The History Of NFTs
Hello, and welcome to the lesson.
In this lesson we will go over the history of NFTs.
The history of NFTs goes back to the year 2012 with digital assets called Colored Coins.
Colored coins are not NFTs, they are digital tokens that represent physical assets (such as a boat, car or a house) on top of the bitcoin blockchain.
The purpose of those digital tokens was to prove ownership of a physical asset.
A colored coin was basically a bitcoin which was “Colored” with specific information about the physical asset.
People couldn’t have just used Bitcoin to transfer assets because Bitcoin was about transferring non unique items, and thus there was a need for a technology which would enable people to transfer unique items.
Colored coins haven’t caught on, and the reason for that was that their value was determined by the participants who took part in the transaction.
So, if one participant has decided to change the value of a colored coin, the transaction was affected.
Colored Coins didn’t last, but the concept of colored coins is an important part in the history of NFs, because it shows the capabilities of Bitcoin.
Later on, in the year 2014, the technology has improved with the launch of Counterparty (a peer to peer financial platform which was built on the Bitcoin blockchain, and gave people the ability to trade memes and card games.
The year that really put NFT on the map was 2017, a year that gave us Cryptopunks, Cryptokittes, and the new concept of digital scarcity.
Cryptopunks and Cryptokittes are two groups of cartoon characters that were developed on the Ethereum blockchain.
Cryptokittes gave people the option to buy, breed, and exchange digital cats.
Now, like physical baseball cards, for example, the value of a Cryptokitie is determined by the rarity of its characteristics. So, a crypto kitty that is more scarce and thus is in higher demand will cost more than a crypto kitty that is not scarce and in low demand.
The Cryptopunks characters also proved the concept of digital scarcity.
Similar to Cryptokittes, Crypto Punks are characters with different attributes, and they are valued based on scarcity and demand.
Another significant occurrence that happened in 2017 was the virtual reality world Decentraland. A virtual world which also runs on the Ethereum blockchain.
Decentraland gave players the ability to buy land with NFTs and own it inside a virtual world.
In 2021, NFTs need much less introduction due to many success stories of people making huge amounts of money by selling NFTs, and the statistics that show that there are currently twice as many NFT buyers than NFT sellers.
So, that’s it for this lesson, and I will see you in the next lesson…goodbye.
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