If you have asked yourself where these weird tokens called NFT’s that suddenly sparked huge interest at the beginning of 2021 actually came from, this is the article for you. Today we are going to dive into the history of non-fungible tokens.
The phenomenon NFT is a blockchain based technology first introduced in 2015. The foundation for the technology dates back to 2012. The first “real” NFT was sold in 2017. The technology is used to sign digital goods and therefore making them unique. Contrary to popular belief an NFT does not describe the asset but is only the “certificate” of ownership over the good is bound to. Whoever has hold of the private key of the NFT is the owner of the corresponding asset.
The term token is not new and dates back to the early days of cryptocurrencies. However when these tokens were first used to sign assets and thus creating an NFT is a little bit diffuse. The term NFT also doesn’t describe a single way of minting an asset but rather a collection of methods that are based on the same principles. Still there are certain projects which heavily influenced the development of NFTs and where they are today.
The invention of NFT’s can not be attributed to a single person but rather a collection of projects and people each driving the development of the tokens further. Names like Yoni Assia, Vitalik Buterin and later projects like CryptoPunks and CryptoKitties were the important influences to get NFT’s to where they are today.
The precursor of non-fungible tokens: Colored coins
The precursors of the NFT’s we know today were called Colored Coins. The first article that mentions Colored [Bit]coins as a way to identify unique tokens was published in March 2012 by Yoni Assia. In the article his thoughts of separating the bitcoin network from the value of a currency - a pioneer thought for NFT’s.
Later in 2012 Meni Rosenfeld expressed his thoughts on the topic in a first paper called “Overview of Colored Coins”.
Shortly after a more in-depth paper followed, featuring Meni Rosenfeld and some industry famous names such as Yoni Assia and Vitalik Buterin. This drove many people into the Colored coin space and different platforms were launched using the bitcoin blockchain.
The whitepaper on colored coins that founded the NFT concept was written by Yoni Assia, Vitalik Buterin, Lior Hakim, Meni Rosenfeld and Rotem Lev. In their paper the inventors describe the concept of “coloring” a set of bitcoins to distinguish them from the rest, making them traceable throughout the network. A Colored coin is independent from the price of the coin it is underlying. This technically makes it non-fungible and therefore fitting the definition for an NFT. The term non-fungible was never used in the original paper, but they already express the thought of managing digital assets in a decentralized way.
Although there are many more people behind the development of NFT’s and how we know them today, looking at the immense contribution of their whitepaper, I see Yoni Assia, Vitalik Buterin, Lior Hakim, Meni Rosenfeld and Rotem Lev as the pioneers and inventors of the NFT technology.
Being the first to express his thoughts on Colored coins and the idea of disconnecting a blockchain from the value of the currency, Yoni Assia plays an important role in the further development of NFT’s. Yoni holds a B.Sc. in Computer Science and Management and an MSC in Computer Sciences and is founding CEO of the trading platform eToro.com.
He is one of the founders of ether and the ethereum blockchain, not only contributing to the invention of Colored coins but also laying down the fundamental network for the later token standards used for most NFT’s today.
Lior Hakim studied human and machine intelligence in the fields of design, physics and mathematics in Jerusalem. After his contribution to the Colored Coins whitepaper he became CTO and co-founder of Hour One, a company that turns real people into virtual versions of themselves.
Meni Rosenfeld holds a Bachelor and Master in mathematics. He is founder of multiple companies and Chairman of the Israeli Bitcoin Association.
In June 2015 Rotem Lev’s company called “Culo” developed a new version of the Colored Coins protocol and put it up open source. The main feature of his code was to attach an unlimited amount of metadata to a transaction using publicly available torrents.
The first NFT’s on the ethereum blockchain
After the introduction of the first token standard ERC20 in 2015 the project “Wrapped CryptoKitties” ($WCK) was the first experiment to create NFTs using this protocol. It allowed for easier trading, as it gained the owners of the Kitties access to more liquid marketplaces such as the exchange Uniswap. However the ERC20 protocol was still unsuited for creating unique tokens because it (still) is the standard protocol for fungible tokens.
The first “real” NFT projects
In 2017 the first project went public, which is today widely accepted as being the first NFT. The project is called CryptoPunks and was a collection of 10,000 unique pixel art characters. Using a protocol close to the ERC20 token they sparked huge interest for the public. The 10,000 characters could initially be claimed by anyone for free (notice that multiple of those characters now sell for millions of dollars!). The project by LarvaLabs is one of the most famous NFT projects up to this date.
Following that, shortly after the project CryptoKitties launched on the new ERC721 token standard. This protocol was developed for the purpose of creating non-fungible tokens. While I mentioned before that there is no uniform standard for creating NFT’s the ERC721 is the most widely adapted one up to this date.
Today, after only 4 years, NFT’s already play a huge role in the art and gaming segment. 10% of the revenue of the global art market can be accredited to NTF’s. However as you can see it took some time and a lot more thought of some amazing people behind it, before the first “real” NFT was released.