The Early Evolution of Art On The Blockchain — The Road to NFTs — Part 2

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Kaleidoscope XCP

9 min readApr 11, 2021

In Part 1 we learned all about some of the fascinating precursors to what would eventually become the crypto art market we see today. Various art experiments, sensible or not, were happening very early on in crypto and the markets and crypto-collectables were already gaining traction with game asset platforms. But it would take a couple of big guns to really bring it to the attention of the masses.

First up …

Rarepepe

“Hey guys I made some rare pepe cards and have associated assets with them. Maybe they will be worth millions one day. I will give shitcoin cards to the first 15 people who paste their Counterparty address.” — @nola1978

In September 2016 a user named Mike, a long time member of the Counterparty telegram chat, posted this message to the group. The cards in question were these:

RAREPEPE (9th Sept 2016), GOXPEPE (13th Sept 2016) and SHITCOINCARD (9th Sept 2016). The first truly rare Rarepepes. A RAREPEPE card can be got for a couple of grand, but there’s not always sales available.

Pepe had been a meme long before he was blockchainized. The often misunderstood frog cartoon was at the centre of the so called Meme Economy, Reddit’s pretend market forum for buying and selling memes. Blockchain, however, offered true digital scarcity and the genius of utilising it for the meme market was yet another step towards inevitability.

The community built up reasonably quickly and other users created assets with cards associated. These again took a tongue in cheek influence from trading card games, but this time … no game.

This was the first time that the art came first. These were no longer game assets. There was no intrinsic purpose driving their existence other than creativity, the creative depictions of a frog cartoon. And the submissions were open to the public with very few constraints. This was a community of project.

PEPECASH 18th Sept 2016. Uniquely this card is not only the native currency but also a rarepepe card itself. It’s a highly liquid crypto-collectable.

The cards started out with that strange janky mix of meme art mixed with card game mockery, many crossed with references and in-jokes from the cryptosphere. But as time went on the card template and derivative nature was often bypassed.

On 17th September 2016, the bespoke currency for all Rarepepe transactions was issued and airdropped to all holders of these first 3 cards and the market was kickstarted into action

A Telegram group developed, with a bot that could summon up any rarepepe card and the submission process was streamlined with a Telegram Submission bot.

Another innovation was rarepepe assets being used as ‘access tokens’ allowing access to bonus content, music, games, websites, where only users who held that particular asset were allowed in. DJPEPE was the first one, allowing access to music by the creator. Another was PEPEBALT allowing the user to play a simple game.

DJPEPE, Oct 13th 2016. The first ‘access token’, allowing bonus content for anyone that owns it.

And to top it off a bespoke Rarepepe Wallet was made with the art and the markets built in that really led the way in presenting the art and the market together in a seamless, beautiful and fun user interface.

There’s no doubt that these innovations drove the wide-spread adoption of Rarepepe and led to the value it accrued. Half-jokingly billed as the first real-world use-case for crypto, this was how to do art on the blockchain.

Early on in the Bullish markets of 2017 the uniqueness of the Rarepepe project finally caught the media’s attention. Articles began appearing in major news and magazine outlets. In February the price of Pepecash started looking bubbly with a tenfold increase. Later in the year it’s market cap rose to around $89mil. It was thought to be in the top gains of 2017 with a whopping 47,500% increase.

Price of Pepecash over time according to Coinmarketcap.

Immutability (it gets a bit technical)

There were some other important innovations to come out of the Rarepepe project. Early on the discussion turned to the true immutability of the images attached to the asset. Although the assets were immutable, were the images? Weren’t the images assigned to the asset just by the fact that someone said they were? How could any one person verify the image really was correct for the asset?

The first step was made by a couple of users, Goat and Bench. As it turns out you can make a cryptographic hash of an image (after all, a digital image is just a bunch of numbers) and that hash can later be used to verify the image. The same image produces the same hash each time, any different image, even a close copy, gives a different hash. That hash can be inserted into the description field of the Counterparty asset for anyone to verify.

So here is the first truly immutable piece of art on a blockchain:

In the description field is the MD5 hash, https://xchain.io/asset/CHYNAPEPE and you can go to some online tool such as http://onlinemd5.com/ drop the image in and verify the hash is the same.

The MD5 “checksum” hash in the description field of the asset on the block explorer xchian.io

How to verify a Rarepepe from the MD5 hash in the description

MD5 hashes, however, aren’t perfect and have their security flaws. So, the next push towards immutability was made by Rarepepewallet developer Joe Looney. Called Pepechain, it was made public on 22nd October 2016, only a couple of weeks after the MD5 effort.

“For those that want to secure rare pepe image rareness, check out https://github.com/loon3/pepechain”

Pepechain is a merkle tree of SHA-256 hashes, a much more secure cryptographic hash function. What this means is that each image has a hash linked in a branching tree-like structure to all the other image hashes. Only a single “root” hash needs to be given for verification and you can work back to it from the hash of the specific image you want to verify.

When trying to verify image Hk, the hash with HL will give HKL. If you do this correctly up the tree then your final hash should match the Root. Voilà, image verified.

What’s more, Pepechain also has a second merkle tree to verify that the immutable asset names were actually officially accepted into the Rarepepe directory. And it all comes with a script that can download all the images and asset names and verify them for you. Is that immutable enough for you? IS IT?

Getting Back to Ethereum

Of course, it turns out that all this could happen natively if your art was hard coded into your smart contract and those Ethereum projects were now picking up speed. Not everything was on chain. Etheria was selling land in a decentralised virtual world with some of the data stored on chain and Curio Cards were selling the first Ethereum collectables.

But soon smart contracts started to show their true capabilities.

It took a New York based duo called Larvalabs to go the whole hog. They deployed a contract that generated 10,000 unique pixel art people which they called Cryptopunks. Each one was individually ownable and tradable. After that a Canadian gaming company, Dapperlabs, deployed a cat breeding game Cryptokitties, where users could generate cartoon cats and breed them for new genetic traits which were all coded into the contract, then trade them like any other asset.

Both of these projects brought further interest from all corners of the creative world and towards the end of the bubble of 2017 speculation in the crypto-art movement began to ramp up. Crypto enthusiasts were going nuts for the kitties. The punks and the pepes followed suit.

At one point Cryptokitties accounted for more than 10% of all Ethereum traffic.

Homerpepe, a true single issuance NFT, complete with ridiculous spelling mistake, sold for $39,000. The buyer would later go on to sell it for $350,000

Rare AF

In January 2018 a reasonably small event called Rare AF was held in New York and was attended by a mix of crypto-enthusiasts, artists and confused professionals who’d heard about the buzz. There was various talks and all the usual stuff, but the highlight of the event was the live auction of some of the crypto-goods that people were beginning to hear so much about.

Up for auction was lots of odd crypto goods, one of those being HOMERPEPE. This is a single issue Rarepepe, made before the community ruled out 1/1 cards (only 7 single issuance cards exist in Rarepepe). The bidding started and it didn’t stop for a while, with the HOMERPEPE eventually selling for $39,000, to be paid in Pepecash. The crowd went bananas, but many were still confused. This would get picked up in the press and analysed in all sorts of ways, but regardless of that it was a hilarious way to end this strange chapter.

$39,000 seems like a drop in the ocean compared to some of the 2021 prices, but it was pretty significant for the early days of crypto-art, particularly for a digital trading card picture of Homer crossed with a frog meme. And this was all before the term NFT had even been coined.

NFTs

The nickname had been bandied around a few times and one naughty company even tried to trademark it for themselves. Standing for Non-Fungible Token it technically means a token that has nothing else comparable that it can be exchanged with. Your coins in your pocket are fungible because they can be exchanged by any other coin of the same value. Same with bitcoins.

But the Mona Lisa is not fungible. There is nothing similar in form or value that could replace it. Technically speaking a piece of digital art backed by a token is only non-fungible if there is only one token issued, but the term has become a more generalised name for token backed art, which is ok.

Post January 2018

After all this hype around crypto-art and crypto itself the bubble simmered (let’s not say burst). Bitcoin and Ethereum and all the other alt-coins experienced massive sell offs down to 10% it’s all-time high of that time, and most of the media went after other non-crypto stories for a while.

Those inspired to build after this first boom mostly continued with their work. More and more platforms emerged. Straight up market platforms were poised for the next round of interest and some excellent art projects were still being put out.

Towards the end of 2020 crypto was on the rise again and people remembered about crypto-art and NFTs. And here we are. It’s 2021 and everyone’s heard of NFTs. As of March 2021 market cap for the NFT space is up to more than $20 billion. Token backed artworks are going for stupid money, celebs are piling in and it’s all gone a bit bananas. Was this how the new technology was supposed to change the world? Some people think otherwise, but more on that later.