At the start of 2022, almost everyone heard about NFTs. It wasn’t something you could ignore or not get curious about. Because insane amounts of money were getting splashed on NFTs, Celebrities and household names were creating, adopting, and purchasing NFTs, each day, NFTs were a topic you would see Trending on Twitter and other Social media platforms.
And global searches of NFTs were off the roof. It was like it was something that became popular overnight, similar to musicians like Billie Eilish, who came up to become Global stars in one day and never went back down. But the sad news is that NFTs did!
Contrary to popular belief, just like the notion that musicians like Billie Eilish became Global Superstars overnight, NFTs didn’t just become popular in a day. The History of NFTs can be traced way back to the year 2012.
History of NFTs
Before the existence of Ethereum, Meni Rosenfield published a paper in the year, 2012 that suggested a ‘Coloured Coins’ proposal for the Bitcoin blockchain, which became the push needed to actualize the concept of NFTs.
The concept of these Coloured Coins was to establish a class of methods for recording and maintaining real-world assets on the Blockchain in order to show ownership of such assets, similar to conventional Bitcoins, but with an extra ‘token’ element that dictates their usage, separating and distinguishing them.
Because of the constraints of Bitcoin, the Coloured Coins proposal was never implemented; nevertheless, it did provide the groundwork for the trials that led to the development of NFTs.
Kevin McCoy minted the very first NFT named – ‘Quantum‘ on the Namecoin Blockchain network on the 3rd of May, 2014. ‘Quantum’ is a digital picture of a pixelated octagon that hypnotically changes colour and also pulsates in an octopus-like fashion.
After these developments, there was an incredible amount of research and development, and platforms were established on top of the Bitcoin network. The Ethereum Blockchain also began its early dominance over NFTs.
Bitcoin 2.0 was founded and grew in popularity as a platform for the creation and development of digital assets.
The First Blockchain-Based Mobile Game and Cryptopunks
Spells of Genesis – The very first Blockchain-based mobile game quickly followed in the steps of Counterparty – The most popular Bitcoin 2.0 platform at the time. Then, the meme era began in 2016, with the introduction of a slew of Rare Pepe NFTs on Counterparty.
However, it is important to remember that the Bitcoin Blockchain was never designed to serve as a token database indicating asset ownership, and so the significant move for NFTs to the Ethereum Blockchain began.
The major transition for NFTs to the Ethereum Blockchain was accompanied by the establishment of a set of token specifications, allowing developers to create tokens. This token standard is a subset of the smart contract standard that includes instructions for developers on how they can design, issue, and distribute new tokens in accordance with blockchain technology.
Following the popularity of the Rare Pepe NFTs, two software engineers, John Watkinson & Matt Hall, created their own series of NFTs upon the Ethereum Blockchain, dubbed CryptoPunks.
CryptoPunks were among the first NFTs to be designed and distributed for free. The experimental project was restricted to 10,000 pieces and included no two identical figures.
After Cryptopunks came projects like Cryptokitties, another virtual game created on the Ethereum Blockchain that went on to become one of the most popular virtual games ever created on the Ethereum Blockchain.
NFT Gaming was taken to another level with Decentraland (MANA), a decentralized Virtual Reality platform also built on the Ethereum Blockchain. Decentraland is an open-world gaming platform that lets people explore, build, play games, create, and do other things, and everything you do in the VR game is yours on the Blockchain.
2021 – NFTs Exploded!
The year 2021 will forever be recognized as the year that brought NFTs to the general public. In March, Christie’s auctioned off an NFT titled ‘Everydays: The First 5000 Days‘ by the digital artist – Beeple for a whopping $69 million. This took the world by storm, and this was when the rest of the world sat up and acknowledged the existence of NFTs.
Art, sports, music, and even the very first Tweet have been transformed into NFTs. Another factor that caused the rise in demand for NFTs that arose from the renowned Christie’s auction was other Blockchains trying to get involved and launch their own new NFT versions. These included Solano (SOL), Cardano (ADA) Tezos, and FLOW.
What Features Made People Interested in Purchasing NFTs?
- Because NFTs are indivisible, they cannot be divided into smaller quantities like other cryptocurrencies.
- Because NFT tokens reside on the Blockchain, they cannot be withdrawn, erased, or recreated – They are unique.
- Blockchain guarantees that the creator can be easily identified, and there is no need for third-party verification.
- Because NFTs are rare, their popularity and value increase, which is why people are eager to create NFT tokens.
- Contracts can be included in NFTs; Smart contracts are feasible owing to the Technology behind the Blockchain; when certain circumstances are met, the next action is triggered. For example, an NFT that has a contract gives artists a portion of the earnings from the NFT’s future sales.
What Caused the Decline of NFTs?
The monthly volume of sales on the biggest NFT platform, OpenSea, fell to $700 million in the month of June, dropping from $2.6 billion in the month of May and much below the record of almost $5 billion in January.
According to NonFungible.com, which records sales on the Ronin and Ethereum Blockchains, average NFT sales had dropped to $412 by late June, down from $1,754 somewhere at the end of April.
This drop in NFT sales can simply be attributed to the recent bear market in the Cryptocurrency space. It’s no news that Cryptocurrencies and NFTs are related. If you’re still wondering how? Check out the article below:
Also, to some extent, the abrupt reduction in NFTs values was also caused by an inflated market.
According to Chainalysis economist – Ethan McMahon, there has been a lot of buzz in 2021 and 2022 and a half around what might be termed profile picture NFT collections. These are collections like the popular Bored Ape Yacht Club, which sold NFTs for more than $2 million each piece, as well as digital artist Beeple’s cryptocurrency art, which sold for $60 million for a single piece near the pinnacle of the NFT frenzy in 2021.
Will NFTs Recover and Bounce Back?
Well, who knows! In my personal opinion, NFTs need a break from the constant attention they are getting from the public to bounce back. The reason is that, just like Ethan Mcmahon stated, the inflation in NFTs leads to its ultimate decline, so with the shift away from focusing on NFTs, there can be better applications of these NFTs in spaces like Gaming which can cause a massive Bounce back and even more widespread adoption.
Did you find this article interesting? Well, I certainly hope you did. If you have any other questions concerning the decline of NFTs that weren’t addressed in this article, please leave them in the comment section below.
If you also have any additions you think should be put in this article that could be helpful to others, make sure you alert me using the comment section below. Thanks for reading!