NFT

I am new to this community. Greetings to all members and boards of this community. I am from Aceh, Indonesia, and currently living in Java island.

I am grateful for this contest run by @khursheedanwar, because I am very interested in this topic of NFT. In fact, I have previously written about it in an article titled "Selling and Buying NFT" on May 5, 2021, as part of an assignment for the Steemit Crypto Academy taught by Professor @levycore. However, in that article, the focus was more specifically on NFT trading.

^{Created with Adobe Photoshop 2021.
Image is clickable and might show larger resolution.}

I hereby invite @rayfa, @lord-geraldi, and Cikgu @fadthalib to join this exciting contest. The contest announcement can be read here.

What Is NFT?

An NFT, or Non-Fungible Token, is an asset that has been tokenized using blockchain technology. There are two main components involved in an NFT: the asset and the token.

• Assets that can be tokenized include digital assets (such as video files, digital paintings, digital cartoons, music and songs, etc.) as well as real-world assets like paintings and even securities.
• Token. According to investopedia.com, a token in the crypto world is "a representation of an asset or interest that has been tokenized on an existing cryptocurrency's blockchain."

In simpler terms, an NFT (Non-Fungible Token) is like a digital certificate of ownership for something unique, such as a piece of art, music, or a collectible. It proves that you own the original digital item, even though it can be copied or shared by others. Unlike cryptocurrencies like Bitcoin, which are all the same, each NFT is one-of-a-kind and can't be exchanged for another NFT at an equal value.

So, once an asset is tokenized on a blockchain network, it can then be valued and traded. For example, I might create an image like the one below, tokenize it, and sell it to someone interested by setting an agreed-upon price.

^{Created with Adobe Photoshop 2021.
Image is clickable.}

The History of NFTs

Although the ERC-721 token technology introduced by the Ethereum blockchain in 2017 is widely recognized as the beginning of the NFT boom, the history of similar technology can be traced back earlier to the Bitcoin blockchain around 2012 and 2013 with the introduction of Colored Coins. These were small denominations of BTC that could be used to "color" or mark assets to represent ownership beyond currency.

^{Illustration of Colored Coins. Created with Adobe Photoshop 2021.
Image is clickable and might show larger resolution.}

Then, in 2014, an open-source internet protocol called Counterparty was built on the Bitcoin blockchain. Counterparty is a peer-to-peer financial platform that is distributed and decentralized. Counterparty allowed the creation of assets, including digital collectibles. Spells of Genesis, one of the first blockchain-based trading card games, utilized Counterparty. Spells of Genesis started its history in 2015 and claimed itself as the 1st blockchain-based mobile game. Now, Spells of Genesis runs on Ethereum blockchain.

On July 30, 2015, Ethereum was launched with the creation of its genesis block. Between 2016 and 2017, a developer named Dieter Shirley first introduced ERC-721. ERC-721 is a token standard that runs on Ethereum blockchain and allows the creation of unique tokens representing digital assets. This token standard was officially developed by Dieter Shirley, along with William Entriken, Jacob Evans, and Nastassia Sachs.

One of the most famous NFT projects is CryptoKitties, which emerged in 2017. CryptoKitties allowed users to collect, breed, and trade virtual cats. It gained significant attention and demonstrated the potential of NFTs, causing a surge in interest and traffic on the Ethereum network.

^{Screenshot of CryptoKitties website homepage.
Image is clickable and might show larger resolution.}

NFT Marketplaces

Following the development of NFTs, marketplaces emerged where people could buy and sell NFTs. Some of the well-known early platforms for this purpose include:

• OpenSea, which proclaims itself as the largest NFT marketplace. OpenSea is headquartered in New York City and was founded on December 20, 2017.
• Rarible, which has the slogan "aggregated NFT marketplace with rewards."
• SuperRare. SuperRare also provides tools for tokenizing digital assets. In April 2018, after a six-month development period following the introduction of the ERC-721 token standard, the first version of the SuperRare smart contract was launched. The first transaction on SuperRare occurred a few days later when Jason Bailey (aka Artnome) bought four AI-generated artworks created by young artist Robbie Barrat.

Further Development

In 2018 NFTs gaining more traction in the digital art world, allowing artists to tokenize their work and sell it directly to collectors. This period saw the rise of digital art platforms and auctions. The NFT market saw explosive growth in 2020, with significant sales and high-profile endorsements. The COVID-19 pandemic accelerated digital adoption, and NFTs became a popular way for artists and creators to monetize their work.

In March 2021, digital artist Beeple sold an NFT titled "Everydays: The First 5000 Days" at Christie's auction house for $69.3 million. This sale marked a turning point, bringing widespread attention to NFTs and legitimizing them as a form of digital art.

^{Beeple’s collage, Everydays: The First 5000 Days, sold at Christie’s for US $ 69.3 M.
Source: the verge. Image is clickable.}

Circa 2021-2022, NFTs expanded beyond art into other sectors, including music, sports, and entertainment. Musicians released albums as NFTs, sports teams launched collectible NFT memorabilia, and virtual real estate in metaverses like Decentraland and The Sandbox gained popularity.

The next development is the integration of NFTs with DeFi (Decentralized Finance) and the Metaverse, enabling new practices such as NFT lending and staking. According to hedera.com, the integration of NFTs into DeFi is a mutually beneficial relationship, where NFTs' ability to verify ownership allows DeFi projects to trust the worth of the digital asset. Additionally, NFT markets benefit from DeFi involvement, improving interoperability and increasing liquidity.

The Future of NFT

NFTs promise a future with even more potential to be uncovered, such as the development of applications in gaming, virtual reality, identity verification, intellectual property, and more. The possibilities may be limitless. As technology and infrastructure continue to evolve, NFTs may play a significant role in the digital economy and beyond.

Key Features of NFTs

Below is the key features of NFTs:

• Uniqueness. Each NFT has a unique identifier, it’s like metadata in traditional file, making it distinct from other NFTs.
• Indivisibility. Unlike cryptocurrencies, NFTs cannot be divided into smaller units. They are typically bought, sold, and owned as a whole item.
• Ownership. NFTs are stored on a blockchain, which provides a transparent and secure way to prove ownership. The most common blockchain for NFTs is Ethereum.
• Interoperability. NFTs can be traded across various platforms that support the same blockchain.

Common Uses of NFTs

NFTs have gained popularity for their ability to provide artists and creators with new ways to monetize their work and for collectors to own rare and unique digital items. Common uses of NFTs are:

• Digital Art. Artists can sell digital artwork with proof of ownership and authenticity.
• Collectibles. Digital collectibles, such as virtual trading cards or in-game items, can be traded and owned as NFTs.
• Music and Videos. Musicians and filmmakers can release their work as NFTs, granting buyers ownership rights or exclusive access.
• Virtual Real Estate. Virtual worlds and metaverses have digital real estate that can be bought and sold as NFTs.

Counclusion

The history of NFTs is nearly as old as blockchain itself. It began with the introduction of Colored Coins on the Bitcoin blockchain in 2012 and gained momentum with the introduction of the ERC-721 token standard technology on the Ethereum blockchain. This technology continued to develop and experienced very high adoption, which even caused traffic congestion on the Ethereum blockchain network at the end of 2017 following the launch of the game CryptoKitties.

NFT technology provides a new way for artists and creators to create and trade their assets. It offers vast possibilities in digitizing assets, making its future seemingly limitless.

Sources and Readign Suggestion

• Investopedia : Non-Fungible Token (NFT): What It Means and How It Works - June 12th, 2024;
• Investopedia : What Are Crypto Tokens, and How Do They Work? - April 22, 2024;
• Nanovest : Apa itu Token Crypto? - Okt 30, 2023;
• bitcoin.it : Colored Coins;
• Wikipedia : Colored Coins;
• bitcoinwiki : Colored Coins;
• Wikipedia : Counterparty platform;
• https://www.counterparty.io/;
• https://spellsofgenesis.com/;
• https://opensea.io/collection/spells-of-genesis-cards;
• ethereum.org : ERC-721: Non-Fungible Token Standard – January 1st 2018;
• Coinbase : What is ERC-721?;
• indodax : Mengenal ERC-721 dan Perbedaannya dengan ERC1155 December 29th 2023;
• https://www.cryptokitties.co/;
• BBC : CryptoKitties craze slows down transactions on Ethereum – December 5th 2017;
• qz : The ethereum network is getting jammed up because people are rushing to buy cartoon cats on its blockchain – December 4th 2017;
• Wikipedia : OpenSea;
• https://dappradar.com/dapp/rarible;
• https://superrare.com/;
• superrare.mirror.xyz : SuperRare Origin Stories;
• superrare: What is SuperRare?;
• Beeple sold an NFT for $69 million;
• artsy.net : Two Years since the Historic Beeple Sale, What’s Happened to the NFT Market?;
• https://decentraland.org/;
• Hedera : NFT DeFi Applications Are Gaining Power;
• Steemit : Selling and Buying NFT by @levicore – May 3rd 2021;
• Steemit : Selling and Buying NFT by @aneukpineung78 – May 5th 2021;

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