NFT Mania: The History of Crypto and Digital Ownership

Welcome to the History of Crypto, a series that takes a look back at the important events in the crypto space. One notable phenomenon that has emerged in recent years is the rise of nonfungible tokens (NFTs). In 2020 and 2021, NFTs experienced unprecedented growth and widespread adoption, transforming how we perceive ownership, art, and the internet. The NFT market in 2021 alone saw approximately $25 billion in trading volume, a stark contrast to its previous minimal presence. NFTs are unique digital assets stored on a blockchain, ensuring their scarcity and authenticity. This innovation has allowed for the tokenization of various digital creations, turning intangible items into valuable commodities.

The concept of NFTs can be traced back to the creation of the Colored Coins protocol on the Bitcoin blockchain in 2012. This protocol enabled the issuance of custom tokens representing digital or physical assets. It was not until 2017, with the emergence of Ethereum smart contracts and the ERC-271 token standard, that NFTs specifically for digital assets became possible. One of the earliest and most notable examples of NFTs gaining attention in 2017 was CryptoKitties, a blockchain-based virtual game that allowed players to buy, collect, breed, and sell virtual cats. This success led to the experimentation of NFTs in various areas, such as digital art, virtual real estate, and in-game items.

Between 2020 and 2021, NFTs reached new levels of mainstream recognition. High-profile sales, including digital artwork selling for millions of dollars and celebrities launching their own NFT collections, made headlines. Quentin Tarantino, for example, announced he would auction off seven uncut scenes from his movies as NFTs. The $69 million sale of Beeple’s digital artwork at Christie’s auction house and the lucrative sales of newly created digital artworks by artists like Pak and Grimes further cemented NFTs’ popularity. This period also saw the birth of iconic collections like Bored Ape Yacht Club and CryptoPunks, with individual NFTs fetching millions of dollars.

The popularity of NFTs led to the rapid expansion of NFT marketplaces such as OpenSea, Rarible, Foundation, and Nifty Gateway. OpenSea became one of the largest NFT marketplaces, with monthly trading volumes surpassing $1 billion by mid-2021. This surge in popularity also brought critiques regarding environmental concerns and questions about the intrinsic value of digital assets. The energy-intensive nature of blockchain transactions raised environmental concerns, and legal disputes emerged over ownership and authenticity. Some platforms implemented verification mechanisms, while others grappled with defining ownership in decentralized ecosystems.

Despite challenges, the NFT market has shown resilience. With the ongoing crypto bull market, NFT trading volume has rebounded. New projects and protocols are emerging, catering to the growing NFT ecosystem. Efforts to address environmental concerns and improve the sustainability of blockchain technology are also underway. The NFT space continues to evolve through experimentation in various industries and the emergence of new platforms. As developers and enthusiasts work towards ensuring the long-term viability of NFTs, the future of digital ownership and expression is set to expand further.