.
Pioneers of NFT
If we look at the history of the creation of NFT, their first prototypes were the experimental assets Colored Coins, created in 2012 on the Bitcoin blockchain.
However, NFT technology officially became widespread in 2017. One of the first tokens depicting Homer Simpson as Pepe the frog sold this year for $38,000 with an initial price of just $500 on the Rare Pepe Directory platform.
The first platform on which NFT images were created and hosted was Counterparty, a decentralized meme marketplace. It is on this platform the HOMER PEPE meme has been tokenized.
Nevertheless, it should be noted that the question about the appearance of the first NFTs remains open, since two years earlier in 2015, the virtual game Etheria appeared. Even then, its participants could buy non-fungible tokens in the form of land plots and build on them.
Cryptopanks as unique pieces of digital art and a profitable investment
The next leap in the development of NFT took place with the emergence of the provocative art project CryptoPunks, which in 2017 became a real sensation in the digital world. Its founders, Matt Hall and John Watkinson, owners of Larva Labs company, have created a collection of 10,000 pixel images of punks, each containing a set of unique characteristics. This collection is final and unchanging, which makes its characters unique, rare and one of a kind.
Collectors have appreciated these qualities of СryptoPunks and have recognized each work as a separate piece of digital art. In June 2021, CryptoPunk Covid Alien was sold at Sotheby’s auction for $11.7 million. Thus, Larva Labs' project was recognized as a new conceptual direction in art.
How Kitties have influenced the NFT realm
Another significant project in the history of NFT's development was the CryptoKitties startup, which gained great popularity at the end of 2017. The essence of the simple game was the ability to raise and breed digital kittens. In other words, a digital male cat owner negotiates cross-breeding with another female cat owner in order to obtain a unique kitten.
According to the pre-established form, the kitten is taken by the owner of the female cat, and the owner of the male cat takes the cash equivalent in ETH.
One cannot but emphasize the importance of the CryptoKitties project in the development of the NFT sphere, which not only occupied 25% of the traffic of the Ethereum network, attracted investments of $12.5 million, but also made the community recognize the enormous potential of NFT.
Today, the hype around digital kittens continues to grow, and so do their prices. Some samples can even be purchased for over $100,000.
After the boom in CryptoKitties, the communities of other NFT projects have grown exponentially. The conditions of the 2020 pandemic have also fuelled increased interest in non-fungible tokens. According to the analytical service Nonfungible.com, the volume of the NFT market in 2020 has tripled compared to 2019 and amounted to $250 million.
And that's not the end, in 2021 after:
🔥 NBA created its own collection of NBA NFT cards.
Then in the first half of the year, the NFT market amounted to 2.5 billion dollars, and according to preliminary calculations of analysts by the end of 2021, its volume may grow five to six times.
Thus, the "gold rush" at the NFT got a "superstar" scale.
You can learn more about the impact of global celebrities on the NFT digital art space and about the events of the “CryptoSpring 2021” in my next article.
Stay tuned, to be continued 🧐
P.S. Keeping pace with the times, our YV Art platform by Vinnie Jinn has created the first and one and only, but not the last NFT. ®
In the future, we plan to release a series of NFT under our brand.
This limited edition NFT comes with additional animated visual certificate with the name of the NFT owner, and the single Pigments itself as .mp3 and .wav files.