Short History of NFTs from 2014 to 2021
Cryptopunks, CryptoKitties, Etheria and building early web3
5 min read
Mar 23, 2022
In 2021 the NFT market exploded. The entire volume for 2020 on OpenSeawas $21.7m, which grew by a factor of 646(!) in 2021 to mind boggling $14 billion. By March 2021 it was clear that NFTs are going mainstream and the whole world heard about CryptoPunks or Beeple’s Everydays.
Today, the most famous NFT collection seems to be Bored Ape Yacht Club, launched in May 2021, which appeared in all major magazines, were adopted by celebrities and crypto world alike.
In my goal to understand what makes a successful NFT collection, I want to delve deeper into the first NFT collections and how they were created, supported and adopted, to process then to 2021, 2022 and beyond. This text concerns the first years of NFTs in a broad outline.
Beeple’s Everydays sold for $69 millions
What is the first NFT collection?
CryptoPunks weren’t the first NFT collection, but they were the first to put NFTs on the map.
Let’s start from the beginning. The early experiments with NFTs started already in 2014 (see Quantum). Then in 2015 came the collection Etheria, a virtual world, with a total of 914 tiles. Still it took years to sell them out and it came only in 2021 during the NFT boom.
Then a couple more collections appeared before CryptoPunks collection. You can check a discussion of early Ethereum NFT collections before CryptoPunks in a thread by Leonidas.eth which also prepared this awesome roadmap:
The definitive timeline of early NFTs on Ethereum (by Leonidas.eth)
However none of these early collections got much traction besides very niche communities.
Cryptopunks and CryptoKitties come along
10,000 unique CryptoPunks — 6,039 male and 3,840 female — were released in June 2017.
In the beginning CryptoPunks were just a curiosity. They were free to claim and still it took some time to give them away. They become popular after a Mashable article describing them and that was the moment when they all got claimed.
“The whole thing is pretty weird, and that’s kind of why we did this,” said Matt Hall, who, along with John Watkinson, made CryptoPunks out of their mobile-focused company Larva Labs. “There’s like a weird intersection here between these virtual, digital things and an artificial rarity, but a rarity that is real and valuable in some sense.”
Matt and John, founders of Larva Labs, creators of CryptoPunks, then Meebits, and before that Autoglyphs, were at heart tinkerers and creators. They wanted to create something unique. They didn’t care about money, even though Cryptopunks became eventually worth hundreds of thousands of dollars. As of 22nd March 2022, the current floor price for Cryptopunks is 73 ETH or $220,000. It’s funny looking back at this quote from the Mashable article:
In this early years the prices of punks varied in a range of hundreds of dollars at most for multiple years. There was some interest within the crypto community but it wasn’t spectacular and definitely not on par with another project released back then — CryptoKitties.
In 2017 another important event in the NFT space happened. CryptoKittieswere created and they took over the market, generating dozens of millions of dollars in 2018. They were definitely more successful in terms of revenue and adoption than CryptoPunks. OpenSea, the largest NFT marketplace currently, launched as a place to trade CryptoKitties and then expanded.
The CryptoKitties-mania faded by 2019 together with the crypto market.
What is ERC-721 or non-fungible tokens
Along with the first massive interest in NFTs came a need to standardise the approach to NFTs and define what non-fungible tokens are. That’s how ERC-721 came to be in 2018.
ERC stands for “Ethereum Request for Comment” and various proposals on Ethereum (EIP = Ethereum Improvement Proposals) are numerated by consecutive numbers in chronology. The most known standard is ERC-20 for standard fungible tokens.
ERC-721 came as a standard for non-fungible tokens and it was introduced in 2018 after Cryptopunks and CryptoKitties success. Later on we had also ERC-1155 format that allows for multiple copies of non-fungible tokens (semi-fungibility).
Why NFTs boomed in 2021?
So if the technology was already there in 2018, why did we have to wait until 2021 to witness the mass adoption and the boom?
The main reason is simple: after the ICO boom in 2017, the bear market came to the crypto market in the full force in 2018. Many people decided they don’t want to have anything to do with crypto anymore.
NFTs being built on Ethereum not only required that you pay in ETH for them, but also required a bit of technical expertise with setting up a wallet and making sure you can claim/buy them.
NFTs started picking up steam due to a continual effort of the crypto community in 2018–2020, new artists coming — especially digital artists who found NFTs the perfect place to sell their art, new projects being created, and finally the crypto rising again in the mainstream.
Finally, the tipping point for the boom was the sale of Beeple’s Everydays for $69 millions which made mainstream aware of NFTs. That is history now.
P.S. I plan to write several texts on early web3 and beyond, so subscribe to not miss anything! Comment if you have any suggestions or remarks.