NFT 101 is a series of popular science articles on NFT planned by BlockManiaDAO, hoping to use simple and easy-to-understand language to help novice users better understand all aspects of NFT.

The Basic Concept of NFT

NFT stands for Non Fungible Token, which is a digital asset with unique and non-interchangeable properties. Each NFT has a unique and unique identifier, and two NFTs are not interchangeable. The minimum unit is 1 and cannot be divided.

The concept opposite to NFT is called Fungible Token. The biggest difference between the two is whether they can be replaced.

The BTC and ETH we are familiar with are all homogeneous. There is no difference between each BTC and they can be interchanged and divided. Homogenous tokens have many advantages, such as unlimited splitting and mutual exchange.

However, there are still some things in reality that are irreplaceable, such as air tickets. The passenger and flight information contained on a ticket are unique, and there will never be two identical tickets. In addition, there is also a rare gaming equipment, an artist's famous painting, a real estate certificate, etc. These are all unique and cannot be expressed through homogeneous tokens on the chain, so non-homogeneous tokens such as NFT appeared.

The development of NFT

When talking about NFT, we have to mention CryptoKitties, which is also many people’s initial impression of NFT. The popularity of CryptoKitties has introduced NFT into the mainstream market, and China has also followed suit with Baidu Dog, Xiaomi Rabbit, Thunder Monkey, etc.

In CryptoKitties, each cat corresponds to an NFT on the chain, with a unique ID and genes, and more importantly, independent value. Apart from speculation and hype, the significance of CryptoKitties proves that the value of assets can not only be carried by homogeneous tokens, but also in another new and unique way.

CryptoKitties is an NFT project that proposed and applied the ERC721 protocol standard. Before it, there were actually multiple NFT-like projects, but they were not clearly defined at the time, including the blue-chip project CryptoPunks that we are familiar with. Now let’s briefly review the development history of NFT.

In 2012, the first NFT-like token, Colored Coin, appeared. Colored Coin is composed of small-denomination Bitcoins, with the smallest unit being one satoshi. It can represent a collection of multiple assets and has a variety of uses, including property, coupons, company-issued shares, etc. External assets are marked on one satoshi output, so each asset is added with a satoshi attribute (color), so it is called Colored Coin. Colored Coin allows people to see the possibility of putting real assets on the chain, laying the foundation for NFT.

In 2014, Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty, a peer-to-peer financial platform that supports asset creation. What really drove the emergence of NFTs was the creation of "Rare Pepes" on Counterparty by users, who turned the popular frog emojis into on-chain assets and established the Rare Pepe Meme Directory exchange, demonstrating the "prototype" of NFTs and trading platforms.

Rare Pepes is based on the "Sad Frog" created by cartoonist Matt Furie.

In 2016, when the Ethereum ecosystem was booming, Larva Labs created a unique character native to the Ethereum blockchain, with a total limit of 10,000 characters, and each character is unique. The project is called CryptoPunks, a tribute to the Cypherpunks who influenced Bitcoin in the 1990s.

CryptoPunks do not follow the ERC721 standard because this standard has not yet been invented, and they are not completely ERC20, so CryptoPunks are generally described as a hybrid of ERC721 and ERC20, and are also considered to be the first true NFT project.

In 2017, inspired by CryptoPunks, the Dapper Labs team launched CryptoKitties and proposed the ERC721 protocol, which made NFTs indivisible and non-interchangeable. CryptoKitties innovated in the way it presented the value of assets and quickly became popular, and NFTs began to become popular.

In 2018, NonFungible.com launched the NFT market tracking platform; at the same time, NFT trading platforms such as Opensea, SuperRare, and MakersPlace also began to emerge.

In 2020, the Flow public chain developed by the Dapper Labs team went online, launching the star video NFT product NBA TOP SHOT. This is a project in cooperation with the official NBA, which turns the wonderful moments of stars in the game into NFTs, attracting the participation of many fans.

In March 2020, digital artist Beeple pieced 5,000 pictures together into a 316MB JPG file and sold it as an NFT, which was eventually sold at Christie's for $69.3 million. This is the highest-priced single NFT work to date, and Beeple has become the third-highest-priced living artist.

Beeple's The First 5000 Days sold for a record price

In December 2020, Twitter CEO Jack Dorsey sold his first tweet in 2006 at auction in the form of an NFT, which was bought by crypto entrepreneur Sina Estavi for a high price of US$2.9 million.

The world’s first tweet made into an NFT

In April 2021, another milestone project, Bored Ape Yacht Club (BAYC), was released. BAYC was based on CyberPunks, designed a variety of different features for monkeys, combined these features, and automatically generated 10,000 pictures with a program. At that time, each picture was sold publicly at a price of 0.08ETH. Many celebrities, including Tom Brady, Justin Bieber, and Steph Curry, hold BAYC, and directly use BAYC as their avatar on their Twitter and IG. The price of BYAC has also soared, and a series of avatar NFT projects such as Azuki, Doodles, and Moonbirds have set off a wave called "PFP Summer".

Since then, more and more celebrities and artists have released NFTs through various platforms, and NFT has completely broken the circle.