It’s always fascinating to see the first instances of NFTs appearing in the public domain, just to understand where they might lead the Web3 and blockchain ecosystem. A journey into the past is always helpful to see what people were thinking, how long it took for the medium to be adopted, the reasons for its success, and what could be next.
So if cryptocurrencies can have tokens that makes them coins, and those can be exchanged through transactions that cannot be altered. Why can’t a an image have one. Kevin McCoy created the first NFT, called “Quantum”, back in 2014. It’s very telling that McCoy is an artist, and the first term that he used to refer to this new creation was monetized graphics. It tells the story of what Kevin McCoy thought that blockchain could bring for artists: the ability to monetize the artwork.
In 2015, “Etheria” was launched as the first NFT project. Just three months after the launch of the Ethereum blockchain and in the first developer’s conference that was held in London (DEVCON 1). Those 457 NFTs went largely unsold until last year, when an NFT frenzy took over and people realized that these were pieces of high historical significance. When “Etheria” was launched, the term NFT was still not getting as much usage as it is today. So back in this day, we are still sort of in the monetized graphics era. And that means that the full potential of what was being created could not be grasped.
Two years later, in 2017, another historical milestones occurred. The ERC-721 protocol was introduced, and this created the sort of the technological framework that stipulates that one token cannot be exchanged for another token. They cannot be divided as well. And so, The term NFT started to gain traction, and we can see how it started to get looked at as a new type of asset. This new standard for creating NFTs was shortly preceded by significantly historical NFT projects. These were: Curio Cards, Crypto Punks and Crypto Kitties. Decentraland, a metaverse project, was initially launched in 2017 and was also mentioned in the ERC-721 proposal.
With a wider concept for what was being created, people can now fully understand what NFTs are for. They are assets that should not be exchanged one for the other. They are valued differently because they are different in and of themselves. Also, the owners might value them differently.
Understanding that they are assets allow to not limiting them to just the realm of graphics. This allows for other many types of NFT assets to join in this new digital economy. Music, video, visual artwork, concert passes, membership cards, tradeable or collectible cards, real-estate and decoration can all be thought of as NFTs. And the NFTs can be thought of as assets. The type of asset that is not as liquid as actual currency (crypto or fiat). One that you invest on and can get some kind of return.
Still, back in 2017 NFTs were still in relative obscurity as the cryptocurrencies were still getting all the headlines related to Web3 and blockchain. So the next important year in the timeline of NFTs is 2021. This was the year were NFTs blew up. First, Jack Dorsey converted his first tweet into an NFT and sold it for $2.9 million. Then, Dylan Field —the CEO of the design software company Figma— sold his Cryptopunk #7804 for 4,200 ETH ($7.5 million).
Still in year 2021, the digital artist Pak also sold his NFT collection called “Merge.” for the equivalent of $91.8 million. Of course, it was not a single piece of art that was sold, but a collection that had a very important artistic component in its smart contract. Meaning that if you buy several of these NFTs, or “mass”, they merge together. Which in turn makes it so that there will be constantly less of the NFT, and each NFT will have more units of “mass”. In 2021 the most expensive single NFT was sold. The honor went to Everydays: the first 5,000 days by Beeple. Christie’s was able to sell this piece for $69.3 million.
Volatility has been a feature of the space. So after what can only be described as a bubble, would later burst. The year 2022 has been one in which the prices have dropped. But there’s nothing to panic, as a lot of functionalities, uses and businesses are still to emerge in blockchain and Web3.
What’s next for art and NFTs?
On the artistic front, the Merge. artwork by Pak revealed an innovative use of smart contracts to as a creative outlet. With all sorts of files being susceptible of becoming NFTs plus those smart contract functions, it’s safe to say that it is quite likely that soon we could be looking at NFTs as a totally unique means of expression. One that could likely incorporate visual and plastic, musical, filming and programming techniques. And that’s only on the artistic and creative front.
NFTs can be all sorts of things, including real-estate. And remember those smart contract functionalities. With the metaverse looming, galleries will make a decisive step into the game. Smart contracts can change how people and institutions exchange art, as there will be no need for intermediaries. Licensing of art could become a lot easier through smart contracts. Simply put, the actual way of doing business could be disrupted. All of it this could even usher in new business models. All because of a code that self-executes if a pre-established condition is met.
Could a NFT be a sort of metaverse, or a VR experience? It’s still early days. And even though a bubble has burst, a lot more is still to be done in the space. Many auction houses have gone into the space, like Sotheby’s and Christie’s. And art galleries like SOPRG have also taken the leap, to get inside what will be the next frontier for art.