While most people associate NFT with Ethereum these days, the reality is that this phenomenon started on the Bitcoin blockchain. In the early days of Bitcoin, a concept known as “colored coins” gained some notoriety as a way to issue other types of assets on top of the blockchain. The idea was that these colored coins, which were basically just satoshis used to represent something else, could be used to allow Bitcoin users to issue anything from a company’s shares to gaming items for video games.
Many Bitcoin users, such as the eventual creator of Ethereum Vitalik Buterin, have been fascinated by this concept of issuing alternative resources on top of the Bitcoin blockchain. However, the various early proposals for colored coins for Bitcoin did not end up gaining much traction. The most notable colored coin of all time may have been the initial coin offering (ICO) associated with the Mycelium Bitcoin wallet. This was issued on the protocol of the Colu colored coins.
The excitement around colored coins on Bitcoin eventually led to additional protocols built on Bitcoin’s core blockchain that also had their own native tokens like Counterparty and Mastercoin. The counterpart in particular has led to the development of some sets of NFT collectibles that are more similar to those seen on Ethereum today. Spells of Genesis and Rare Pepes were two NFT collectible games that were particularly successful on Counterparty.
However, it should be noted that Bitcoin was never really intended to serve as a database for these alternative tokens, and many Bitcoin users did not like the idea of clogging up valuable block space with tokens representing ownership on frog images, as this would make simple Bitcoin transactions more expensive.
NFTs switch to Ethereum
Of course, the aforementioned Buterin would go on to launch Ethereum in 2014. It would be on this platform that NFTs would see a resurgence in 2017 with versions of Cryptopunks and Cryptokitties. These were basically alternatives to the Spells of Genesis and Rare Pepe NFT that had previously been launched on Counterparty. Perhaps more specifically, Cryptopunks did not follow the ERC-721 standard when it was launched, as it did not yet exist. Instead, Cryptopunks were originally launched as ERC-20 tokens, which are more closely associated with the initial coin offerings (ICOs) that were popular at the time.
That said, the Wrapped Cryptopunks project has made this NFT collectible set compatible with the ERC-721 standard. Cryptokitties was launched later in 2017 than Cryptopunks, and this blockchain-based game was the first major use case of the ERC-721 standard. Those who were around at the time will remember that Cryptokitties became so popular that they started clogging up the Ethereum blockchain and causing a sharp increase in the costs of using the network.
The developers behind Cryptokitties were finally able to turn their success into a $15 million funding round from some of Silicon Valley’s biggest names. Subsequently, the ERC-721 standard was integrated into popular Ethereum wallets such as Metamask, and NFT markets such as OpenSea began to emerge.
NFTs start to go beyond Ethereum
Just as NFTs moved from Bitcoin to Ethereum, there is now another transition occurring as we enter a multi-chain universe.
While many of today’s most popular NFT projects are found on Ethereum, there are also a large number of NFT apps that use alternative blockchains for a variety of reasons.
For example, NBA Top Shot, which is the most successful sales-based NFT collectible game of all time, uses the Flow blockchain, developed by the team behind Cryptokitties. More recently, the most popular NFT collectible set has been Axie Infinity, and those tokens are issued on the Ronin blockchain. WAX is another blockchain platform that has gained popularity in the NFT realm. Binance Smart Chain is also springing into action, as Andy Warhol and Salvador Dali’s NFTs were part of the launch of Binance NFT Marketplace.
In addition, the NFT
boom has brought renewed interest around the concept of Bitcoin, as more NFT platforms have been released or are currently under development on the Liquid and RSK layer two networks. While there has been a lot of excitement around NFTs lately, it’s important to remember that there’s no guarantee that this is a new technology that will change the world. Remember to consider that this phenomenon may eventually end up resembling the Beanie Babies fashion before you put all your money into NFT.
Ethereum still retains a lot of popularity, however, with NFTs like Bored Ape Yacht Club, VeeFriends, and more.
