The early days of NFTs

A non-fungible token (NFT) is a unique record on a blockchain that points to something, most often a digital file, and says who owns that record. A bitcoin is fungible: one coin can be swapped for any other. An NFT is not: each token has its own identifier and its own history. The idea looks simple today, but it took almost ten years of experiments to get from the first attempts to the frenzy of 2021.

Before NFTs: Colored Coins (2012)

The story starts on Bitcoin. In 2012, developers proposed Colored Coins: small amounts of bitcoin "coloured" with extra data so they could stand for something else, such as a share, a coupon or a property title. Bitcoin was not designed for this and the system stayed limited, but the core idea was there: a token on a public ledger can represent a real or digital asset.

Quantum, the first NFT (2014)

In May 2014, artist Kevin McCoy and entrepreneur Anil Dash presented a live experiment at the Seven on Seven conference in New York. McCoy registered Quantum, a pulsing, multicoloured octagon animation created with his wife Jennifer McCoy, on the Namecoin blockchain and sold it to Dash for four dollars. Nobody called it an NFT yet. Dash himself called it "monetized graphics". Seven years later, in 2021, Sotheby's sold Quantum for about $1.47 million as part of its first curated NFT sale, Natively Digital.

Counterparty and Rare Pepes (2014 to 2016)

In 2014, Counterparty launched as a platform on top of Bitcoin that let anyone create their own tokens and trade them. Early blockchain games such as Spells of Genesis and the trading card game Force of Will used it to put in-game cards on chain.

In 2016, the internet made its own use of it: Rare Pepes, cards based on the Pepe the Frog meme, were issued on Counterparty. A community of artists submitted designs, a curated directory decided which ones became "official", and collectors traded them. Rare Pepes showed that a community could build a scarce digital collectible from a meme, years before the idea became mainstream.

Ethereum changes the game (2015 to 2017)

Ethereum launched in 2015 with smart contracts: programs that run on the blockchain. This made it much easier to create tokens with their own rules.

• Etheria (October 2015) was presented at DEVCON 1, Ethereum's first developer conference. It offered 457 hexagonal tiles of virtual land. Most of them stayed unsold for more than five years, then all sold within a day in March 2021 for about $1.4 million.
• Curio Cards (May 2017) was one of the first art projects on Ethereum, with 30 cards from seven artists.
• CryptoPunks (June 2017), by the studio Larva Labs, released 10,000 unique pixel-art characters, free to claim for anyone with an Ethereum wallet. They became the model for the "profile picture" (PFP) collections that followed, and some later sold for millions of dollars.

CryptoKitties and the ERC-721 standard (2017 to 2018)

In November 2017, CryptoKitties, created by Axiom Zen (later Dapper Labs), let players buy, collect and breed virtual cats. Each cat was unique and belonged to its owner. The game was so popular that it slowed down the whole Ethereum network, and some kitties sold for more than $100,000.

CryptoKitties also gave the technology its name and its rules. Its team helped write ERC-721, the "Non-Fungible Token Standard", led by William Entriken and published in 2018. ERC-721 defined a common way for any application, wallet or marketplace to read, display and transfer a unique token. Soon after, ERC-1155, proposed by the Enjin team, added the possibility to manage fungible and non-fungible tokens in the same contract, which suited games well.

Marketplaces and first creators (2017 to 2020)

With a standard in place, marketplaces appeared. OpenSea opened in late 2017, then SuperRare, KnownOrigin, MakersPlace, Rarible and Foundation gave artists a place to sell their work directly to collectors. In 2017, Eric "Snowfro" Calderon started work on Art Blocks, which launched in 2020 and made on-chain generative art a movement of its own: the collector mints the piece, and the code draws it at that moment.

Big brands also started testing. In 2019, NBA Top Shot, from Dapper Labs and the NBA, sold video "moments" of famous plays on its own blockchain, Flow. It gave millions of sports fans their first contact with NFTs.

The 2021 boom

In 2020, the NFT market was worth about $250 million. In 2021, it passed $17 billion in trading volume. A few events set the tone:

• February 2021: DJ and producer 3LAU sold 33 NFTs linked to his album Ultraviolet for $11.7 million.
• March 11, 2021: Everydays: The First 5000 Days by Beeple (Mike Winkelmann) sold at Christie's for $69.3 million. It was the first purely digital work sold by a major auction house, and it made Beeple one of the most valuable living artists.
• March 2021: Jack Dorsey's first tweet sold as an NFT for $2.9 million.
• April 2021: Bored Ape Yacht Club, 10,000 cartoon apes whose owners received commercial rights to their image, launched and became a status symbol followed by celebrities.
• June 2021: Sotheby's held Natively Digital, its first curated NFT sale, with Quantum and a CryptoPunk.
• December 2021: Pak's The Merge sold for about $91.8 million, split among thousands of buyers.

By the end of 2021, NFTs had gone from a niche experiment to a word everyone knew. What happened next, the crash, the lessons and the new uses, is covered in the next articles of this section.

Key dates

• 2012: Colored Coins on Bitcoin.
• 2014: Quantum, the first NFT, minted on Namecoin. Counterparty launches.
• 2015: Etheria at DEVCON 1.
• 2016: Rare Pepes on Counterparty.
• 2017: Curio Cards, CryptoPunks, CryptoKitties, OpenSea.
• 2018: ERC-721 standard published.
• 2019: NBA Top Shot announced.
• 2021: Beeple sells for $69.3 million at Christie's, Bored Ape Yacht Club, $17 billion in yearly volume.