WHAT IS AN NFT?

Even if you were hell-bent on ignoring the blockchain movement, I bet you couldn't ignore the attention and awareness that came with NFTs. At every turn, from the internet to television stations and physical gatherings, NFTs have remained a constant topic of discussion. So much that in the blockchain space, 2021 is often referred to as the” year of NFTs.”

One would think with this level of media attention, NFT would be an innovation everyone is familiar with or understand clearly. But in reality, this is far from being the case. Instead, NFTs have been misunderstood as all sorts, with some believing that NFTs are pictures or digital images.?

If that is you, not to worry, today is your lucky day.

In this article, I will be explaining what NFTs are, brush up on your knowledge of its history, evolution and share my projections on where NFTs are headed.

Sit tight and enjoy!

So, what exactly is an NFT?

For starters, NFT is an acronym for non-fungible token. Non-fungible means it is unique and cannot be replaced by another. So, to put it in context, we can say a dollar bill is fungible as it can be replaced by another but your house is non-fungible as it is unique and completely irreplaceable.

Now that you understand what non-fungible means, it's time to explain what non-fungible tokens are.

Non-fungible tokens are a unique set of tokens that serve as a symbol of ownership and authenticity on the blockchain network. Any item can be made into an NFT with no exception. From your car to house, clothes, shoes, digital arts, and assets, there is absolutely no limit to what can be tokenized or made into an NFT.

At this point, you may be a bit confused if you thought NFTs were images but stay with us, we are going to break it down.

NFT is not the item itself, it is the underlying code on the blockchain representing the item. The code represents the ownership, confers rarity and authenticity to the item. For example, if you buy a digital artwork as an NFT, what you are buying is not just the image but the right of its ownership and proof of its authenticity. So, even if someone else screenshots it, uses it as dp, or shares it across social media, it doesn't change the fact that they don’t own it.

Here is another example, imagine you have a painting of the Mona Lisa or some artwork by Michael Angelo in your home. Truth is, if you don’t own the original, you are most likely aware that what you are holding onto is a fake and has no market value. This does not stop you from keeping it in your apartment if you love it. The same is the case for NFTs.

Some of the most popular NFTs are Nyan gifs, Taco Bell,? Everydays: The First 5000 Days, Human One, Jack Dorsey’s first tweet, and NBA top shots. Here, you’ll notice that NFTs are not limited to jpegs.

At this point, you may ask questions like if NFTs are tokens and cryptocurrencies are tokens with both being built on blockchain, what differentiates them? The answer is simple, cryptocurrencies like every dollar bill are fungible and interchangeable, but NFTs are not. One bitcoin is equal to another and can be exchanged, while every NFT is unique and cannot be replaced one for another.

Indeed, judging by media attention in the past months, it is very easy for you to think NFT is a new innovation. But is it? The answer is no.?

NFTs history and development

The concept of digital ownership can be traced to 2012, before cryptocurrency or blockchain became mainstream. However, it wasn’t called NFT. The coin was built on the Bitcoin network and referred to as colored coins with the goal of serving as a digital proof of ownership. The idea was first published by Yoni Hesse first on his personal blog in March 2012, and then a whitepaper by Meni Rosenfield was released explaining the notion of coloured coins in December of the same year.

Nothing major transpired until Flavien Charlon invented a protocol that would allow these coins to be created in 2013. Unfortunately, due to the limitations of the Bitcoin network, this development continued to evolve but was never implemented.

2014-2016

In 2014, Kevin McCoy and Anil Dash created “Quantum” it was the first known “NFT”, but at the time, the word NFT was not in existence; instead, it was referred to as digital cash. Quantum is a pixelated octagon image with other shapes and light reflections in the center.?

Also, Counterparty was founded in 2014 by Robert Dermody, Adam Krellenstein, and Evan Wagner. It was a peer-to-peer platform built on the Bitcoin blockchain. The platform enabled digital asset creation and trading through its decentralized exchange. As a result, users can easily create and trade digital assets. By 2015, Counterparty teamed up with a group of creators to create? Spells of Genesis, the first game to issue in-game assets. Their currency was known as BitCrystal.

Between 2014 and 2016, there was a lot of development in the space. Ethereum was also launched but its reign did not begin immediately.

By 2016, the popular trading card game Force of Will and the Rare Pepe meme, an interesting frog character, entered the blockchain ecosystem through counterparty. This was the first time a meme made an appearance in the NFT and blockchain world. Rare Pepe gained so much popularity.? With the Rare Pepe Wallet, CryptoArt was founded, and it was the first time that artists from all over the world could submit and sell their own work. It was also the first time that digital art could be considered valuable in its own right.

As the popularity of NFT grew, Bitcoin users detest the idea of using “precious” blocks for proof of ownership, and also, the bitcoin network is not as enabling as Ethereum. The shift to the Ethereum network began at this point.

The Ethereum reign

Ethereum was first introduced in 2014, and by July 30, 2015, the platform went live. This was followed by NFT’s gradual shift from the Bitcoin blockchain to the Ethereum blockchain. The first NFT was created on the Ethereum network and it was called Etheria. It was made up of 457 hexagon tiles that remained unsold until 2021.

Following Rare Pepe’s success, the founders of Larva Labs, Watkinson and Matt Hall, developed 10,000 CryptoPunks in 2017. There were no two characters alike. Because ERC 721, which powers NFT, had not yet been developed at the time of its launch, CryptoPunks was built utilizing a hybrid of ERC 20 and ERC 721.

CryptoPunks was followed by the launch of CryptoKitties. They were the first NFT built using ERC 721 token standard. Cryptokitties is a virtual game in which players can adopt, breed, and sell virtual cats. The game was developed by Axiom Zen, a Vancouver-based company, and launched during the world's largest hackathon for the Ethereum ecosystem. The project exploded in popularity and became well-known.?

This marked the beginning of NFTs' increasing adoption.

Between 2018 and 2020, the popularity of NFT gaming began. Games built on blockchain network power earning and in-game asset ownership. This is very appealing to the mainstream market as it changes the notion of gaming being a pastime to a financially rewarding activity. The first was Decentraland (MANA), a platform built on Ethereum that allows gamers to explore, develop, play games, and collect items.?

This was followed by ? Enjin Coin (ENJ), a blockchain-based platform that allows developers to tokenize in-game assets on Ethereum. It backs the assets with real-world value using ENJ.? Then came? Axie Infinity (AXS), a blockchain-based trading and combat game that is partially owned and operated by its users. These platforms were all developed during the crypto-winter (bear market) and did not gain mainstream attention immediately.

2021 and Beyond

The year 2021 ushered in NFTs use cases like never before, beyond art and digital collectibles; people are beginning to understand NFTs have the potential to change most sectors as we know it.

Also, aside from Ethereum,? Blockchain networks, like Cardano, Solana, Tezos, Flow, and others, are promoting the convenience and cost of digital creation while setting new standards to ensure that the digital assets represented are unique.

From the beginning of the article to where we are now, we’ve gone on a journey to understand what NFTs are,? where they are coming from and where they are now. Although while explaining what NFTs are, we have touched on some of their uses, but we will move on to discuss them in detail now.

Applications of NFT

If there’s anything we all can agree on, it's the fact that NFTs have evolved so much in the past few months. But, the truth is, it's just getting started.

?In the coming months, we will see NFT use cases we couldn’t have imagined at this point in time. But for the purpose of this article, we will be discussing the application across different walks of life.

• NFTs can be used to guarantee that the goods you're buying are authentic.
• NFTs can be used to transfer land documents, establish proof of ownership, and track changes in property value over time.
• NFT ledgers can be used to keep an individual's medical records without jeopardizing confidentiality or exposing them to outside interference.
• NFTs are an effective way to safeguard intellectual property and patents.
• NFTs are an effective alternative to convey academic credentials. This information is securely saved on the NFT chain and cannot be manipulated or hacked.
• NFTs can enable businesses to trace their products from production to shipment and delivery.
• NFT empower in-game asset ownership and real-life relevance.
• In the not-too-distant future, NFTs will be adopted to replace tickets.
• It can help to determine the authenticity of a piece of art, both physical and digital, and can help reduce or eliminate the circulation of counterfeit artwork.
• NFTs can help eliminate election fraud and cheating by serving as an official record of who voted and their vote.
• In addition, NFT makes the concept of the metaverse achievable. Without digital ownership, the metaverse will not be able to exist as an extension of reality.

As NFTs are capable of representing almost anything and, as such can be used for so many things across all walks of life. Indeed, the list of what is achievable with NFT is endless.

Putting it all together

If you made it down here, I am sure you will agree with me that NFTs are actually simpler than most people think, and the majority of attacks on this innovation are born out of fear of the unknown. People fear what they do not understand.

With more people realizing the boundless possibilities of this revolutionary innovation, the narrative is fast changing.? Now, NFTs have gone from being regarded as a bubble poised to pop to a major force spearheading blockchain mainstream adoption.

Truth is, we are still early in and the evolution of NFTs has just begun. Over time, they will keep evolving and with an increase in technological advancement, we are bound to see use cases we couldn’t have imagined at this point in time.