Welcome to Volume 2 of our 6 part ‘NFTs Explained’ series — a shareable guide for your friends and family. In Vol.1 we discussed what exactly are NFTs. In today’s post we discuss the history of NFTs & the different forms they come in.
The first NFTs created were on the Bitcoin Blockchain
It may seem that NFTs just suddenly appeared out of nowhere but they have actually been around since 2014. Most people are familiar with NFTs traded on the Ethereum blockchain, but the first widely known NFT called “Quantum” was minted on the Bitcoin blockchain by digital artist Kevin McCoy, on May 3, 2014.
Quantum is a pixelated octagon, moving GIF type artwork that displays a hypnotic pulse. On November 28, 2021, the one-of-a-kind piece sold for over $1.4 million USD at a Sotheby’s auction.
From 2014–2016 there was a lot of development and experimentation from platforms built on the Bitcoin blockchain such as Counterparty, a platform which allows the creation of digital assets. Spells of Genesis was another platform created similar to Counterparty but focused more on issuing gaming assets rather than a variety of digital assets.
By 2016 the age of the memes began and the Rare Pepes NFTs were released on Counterparty — created by various artists, based on ‘Pepe the Frog’ by artist Matt Furie. On October 26, 2021, a rare Pepe, Pepenopoulos was sold at a Sotheby’s auction for $3.65 million USD.
Although these NFTs started to become popular, Bitcoin users were not pleased with alternative tokens that represented ownership of images, taking up space on the Bitcoin blockchain.
This is what caused the shift towards Ethereum.
The rise of NFTs: 2017–2021
CryptoPunks: 2017
In 2017, John Watkinson and Matt Hall, founders of New York based software company Larva Labs released an NFT series of 10,000 items on the Ethereum blockchain, called CryptoPunks. In this series, each artwork is a simple 24x24 pixel image of misfits. This is dubbed as the original 10K PFP (profile picture or picture for proof) series that has inspired the development of so many more.
These were not individually created artworks, this is a generative series where different “traits” or “attributes” such as hair style, ears, nose, accessories (sunglasses, headband, cigarette, pipe, eyepatch, etc) are all created separately and then randomly put together using a special code, where no two artworks in the series are the same. Some traits are more rare in the series than others — making these more valuable to collectors. CryptoPunk 635, one of only nine alien Punks in the series, sold for $16.96 million USD at a Christie’s auction on May 11, 2021.
According to OpenSea, a peer-to-peer marketplace where you can learn about projects and buy NFTs, there are currently 3400 owners of CryptoPunks — which means on average, each owner has about 3 of them.
CryptoKitties: 2017–2018
CryptoKitties, a blockchain-based virtual game, developed by a Canadian studio called Dapper Labs was the next big project to become viral. The game allowed users to adopt, breed and trade virtual cats from the safety of their online digital wallets on the Ethereum blockchain. The project became so popular that the blockchain platform became congested due to the high volume of trading, where individuals who sold these cats made massive profits. Dragon is the most expensive CryptoKitty to date that recently sold for $170,000 USD. There are currently 2.01 million unique CryptoKitties.
Bored Ape Yacht Club: 2021
Following the CryptoPunks formula, the Bored Ape Yacht Club (BAYC) is a 10K series of generative artwork. This project is best known for its community building: NFT holders are a part of an exclusive club where they enjoy perks such as getting invited to exclusive real-life parties during prominent art and NFT events across the world, in galleries, warehouses, and actual yachts.
In late 2021 — BAYC was the first known series to provide a “serum” by airdrop to their NFT holders, where Ape owners were given the option to use the serum on their ape — to morph the artwork into a “mutated ape”, giving the project new life and more hype.
The creators behind the project have since released other projects like — the Bored Ape Kennel Club, which was also airdropped to existing BAYC holders, with secondary sales almost immediately surpassing 1ETH after drop.
There are only 10K Bored Apes, but the BAYC community in Discord is 145K members strong. BAYC community members get a say in where the project proceeds go — with over $4.5 million USD so far being donated to various charities.
NFT gaming: 2017–2020
By 2017, NFTs were starting to become more known through NFT gaming and metaverse projects.
Decentraland (MANA), a decentralized Ethereum-based VR platform, was the first to enter the metaverse space in 2017, where parcels of digital land sold for about $20. It has since become a virtual destination for digital assets, a space where users explore, build, play games, collect items, host events and more.
Soon after Decentraland launched, other new platforms and games began to rise, like Enjin Coin (ENJ), a blockchain-based platform that allows developers to tokenize in-game items on Ethereum; Axie Infinity, a blockchain-based trading and battling game that’s partially owned and operated by its players; and arguably the most popular open-world adventure RPG (Role Playing Game) with a play-to-earn structure, Illuvium. Others you may have heard about include The SandBox, Star Atlas, SomniumSpace, these are all game based metaverses where you can buy and display NFTs.
NFTs become mainstream in 2021
It was in 2021 when NFTs really exploded. There are now other blockchains such as Polygon (MATIC), Cardano (ADA), Solana (SOL), and Flow (FLOW) who have all incorporated NFTs on their chain.
In the year of 2021 it became overwhelming how many people were buying NFTs. DappRadar, a company that tracks data across 10 different blockchains, says marketplace revenue sales reached a record high of $24.9 billion USD, in comparison to 2020 where sales were just $94.9 million USD. It was also recorded that 28.6 million wallets traded NFTs in the year of 2021 compared to 545,000 wallets in 2020.
When Facebook changed their name to Meta in October, this solidified for the mainstream that the idea of the Metaverse and NFTs is here to stay.
Right after Facebook’s announcement, there was a huge demand for virtual land NFTs in the metaverse space. Everyrealm, a virtual real estate investor, known as Republic Realm at the time, bought land in the online metaverse, The Sandbox, for $4.3 million USD in November 2021.
The NFT space is still very young. NFTs are not just limited to digitizing images and videos, the industry is starting to expand far beyond this.
The different types of NFTs
Art
Art is currently the most popular form of NFT. Because the blockchain validates the true origin and current ownership of each artwork, buyers and collectors have peace of mind that the NFT they’ve purchased is authentic. As of today, the most valuable NFT ever sold is called “EVERYDAYS: THE FIRST 5000 DAYS” by renowned artist Beeple. The artwork was minted on Feb.16th 2021 and the sale closed on March.11th for $69 million USD.
The work is a collage of 5000 digital images — 1 per day was added to the piece since May 1 2007 and arranged chronologically. Some of the images involve figures from pop culture, like Donald Trump and Jeff Bezos, while others are hand drawn.
The majority of NFT artwork today is digitally native. ArtMeta is working with world renowned contemporary artists to digitize their incredible work and take NFT art to the next level.
Music
Musicians have now started to sell their work as NFTs. Since NFTs need to be unique to be non-fungible, artists have either released altered versions of their music, with variations in sound on the same song so each NFT that is released is unique; or they have released a limited amount of downloads of a track which comes with its own serial number, making this the unique identifier.
This has proven to be a lucrative model, with some musicans having earned millions of dollars within a matter of hours.
Recently, popular rap artist, Snoop Dogg announced the release of his new album, B.O.D.R. (Bacc On Death Row), on blockchain platform Gala Games through their new music store, Gala Music.
Songs from his new album are sold as “Stash Box” NFTs. There is a limited number of 25,000 of these NFTs available for purchase, which include 1 of 17 available tracks from the Bacc On Death Row album.
At the time of writing this, over 8,500 Stash Box NFTs have been sold, each worth $5000 USD, generating $44.3 million in sales. If all NFTs end up being sold, Snoop’s Stash Box NFT’s will have generated total revenues of $125 million. As a bonus, if all 17 tracks are purchased by a user they will get access to exclusive perks which include private concerts & private parties (possibly BBQs at Snoop Dogg’s home), a limited edition custom commemorative chain and ongoing VIP membership benefits.
This is game changing as artists usually only receive a fraction of the money that is generated through streaming platforms and record labels, but through selling their music as an NFT musicians are able to keep up to 100% of their profits and connect far more with their audience.
Video Game Assets
Other types of NFTs are in-game created assets. These range from items such as skins, characters, weapons, etc. These NFT assets are unique and exclusive to their players, as the game will only sell a limited number of these NFTs with varying levels of rarities.
Virtual Fashion
It’s now becoming a trend to dress up your online avatar in the metaverse. You can show off your new virtual shoes by RTFKT (Nike), Virtual 25 trainers by Gucci, Dolce and Gabbana’s ‘Collezione Gensi’ NFT wearables from their Genesis collection, or wear an iconic dress from Ambush. Of course, only a limited number of these NFTs will be sold and uniquely designed for the market.
There are also metaverses in development that focus solely on selling virtual fashion. An example of this is Highstreet Market, a platform where Web3 applications manifest themselves into fully explorable regions packed with merchants selling real products from real brands as well as NFT versions of these products.
Trading Cards & Collectibles
In the physical world, limited edition baseball cards can go for thousands of dollars. The 1909 American Tobacco Company T206 Honus Wagner trading card, one of the rarest baseball trading cards out there, is worth over $1 million, even in the poorest condition.
This is also the same when it comes to the NFT market as people can also buy and trade virtual versions of trading cards or collectibles with series/serial numbers attached — still making them unique due to this factor.
Memoriative Sports Moments
These NFTs are short clips of noteworthy moments in sports history. The clips can be as long as 10 seconds but can sell up to around $200,000. NBA Tops Shots is a successful company and a great example as they sell the most coveted moments in NBA history with the biggest stars in the industry.
The NBA and NBPA have agreed to a revenue sharing model with NBA Top Shots. For every transaction there is a 5 percent seller’s fee. That 5 percent is split between the NBA, NBPA and Top Shots. So when a player’s NFT video moment is sold it is divided across the entire league, rather than to that one specific player.
Memes
That’s right, you can buy, trade and sell memes on the NFT market too. The most popular and highly valued meme to date is the Doge meme which sold for a whopping $4 million dollars.
Domain Names
You can now even register a domain name and sell it as an NFT — since it already has to be unique. In the past you would have to pay a third party to manage your domain, but now if you purchase it on the market you will obtain exclusive ownership of the name and at the same time remove the middleman. Unstoppable Domains, is a platform where you can own rather than rent a domain. The user only has to buy the domain with a one time registration fee and store it in their online wallet. The user never has to worry about renewing their domain registration again after this.
Live Events
In the future the live events space can be largely disrupted by NFT blockchain-based technology. For instance, concert tickets are unique in their own way through the ticket’s row and seat number — this can be used to create an NFT, and concert goers can show this NFT in their wallet to gain access to the event. With this an artist can also add certain perks. A great example would be how the band, Kings of Leon utilized this technology. They entered the space with their album When You See Yourself, for their ultra-fans, YellowHeart (a blockchain live event ticketing platform) minted 18 golden tickets which unlocked front row concert tickets at every KOL show.
The list of types of NFTs is growing almost daily. It will be very exciting to see the evolution of NFTs over the next few years and which industries it will penetrate.
Stay tuned for Vol.3, where we explain how to buy your own NFT.
This guide is a 6 part series covering the following:
- What is an NFT?
- The different types of NFTs
- How do I purchase an NFT?
- How do I create an NFT?
- How do I sell an NFT?
- The future of NFTs
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