NFTs Explained: Non-Fungible Tokens History, Future, Pros & Cons

NFTs History


While many people today identify NFTs with the Ethereum blockchain, the fact is
that the concept came long before Ethereum.


Depending on who you ask, CryptoArt evokes a range of feelings. CryptoArt and NFTs
bring together the worlds of time-based media art with blockchain technology, making
them decentralized, provably scarce and real, and, most importantly, pro-artist.


What are NFTs, exactly? Understanding the Non-Fungible Token
World


Assume you have four separate bank accounts and want to assign a use case to
each of them. Imagine you have a billing account, a savings account, a gaming
account, and a college savings account. The money is then separated and
distinct.


Despite the fact that the concept of Colored Coins was never fulfilled due to
Bitcoin’s constraints provided the framework for future NFT experiments.


What are the Benefits of Non-Fungible Tokens?

What is NFTs? NFTs future, nfts history


There are numerous explanations for this. A non-fungible token (NFT) is a one-of-a-kind
digital asset representing any digital asset on a blockchain (such as Ethereum, Tezos,
Flow, Solana, and others), making it scarce, verifiable, and valuable. The introduction of
NFTs have given artists and creators a new platform to display their work or collections.
As a result, a revolution is underway, allowing artists to create and market their work
while also providing collectors with complete transparency into the authenticity and
provenance of their purchases.


NFT assets can be digital art, collectibles, a creative extension of the music, a synergy
of all three, or wholly new and uncharted compositions. Using NFTs, creators continue
to push the boundaries of creativity, customizing them in new and unique ways.


Many people wonder, “Can’t I just screenshot the NFT without buying it?” This is
correct, but you would be unable to sell it for the original price. Similarly, finding a
collector for a photograph of the Mona Lisa would be difficult.

When an NFT is traded on the secondary market, the new owner and the price paid are automatically recorded on the blockchain, which is a digital archive of transactions that no one can change and
that everyone can see. The idea is that by making these certificates of authenticity
publicly available for everyone to view online, NFTs will be able to verify the origin of
any asset to which they are linked.


By definition, NFTs are tools that artists can use to verify their work without dealing with
the typical machinations of the legacy art world (provenance). Given their potential to
establish scarcity of digital material, NFTs also allow artists to determine their rates for
their creations – and control their secondary market – thereby democratizing access to
new markets for artists globally.


“What you’re buying is code that emerges as graphics,” said Donna Redel, a professor
of crypto-digital assets at Fordham Law School. “You’re purchasing a different type of
art.” You should also consider “You’re not buying the vision,” Jake Brukhman, founder of
bitcoin investing firm CoinFund, said. “You’re purchasing the rights to the image.”


Who made the first NFT?


Kevin McCoy, a digital artist, minted the first-known NFT “Quantum” on May 3, 2014.
Quantum is a pixelated octagon packed with various shapes that pulse in a fascinating
manner. The one-of-a-kind Quantum art sculpture sold for more than $1.4 million in a
Sotheby auction on November 28, 2021.


So, where did this technological craze originate? The history of NFTs, On May 3, 2014,
the guy who invented them, Kevin McCoy, began. He issued his non-fungible token
“Quantum” long before the cryptocurrency art market erupted.


A pixelated image, Quantum, of an octagon filled with circles, arcs, or other patterns
that share the same center, with larger shapes encircling smaller ones and hypnotically
pulsing in bright hues. The one-of-a-kind “Quantum” art piece (2014-2021) is on the
market for $7 million.


McCoy is outstanding. He and his wife, Jennifer, have made a name for themselves as
first-rate digital painters throughout the years. “The NFT phenomena is profoundly
embedded in the art world,” McCoy explains. “It arose from a long tradition of artists
experimenting with creative technology.”

Their work has typically been purchased by ardent art collectors, although McCoy likes to sell at a gallery or one on one rather than in public bidding battles. Their piece “Every Shot, Every Episode” is now exhibited at the Metropolitan Museum of Art.


History of Non-Fungible Tokens

What is NFTs? NFTs future, nfts history


CryptoPunks, Rare Pepe, and CryptoKitties were cultural phenomena that
sparked the CryptoArt category. These works of ‘art’ became well-known due to
viral network effects and the desire to pay large sums of money to acquire them.


Colored Coins (2012-2013)


Meni Rosenfeld published a paper on Dec. 4, 2012, that established the notion of
“Colored Coins,” issued on the Bitcoin blockchain. Colored Coins are a set of
ways for representing and maintaining real-world assets on the Bitcoin
blockchain, which can be used to prove asset ownership. They’re just regular
Bitcoins with a mark on them determines what they can be used for.
Let’s get started on this trip, which involves many individuals, artists, and
initiatives.


A “colored coin” that was initially launched on the Bitcoin network in 2012-2013
inspired NFTs. Colored coins are blockchain-based tokens that reflect real-world
assets and may be used to authenticate ownership of everything from precious
metals to automobiles, real estate, and stocks and bonds.

The original concept was to use the Bitcoin blockchain to store assets such as digital collectibles,
property, coupons, company shares, and more. They were described as novel
technology with a lot of untapped potential for future applications.


Counterparty (2014)


Counterparty, a mentor financial platform and distributed, open-source Internet
protocol built on the Bitcoin blockchain, was created in 2014 by Adam
Krellenstein, Robert Dermody, and Evan Wagner. Counterparty allowed users to
generate assets and had a decentralized exchange, allowing them to build their
own trading currencies. It featured a plethora of ideas and potential, including
meme trading without the risk of counterfeiting.


Counterparty’s Genesis Spells (2015)


Counterparty collaborated with the Spells of Genesis team in April 2015. The
makers of the Spells of Genesis game were not only the first to issue in-game
assets into a blockchain using Counterparty, but they were also among the first to
initiate an ICO. By inventing their own in-game money called BitCrystals, the
founders helped fund the development of Counterparty.


CounterpartyTrading Cards (2016)


New trends began to emerge in 2016. Counterparty made a partnership with
Force of Will, a popular trading card game, to launch their cards on the
Counterparty platform. Force of Will was the 4th most popular card game in
North America, after only Pokemon, Yu-Gi-Oh, and Magic. Their introduction into
the ecosystem highlighted the necessity to hold such assets on a blockchain,
despite their lack of prior blockchain or cryptocurrency experience.


Rare Pepes & Counterparty (2016)


Memes made their debut on the blockchain in 2016. Memes began to find their
way onto the Counterparty platform in October of 2016. People began to
contribute materials to a meme known as “Rare Pepes.” Rare Pepes is a meme
that features an intriguing frog mascot that has amassed a large following over
time.


What began as a comic figure is known as Pepe the Frog and has grown to
become the most popular meme. With the rise of Ethereum in early 2017, Rare
Pepes began to be exchanged there as well. Portion’s founder, Jason
Rosenstein co-hosted the first live Rare Pepe auction at the first Rare Digital Art
Festival alongside Louis Parker.

With the Rare Pepe Wallet, CryptoArt was founded, and it was the first time that artists from all over the globe could submit and sell their own work. It was the 1st time that digital art could be considered valuable in its own right.


Cryptopunks (2017)

What is NFTs? NFTs future, nfts history


The inventors of Larva Labs, John Watkinson, and Matt Hall, produced distinct
characters generated on the Ethereum blockchain as Rare Pepes trade grew in
popularity. There would be no two characters alike, and the total number of
characters would be capped at 10,000. The project’s name, Cryptopunks, refers
to a Bitcoin experiment from the 1990s and may be regarded as a mix of
ERC721 and ERC20.


ERC721 was used to get CryptoKitties NFTs off the ground. They are a virtual
game built on the Ethereum blockchain that lets participants adopt, breed, and
trade virtual cats. They were extremely famous and were featured on major news
outlets such as CNBC and Fox News.

CryptoKitties was established by Axiom Zen, a Vancouver-based company, and it immediately became popular, attracting money from prominent investors as a result of its rapid growth. CryptoKitties was
eventually spun out by Axiom Zen and renamed Dapper Labs.


The NFT Explosion (2018-2021)


NFTs gradually gained public recognition between 2018 and 2021 before
erupting into general use in early 2021.


The ostensibly hidden trend that swept the crypto world has gradually evolved
into more popular art. On Valentine’s Day 2018, artist Kevin Abosch joined with
GIFTO for a philanthropic auction, marking a turning point in the transformation.
The relationship resulted in a $1 million transaction for The Forever Rose, a
stunning piece of CryptoArt.


Abosch continued to increase the stakes when he launched a concept called
“IAMA Coin” that combined the Ethereum blockchain with his blood. Abosch isn’t
the only artist who has embraced this fascinating way of expression. It’s steadily
gaining appeal among artists eager to test their creative limits.


The NFT market is more effective and liquid than traditional asset transfer
techniques. Several platforms have emerged online, each with unique features
for both makers and collectors. The central area of disruption is minimizing
centralized fees, which may be as high as 40% for traditional art dealers and
auction houses.

The largest marketplace for art, music, domain names, collectibles, and trading cards is Opensea. Mintable’s platform is designed to make the minting process as simple as possible for creators. Portion is portraying
itself as an NFT platform that connects DeFi, NFTs, and DAOs, with the
community in charge of the governance token $PRT. Users may acquire fractions
of NFTs or “shards,” which are ERC20 tokens that represent a piece of the
complete NFT, on other platforms like Niftex.


NFTs in 2023

What is NFTs? NFTs future, nfts history

NFTs have a far long legacy than most people realize. The future has endless
possibilities as we go from an experimental to a mainstream phase. Despite the
recent tremendous increase, I feel that this field is still new and that growth will
only continue. Indeed, I expect that the NFT area will expand as more people
grasp the potential of NFTs in most of our existing industries.


How We See It


Portion feels that this intriguing new medium has a promising future. We think
that each artist can and should use blockchain technology at some point in their
career. Portion, which considers itself first and foremost an artist, sees a world
where artists may expand their creative freedoms and reach new audiences
eager to acquire and admire their work.


The future of NFTs


While the history of NFTs is fascinating, the future of the technology is brimming with
possibilities as the new area evolves from raw and experimental to extremely useful and
popular. NFTs may soon be a technology that is essential to everyday life due to
tokenization, fully programmable, cooperation, royalties, and more direct relationships
between artists and collectors.


Token-based Metaverses, DAOs, community-owned financial protocols, and NFT art
were just a few years ago small-scale experiments. As global collectives on the internet,
they now represent multibillion-dollar communities that mix protocol-driven design,
economics, and governance. It is tough to foresee the future, but in the case of digital
art collecting, it’s reasonable to say we haven’t even scratched the surface of what may
emerge in the following decades.


Before the globe was engulfed in the virus two years ago, few people had heard of
non-fungible tokens (NFTs). This digital asset, like cryptocurrency, is traded using
blockchain-based technology, which has sparked an uptick in interest and activity from
gamers, influencers, and artists who have worked out how to make use of the
technology.


Because of their guaranteed ownership and validity and their entirely digital nature,
NFTs have proven advantageous for digital content suppliers. Creators have more
control over their digital work since they can release something they genuinely own and
earn money every time it sells. Secondly, each NFT sale is decrypted, resulting in an
unalterable digital provenance. To summarise, I believe that digital entertainers have a
very bright future.


Use Cases For NFTs


People bought and sold more than 85,000 NFTs in May, according to application
tracking firm DappRadar, for a total trading value of $5.8 million in a single day.
However, mass acceptance, in my opinion, is practically impossible.


Instead, I believe that NFTs will ultimately supplant industries that like appropriating
other people’s hard labor and that this is going to happen sooner. Consider record
labels. NFTs, like a checkmark on Instagram, will become a status symbol for the future
of decentralized social media by then.


NFTs, on the other hand, are about more than just swapping Bored Apes for millions of
dollars. In my opinion, the digital asset may be used more extensively, even for
commercial purposes. Because digital certificates are traded online and using
decentralized blockchain technology, commercial transactions may be completed more
swiftly and securely.


For NFTs, I prefer DESO since there are no minting charges. Also, because I’m on a
social media platform, I can communicate my brand’s narrative. Because of these
advantages, my business intends to manufacture and sell NFTs ultimately through
DESO.


NFTs can also offer features and incentives that are tied to the asset itself. A tangible
component or an experience can be sold behind each NFT, depending on who is selling
it. For example, top coin holders may be eligible for unique prizes from the creator coin
NFTs. I feel that if an athlete or artist has a large enough following who cares about
them, they will buy whatever NFT they sell.

Creators may use the decentralized social media component to talk to an audience
about their NFTs. After all, decentralization as a concept is quite similar to what NFTs
are attempting to do, which is to open up the potential of owning art to the public, a
luxury that has hitherto been reserved for the affluent. Even art appraisal, which has
traditionally been the domain of a limited group of enthusiasts, has evolved into a
democratic process.


However, keep in mind that the wild nature of NFTs is causing mistrust among some
developers as well as hope among others like me. I’ll concede that the future of NFTs is
still mostly unknown, but the chance to get in now is one that my firm will not pass up.
Creators of material make an effort to appear alive. Digital entertainment has a bright
future.


Pros of NFTs

What is NFTs? NFTs future, nfts history
A-Complete-Guide-to-NFt-and-its-Working


NFTs, help to improve market efficiency.

The capacity of NFTs to increase market efficiency is their most obvious advantage. Transforming a physical object into digital assets can help to streamline processes, cut
out middlemen, enhance supply chains, and improve security.


An example is now playing out in many corners of the art world. Artists are increasingly
able to communicate with their followers directly. Thanks to NFTs, remove the need
for expensive agents and time-consuming transactions. Furthermore, the digitalization
of artwork improves the verification process, streamlines transactions, and lowers
expenses.


However, NFTs have uses outside of markets. They may eventually turn into an effective
approach for individuals and businesses to manage and regulate sensitive records and
data.


Consider how we use passports, which must be presented at every point of entry and
departure. By separating them into independent NFTs, we might considerably simplify
the process of limiting travel and identifying people. Savings in the terms of both money
and time might be significant.


Physical Asset Ownership can be fractionalized using them.

Today, it’s impossible to fractionalize some assets like real estate, artwork, and pricey jewelry. A computational duplicate of a structure is easier to divide amongst several owners than a real one. A priceless piece of jewelry or a one-of-a-kind bottle of wine is an example of this.


Digitalization may greatly expand the market for particular assets, resulting in more
liquidity and better prices. Individually, it has the potential to improve the way financial
portfolios are structured, allowing for more diversification and more precise position
sizing.


Blockchain Technology Behind NFTs Is Secure
NFTs are made utilizing blockchain technology, which is a method of storing data that is
difficult to hack, edit, or delete. In a peer-to-peer network, a blockchain is essentially a
digital record of transactions that is duplicated and distributed among participants.
All NFTs kept on the blockchain have independent records of authenticity and
chain-of-ownership, preventing them from being mishandled or stolen. Data that has
been added to the chain cannot be modified or removed. This implies that the scarcity
and authenticity of each NFT are retained, encouraging a degree of trust that we aren’t
used to seeing in many marketplaces.


NFTs: Provide Diversification Benefit to Investment Portfolio
NFTs are not the same as traditional assets like equities and bonds. As previously said,
they have different characteristics and provide benefits that we are only now beginning
to fully appreciate. Having said that, ownership is not without danger.
The dangers will be discussed more in the next section. For the time being, merely be
aware that the risk profile of NFTs differs from that of other asset types. As a result,
adding NFTs to an investment portfolio may increase its efficiency. Essentially, this
implies having a higher risk-reward ratio.


Cons of NFTs


NFTs are volatile and illiquid.
The market for NFTs is illiquid due to their nascent status. NFTs are not well understood,
thus there are few possible buyers and sellers. As a result, trading NFTs can be
incredibly challenging, especially during bad times. It also suggests that the NFT price is
subject to considerable variation.


NFTs Don’t Generate Income


NFTs, unlike dividend-paying stocks, rent-generating real estate, and interest-bearing
bonds, do not give their owners money. Like antiques and other collectibles, NFT
investments are entirely reliant on price appreciation, which you should not anticipate.


NFTs Have the Potential to Perpetuate Fraud
While a blockchain’s integrity is unassailable, NFTs may be exploited to propagate fraud.
Indeed, some artists have recently reported finding their work for sale as NFTs on online
platforms without their permission.


This directly opposes the purpose of using NFTs to make art/painting sales easier. The
value of an NFT is that it validates the ownership of a real piece of art by using a
one-of-a-kind token, assuring that whomever owns the token also owns the work of art.
If someone develops an electronic image of the original work, attaches a token to it, and
sells it on a virtual marketplace, there is a severe concern. There is no acknowledgment
of the original work in this piece. The token has been linked to a forgery.


NFTs Have the Potential to Destroy the Surrounding
Building blockchain records takes a lot of computing power, and there’s a lot of debate
over whether the process is hazardous to the environment in the long run. According to
some estimates, carbon emissions related to mining cryptocurrency and NFTs would
surpass those associated with the whole city of London in the future if current trends
continue. According to blockchain proponents, as NFTs revolutionize global
marketplaces, decreasing the need for travel and office space, pollution is being
reduced.


The Future of Non-Fungible-tokens Investment
NFTs are a fascinating invention that is gaining a lot of attention as their applications
grow. The attention-getting price tags on certain NFTs are adding fuel to the flames.
However, because NFTs are very illiquid and volatile, smart investors should proceed
with caution when considering purchasing these assets.


The fundamental value of NFTs lies in their power to alter market behavior and
enhance how we handle and regulate sensitive data. Here, the sky is the limit.

How to get started with an NFT project?

What is NFTs? NFTs future, nfts history

Fast forward to 2030, NFTs will be normalized. We will be using passports in the form of NFTs. In that era, new projects will be much harder to succeed in. Hence, why not take a chance now? If you got an idea, and some money, then at least try your project once.

If you are willing to be an NFT artist, you will need to build a small team. You will need an artist, a developer, and a marketer. The artist will be responsible for making your art, while the developer generates thousands of unique copies of that art. The developer will also make your website and a custom minting page. Last but not least, a marketer is a must to announce to the world that your project is going to be the next big thing. Of course, it will be hard to find the best skills. To save your time, leave your burden of graphics work, NFT website, and marketing to this NFT specialist.

Final Words
Nonetheless, if you want to join the blockchain revolution and view NFT ownership as a
viable option, go for it. Please, however, do it in a responsible manner. Don’t invest a lot
of money in NFTs and always go for low-cost positions.

Leave a Comment