Original Title: The History of Non-Fungible Tokens (NFTs)
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Original author:
Words: 2004 Translator: Typto
This is a review of NFT history written by Andrew Steinwold in October 2019. Although in 2020, the NFT field has ushered in very big progress, almost everyone in the crypto world understands and participates in it. However, about NFT I believe that few people know history well. This article is a great tutorial material. If you want to be more knowledgeable when talking about NFT with friends, this article must be read! Unfortunately, Andrew is lazy and didn’t add the content of 2020 this time, which is a little regrettable.
(The article was originally published on my Medium on July 10, 2019)
What is a non-fungible token (NFT)?
Non-homogeneous tokens are just a unique digital asset. Assets such as Bitcoin are fungible, which means that all Bitcoins are the same and are interchangeable. An example of a non-homogeneous token is artwork. I can have two identical digital art works, but each work is unique. The example below shows two NFTs from Encrypted Artist. Her two works “Choose” edition #4 and “Choose” edition #5 may look exactly the same, but for the blockchain, both are unique.
We have already understood what NFT is, let’s formally understand the history of these assets.
Some people may say that Colored Coin is the first NFT to appear. Colored Coin is made up of small denominations of Bitcoin, which can be as small as one satoshi (the smallest unit of Bitcoin). Colored Coin can symbolize multiple assets and has multiple use cases, including:
- property
- coupon
- Able to issue own cryptocurrency
- Issue company shares
- subscription
- Access token
- Digital collectibles
Colored Coins represent a huge leap in Bitcoin use cases, but its disadvantage is that they can represent some value only when everyone agrees with their value. Obviously, Bitcoin’s scripting language is not designed to implement this behavior in its network, so the strength of Colored Coins depends on their weakest participants. For example, three people agree that 100 Colored Coins represent 100 company shares. Suppose, even if one participant decides not to equate Colored Coin with company shares, the entire system will collapse.
The first mention of Colored Coin seems to come from a blog post by Yoni Assia in early 2012 with the title “”. He discussed Colored Coin in this article, but did not mention the various assets or use cases they represent. Instead, he claims that because Colored Coins are part of the “Genesis Transaction”, they are unique and identifiable from regular Bitcoin transactions. Until December 4, 2012, Meni Rosenfeld published a paper entitled “Colored Coin Overview” (), the potential of these new assets seems to be tapped. A few months later, in 2013, another paper “” was published. This paper is not only more in-depth than the former, but there are also people you may be familiar with. They are: Yoni Assia, Vitalik Buterin, Lior Hakim, Meni Rosenfeld.
However, the defects of Colored Coin are also obvious. The system works best in a permissioned environment, which means that in some cases, simply using a database is better. Nevertheless, Colored Coins opened the door for further experiments and laid the foundation for NFT. The huge potential of bringing real-world assets into distributed ledgers is obvious, but to achieve it requires a more malleable blockchain.
Year 2014-
The birth of Colored Coin has made many people realize the huge potential of issuing assets on the blockchain. However, people have also learned that Bitcoin itself does not intend to enable these additional features in the current iteration. In 2014, Robert Dermody, Adam Krellenstein and Evan Wagner created: a peer-to-peer financial platform and a distributed open source Internet protocol built on the Bitcoin blockchain. Counterparty supports asset creation, a decentralized exchange, and even an XCP contract currency. It has many items and assets, including card games and meme transactions.
April 2015-on Counterparty
The game developer of “Spells of Genesis” is not only a pioneer in issuing in-game assets to the blockchain through Counterparty, but also one of the first to launch an ICO. In fact, ICOs were called crowdfunding a long time ago. “Spells of Genesis” funded development by issuing a token called BitCrystals, which is also used as currency in the game.
August 2016-on Counterparty
In August 2016, Counterparty cooperated with the popular card game “” and released their cards on the Counterparty platform. “Force of Will” is the fourth-selling card game in North America, second only to “Pokemon”, “Yu-Gi-Oh” and “Magic: The Gathering”. This event is important because “Force of Will” is a large mainstream company. They have no previous experience in blockchain or cryptocurrency. Their entry into the ecosystem shows the value of bringing such assets to the blockchain.
October 2016-on Counterparty
It is only a matter of time before meme starts to transfer to the blockchain. In October 2016, people began to issue “rare pepes” in the form of assets on the Counterparty platform. Rare pepes is a meme with the characteristics of this frog.
These memes have a huge fan base, and there is even a meme exchange called.
It seems that just being on the Bitcoin blockchain is not enough. The “experts” in the Rare Pepe Meme Directory have proved the rarity of pepe Meme. Putting aside the weird and bizarre side, this example does make many people understand the unique digital goods.
Today, Counterparty has built a large number of projects on its platform, many of which involve NFT-like assets. You can browse various projects on Counterparty.
March 2017ー
With the rise of Ethereum in early 2017, meme transactions also began to appear in Ethereum. In March 2017, a project named as a “decentralized meme market and trading card game (TCG), anyone can create meme permanently stored on IPFS and Ethereum.” Similar to Counterparty , Peperium also has an associated token: RARE, which is used to create meme and pay listing fees.
June 2017ー
With the increase in rare pepes trading volume on Ethereum, two “creative technology experts ()” decided to create their own NFT project through minor changes. And realized that they can create a unique role native to the Ethereum blockchain. The total limit of these characters is 10,000, and two characters cannot be the same. They called their project a tribute to Cypherpunks, the pioneers who influenced Bitcoin in the 90s.
Surprisingly, Watkinson and Hall chose to allow anyone with an Ethereum wallet to claim Cryptopunk for free. All 10,000 Cryptopunks were quickly claimed, and this created a prosperous Cryptopunk secondary market, where people trade Cryptopunks. Interestingly, Cryptopunks did not follow the ERC721 standard because the standard had not been invented at that time, and due to its limitations, they are not entirely ERC20. Therefore, it is best to describe Cryptopunks as a mixture of ERC721 and ERC20.
What is the Ethereum token standard (ERC)
On Ethereum, different types of tokens have different technical standards to enable their interaction to work properly. The full name of “ERC” is “Ethereum Request for Comment”. The most common ERC standard is that it has rules that allow tokens to interact in the expected way. This standard framework is very useful to developers when developers create tokens that need to interact with other tokens or applications on Ethereum. Although ERC20 tokens work perfectly in many scenarios on Ethereum, they are not the best choice for creating “unique tokens”. For this reason, standards were born. Although similar to ERC20 in many respects, ERC721 is specifically built for the technical standards of non-homogeneous tokens on Ethereum. The main difference between the two standards is that ERC721 tracks the ownership and transfer of individual tokens in a block, which allows the chain to identify non-homogeneous tokens. The first project to use the new NFT technology standard is the famous CryptoKitties.
October 2017ー
With the advent of, NFT became the mainstream. CryptoKitties is a blockchain-based virtual game that allows players to adopt, feed, and trade virtual cats. Cat, on the blockchain!
Maybe it’s because this game has caused network congestion in Ethereum, maybe it’s because people get people through trading them. In short, soon, this amazing project seemed to appear in a large number of news media, such as CoinDesk and CNN.
Some virtual cats even sold for more than $100,000.
CryptoKitties was launched in October 2017 by a company in Vancouver called. When they released the Alpha version during the ETH Waterloo Hackathon (the largest hackathon in the global Ethereum ecosystem), the team had been working on the project for several months. At that time, more than 400 developers participated in the hackathon, so this is a great place and time to introduce this game. The CryptoKitties team won first place in the hackathon, and the game quickly became popular.
The rise of CryptoKitties coincides with the 2017 bull market, so it is unstoppable. People buy, breed and trade virtual cats frantically. This allows many people to see the potential of non-homogeneous tokens. Subsequently, Axiom Zen spun off a company called, which obtained it from top investors such as and. After witnessing the crazy actions of the CryptoKitties community and Dapper Labs receiving investment from top investors, people began to realize the true power of NFTs.
2018-2019 ーNFT Cambrian Explosion
In 2018 and 2019, the NFT ecosystem has achieved large-scale growth. At this time, there are more than 100 projects in this space, and more projects are in progress. Under the leadership of and, the NFT market is booming. Although their trading volume is still small compared with other cryptocurrency markets, they are growing at a rapid pace and have made great progress. With the continuous improvement of Web3 wallets like, it has become easier to join the NFT ecosystem. Recently, Dapper Labs has also launched a free gas fee. In addition, there are now some websites, such as and (shameless plug-ins), which delve into NFT market indicators, game guides, and provide standard information about the field. This picture from is a good illustration of the current NFT ecology.
CryptoKitties has opened up the territory of NFT, but without those previous projects, CryptoKitties could not have achieved today’s results. These projects have laid the foundation for NFT by establishing unique digital assets. This interesting chart released shows the importance of CryptoKitties to the current NFT ecosystem.
This graph shows that people who have CryptoKitties tend to play other NFT games, while people who play other NFT games usually don’t play other games. CryptoKitties is the perfect gateway to the NFT world.
Due to the ability to breed different cats, CryptoKitties has therefore experienced tremendous growth, which created a brand new cat or ERC721 token. Now, NFT has endless functions, including character names (similar to domain names), virtual land, virtual clothing, event tickets, asteroid mine resources and more. Perhaps the most exciting development space is that countless NFT games and projects are interactive, making projects interoperable. For example, maybe a player in one game owns a sword and can take it into another game as a rare piece of clothing. With interoperability, the possibilities are limitless.
Future outlook
The history of non-homogeneous tokens is much longer than most people think. NFT’s first attempt was in the Colored Coin era in 2012-2013, but I believe that although it is now 2019, we are still in a very early stage. Although we have experienced tremendous growth in the past two years, the NFT ecosystem is still very young, so growth will only continue. In fact, I believe that as more and more people and companies realize the impact of NFTs and further implement them, the growth of the NFT ecosystem will accelerate. Developers will continue to create innovative uses for NFT, and interoperable projects will completely change the rules of the game. I infer that in five years, the scene of the NFT field will be turned upside down, and by then, I will have to update the history of the NFT ecology again!
