But why were NFTs developed in the first place? When did they first come into existence? What problem were creators trying to solve? And what does the future of NFTs hold? Let’s take a closer look at the origin of NFTs.
Anyone who is into web3 knows about NFTs and probably even owns a few (or hundreds if you're an avid collector). But why were NFTs developed in the first place? When did they first come into existence? What problem were creators trying to solve? And what does the future of NFTs hold? Let’s take a closer look at the origin of NFTs.
The Origin of NFTs Didn’t Start with NFTs at All
Before NFTs appeared on the ETH blockchain, BTC had something called Colored Coins. The purpose of these coins was to represent ownership of assets other than bitcoin on the blockchain. So they served a similar purpose to NFTs in the sense of proving digital ownership. These were essentially other tokens operating on the BTC blockchain, and their values operated independently from the price of BTC. However, they couldn’t really operate as intended on the BTC blockchain because these Colored Coins could only maintain their value if everyone agreed that they did, in fact, represent some sort of physical or digital asset and thus have a certain value.
While there were technically a few actual NFT collections that appeared on Bitcoin in the early days, they were not comparable to modern NFTs. For example, Spells of Genesis and Rare Pepes, two collectible card series, were released in 2105 and 2016, respectively. However, they both used an open-source protocol called Counterparty that ran on top of the Bitcoin blockchain (referred to as Bitcoin 2.0).
Ethereum and the Emergence of NFTs
In 2017, NFTs, as we know them today, started to appear on Ethereum. This was the first time that assets could be linked to blockchain ownership and metadata. With the introduction of collections like CryptoPunks and CryptoKitties, the age of profile pictures began (although another of the most popular PFP collections, Bored Ape Yacht Club, didn’t release until 2021). Eventually, NFTs spread into the realm of gaming with Decentraland, Axie Infinity, and other games that feature collectibles.
Linking Digital and Physical Assets
Today, NFTs link ownership of assets to specific users on the blockchain. For example, Yumi and ORIGYN recently joined forces to decentralize ownership of a Julian Opie artwork. The NFTs in the first Co-Owned collection represent ownership of a specific part of the painting, and all the owners comprise a DAO who can determine the future of the artwork (currently, it is stored in a Swiss vault). This is just one example of how NFTs can link to physical assets.
The Future of NFTs
The Internet Computer is allowing NFT creators the opportunity to take digital asset ownership to the next level. While most NFT assets from other blockchains are stored on peer-to-peer networks like IFPS or even centralized cloud networks like AWS, the Internet Computer allows for 100% on-chain NFT hosting.
For the first time, it is affordable for the digital asset itself to be stored on the blockchain and not just a line of code that says which wallet possesses which URL or token ID. The future of non-fungible tokens is bright as the IC provides affordable storage for everything from JPGs to complete music videos.
While the origin of NFTs may have been a humble effort to add tokens to the Bitcoin blockchain, now the sky is the limit as NFTs can be stored directly on the Internet Computer blockchain, finally adding web3 assets to digital ownership.
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