The NFT (Non-Fungible Token) craze of recent months has piqued the interest of crypto enthusiasts, artists, gamers, DeFi “degens” and billionaires alike. In February 2021 we saw sales volume from the top 3 NFT platforms grow to $342 million, an increase of nearly 400% from the month before.
This exciting new frontier features artists and influencers ranging from crypto-millionaire twitter-philosophers to the Grammy Award-Winning “Kings of Leon” and billionaire entrepreneur Mark Cuban.
So what exactly is an NFT and how has this technology managed to provide common ground to such a broad spectrum of traders, investors and collectors? Is it just another “bubble” preparing to burst? Where do we go from here?
In this article I’ll be recapping a brief history of NFT technology up to this point and outlining some of my thoughts on the implications it has for the future, including how the public perception of NFT’s can grow from the novelty of art and artists we primarily see it as now, into the new standard for defining identity and ownership.
I believe NFT technology has placed us at a new frontier of content creation, distribution and ownership. Adoption of NFT technology will be a subtle and seamless seduction of the masses into a digital world of true ownership and verifiable, transparent interaction; A Tokenized Future.
From Colored Coins to Colored Tokens in Ten Years
The journey in pursuit of putting real-world assets onto distributed ledgers began nearly ten years ago, in early 2012. In a blog post titled “bitcoin 2.x (aka Colored Bitcoin)-initial specs”, Yoni Assia proposes a way to create unique “colored bitcoins” on top of the bitcoin network that are distinguishable from standard bitcoins, for the purpose of separating the technology of bitcoin from the value it holds as a currency.
While Yoni’s motives for exploring these possibilities are a far-cry from the current state of NFT technology, they share an underlying core principal- That this currency would be non-fungible and its value would be affected by factors other than the price of bitcoin (rarity factor of the color coin, for example).
It wouldn’t be until some months later that Meni Rosenfeld would go on to expand upon the concept of Colored Coins in December of 2012. It was at this point that the notion of using non-fungible coins to not only represent real-world physical assets, but to also interact with them in unique and more meaningful ways, was proposed.
2013 is when we start to see how our current NFT state-of-affairs started to take shape. Toni Assia and Meni Rosenfeld returned in collaboration with Vitalik Buterin and Lior Hakim to publish their paper “Colored Coins — BitcoinX”, the most expansive look at early NFT concepts up to this point in history with clear references to Digital Art as a potential use-case.
Limited by the immature technology of Bitcoin at that time, it would take several years and the advent of Ethereum (by the afore mentioned Vitalik Buterin, no less) before NFT’s would emerge as a viable form of collectible digital art on distributed ledger technology.
CryptoPunks hit the scene in June of 2017 on Ethereum’s network, before they had even rolled out the ERC721 standard that all NFTs on Ethereum use today. 10,000 unique “punks” were minted and made available for free to anyone with an Ethereum wallet. They still exist today and are traded among collectors for varying prices, using a sort of hybrid ERC20/ERC721 technology standard.
The first project to exclusively use the new ERC721 NFT standard would be CryptoKitties in October of 2017. This project went on to notoriously “break” the Ethereum network in a peak moment of popularity in December of 2017, causing massive transaction congestion and high transaction fees.
Despite the sharp crypto market correction in early 2018, NFT projects such as CryptoPunks and CryptoKitties experienced a surge in growth and popularity. Between 2018 and 2019, the space exploded to over 100 active and ongoing NFT projects, with most being Ethereum-based.
By that point, most NFT projects were varying derivatives of collectible art platforms. They appealed to collectors but had very little interactivity or utility beyond that, due largely to the limitations of the Ethereum network with regards to mainstream-accessibility and transaction fees.
In the same timeframe, however, many competing blockchain technologies emerged in response to these issues faced by Ethereum and Bitcoin, aiming to provide solutions to scalability, transaction costs, adoptability and reliability.
Solving these Ethereum-related issues is leading to a new wave of fast and flexible NFT projects, with VIMworld being most notable (in my opinion) as of late.
Built upon the VeChainThor Blockchain, VIMworld is a newly emerging “Smart” NFT Platform. They feature unique digital characters in NFT form called “VIM”s (Virtually Integrated Metadata) with the added benefit of having “nested smart contracts” to give them flexible utility.
“Colored Tokens” are a currency of VIMworld that can only be held by your VIM and can be used to track in-game achievements, wealth, authenticity, progress, history and more.
Sound familiar?
Remembering back to “Colored Coins — BitcoinX” of 2013, we can begin to see how VIMworld is using Smart NFT technology to bring the original concept of “Colored Coins” back around full circle but with up-to-date technology as “Colored Tokens”.
What does this mean, exactly?
Well, it could mean that we are at the pivotal moment of a nearly decade-long journey in NFT technology history.
NFTs to Bridge the Physical and Digital Worlds
Imagine a world where the traditional “barcode” has been made obsolete; Replaced by new distributed ledger technology that allows instant verification of identity, authenticity, and ownership.
Imagine every physical good on every shelf of every store, containing a digital counterpart with a complete and immutable history of its life from production to present, accessible easily and transparently by virtually anyone.
And now try to imagine the implications such a disruptive change would have to the way we interact with products, brands, companies, and each other on a daily basis. What would it look like? How would we interact with these digital counterparts and what value would they bring to other aspects of our daily lives?
What happens when someone can buy the latest pair of Limited Edition Yeezy’s not only with 100% certainty of authenticity, but also with immutable proof of price/rarity/status and the ability to bring that metadata with them into their digital personas?
Or when someone purchases a house or vehicle and receives with it a digital NFT as proof of identity/authenticity/ownership, and has the freedom to sell/hold/leverage the NFT in stead of the physical item it represents?
This is the future we can look to as Blockchain and NFT technology continue to develop hand-in-hand.
A future where every physical product, piece of real estate, share of ownership, or other tangible asset is tokenized and representable via NFT. Not only for the efficiency and interactivity of NFT technology with regards to ownership, but also because NFTs can securely and transparently translate individual status (identity) into the digital space.
NFT + Education + Entertainment = Smart NFT
To take it one step further, I believe NFT technology can and ultimately will serve to supplement our traditional lifestyles insomuch as playing an active role in education from grades K — 12 and beyond in the near future.
This is yet another showcase of one of the many ways in which advancing NFT technology can serve to supplement our complex lifestyles, securely and efficiently tracking our education progress and translating that progress into tangible benefits in both the digital and physical spaces.
In a Tokenized Future, Everything is Powered by Crypto
Diplomas, medical records, retail merchandise, drivers licenses, social security cards, concert tickets, legal records, software licenses, titles, deeds, COA’s- There is no aspect of daily life that can not be touched and improved upon with the supplementation of NFT and distributed ledger technology.
We are at the pivotal moment of a nearly ten year journey. We hold in our wallets the keys to a fully tokenized future of interwoven, transparent and value-driven interactions.
As major brands and industries seek to digitize their products in this exciting new age, which platforms and technologies will they look to for assistance, and how will it impact the everyday consumer?
These are the questions to keep in mind when looking towards the future of NFT’s and where this exciting new market can grow from here.
From where I’m standing, the future is bright. The switch from paper certificates and barcodes to digital NFTs will be as impactful a leap as going from horse-drawn carriages to motor-vehicles, and when it happens we’ll all be left with similar sentiments- That we can’t imagine how life was before they existed.
Thank you for reading!
@Poweredbycrypto
