In early 2019, I have worked on the NFT project ,which aims to tokenize IP (Intellectual Property) of the design of physical merchandise. I thought it was a terrific concept of tokenizing IP ownership with NFT (ERC-721). In addition to that, it was backed by Animoca Brands (including its strategic partners Cryptokitties and Decentraland). So, I was pretty sure that this project would be successful, and I worked ardently on it.

However, unfortunately, the business did not go well as the company wanted, but I’d like to blame it on the market timing rather than its business. Back then, the entire cryptocurrency market was completely frozen, and people became more sarcastic about the cryptocurrency and mocked the concept of NFTs. Many people in the industry left and changed their jobs to another.

It was only two years ago. Who knew after two years people buy one JPEG associated NFT of Bored Ape NFT with 70 eth, or around $266,000, and celebrities such as Eminem, Jimmy Fallon, and Steph Curry, etc. bought those NFTs with about $462,000? Furthermore, Open Sea, a leading NFT marketplace to trade NFTs sets a record with $5 Billion in monthly NFT sales, breaking its previous record from August 2021.

Though, there are still criticisms around the NFTs: Hollow type of NFTs, artists’ protection, environmental issue, blockchain security gap, etc. However, it’s undeniable about its exponential growth and much further potential beyond PFP (Profile Picture NFT). Recently, many big brands including Disney, Adidas Original, Nike, Gucci, etc., started to embrace NFTs in their brands.

As the NFT industry and its blockchain technology evolve, I think those problems could be sorted out, and we could see more various use cases applied by NFT and tokenization. Specifically, it is expected to see more use cases with gaming companies associated gaming items and other services.

Well, do you feel overwhelmed by the exponential growth of NFTs? And do you hesitate to involve in the market because you think it’s a bit late? I can show you where we stand now compared to the overall cryptocurrency market.

As you can see above, it seems NFT is about to enter the ‘Early adopters’ stage after going through the ‘Innovators’ stage, which people who are interested in trying new technologies and establishing their utility in society. Meanwhile, Cryptocurrency is getting into the ‘Early majority’ stage — for the use of innovation within mainstream society and are part of the general population.

So, we’re pretty early in the NFT space for sure.

Then, we’re curious about how the market goes further. We’re not the ‘Paul the Octopus’ which can predict the future exactly (Are you?). So, we need to get a hint from some data and its history.

Let’s dive into the history of NFT first.

2012–2013: Colored Coins — Laid the groundwork for the future of NFTs

The initial idea of NFTs has started with Color Coins which aims to extend these abilities to other assets and was initially issued on Bitcoin in 2012–2013. The project proved a massive potential of real-world assets onto Bitcoin blockchain. It showed how bitcoin blockchain can be used to prove ownership of any asset such as property, coupons, digital collectibles, company shares, real estate, and equity, etc. Regarding the papers of Colored Coins, this paper has in-depth and its authors — Yoni Assia, Vitalik Buterin, Lior Hakim, and Meni Rosenfeld — are well-established figures in the cryptocurrency industry. There would be some arguments around Colored Coins, but one thing for sure is that it paved the way for NFTs’ future experimentation.

2014 -2016: Counterparty — Enabled the creation of early editions of NFTs

After Colored Coins, Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty in 2014 –a peer-to-peer financial platform and distributed, open-source Internet protocol built on top of the Bitcoin blockchain and network. The earliest successful trading card game called ‘Spell of Genesis’ launched in 2015. Then, since the Ethereum Network launched in Q3 2015, more historically significant NFT projects made an appearance on Counterparty– which launched a series of Frog Memes known as Rare Pepes in 2016.

2017: CryptoPunks and Cryptokitties– Accelerated to grow NFTs industry coincided with the 2017 Crypto Bull Market

John Watkinsonand Matt Hall, the two creative technologists of Larva Labs, created CryptoPunks, NFT collection on Ethereum blockchain in June 2017. The experimental project was inspired by the London punk scenes, the cyberpunk movemen,t and electronic music artists Daft Punk. This project has already left its mark on the NFT industry because it is commonly credited with starting the NFT craze of 2021, and it is the best example for ERC 721 and ERC 20 hybrid so far.

CryptoKitties, a blockchain game on Ethereum developed by Canadian studio Dapper Labs, hit the mainstream. Most of all, it is kind of the first blockchain NFT gaming and it laid the groundwork of the future NFT Blockchain game experiments. In the CryptoKitties, players purchase, breed, and trade virtual cats that have different visual features of varying levels of rarity. Each CryptoKitty is represented as a non-fungible token using the ERC-721 token standard on Ethereum. Coincided with the bull market of 2017, CryptoKitties’popularity exploded ,and almost every news station around the world talked about it.

2018–2019: OpenSea, Nifty Gateway, Super Rare — The Rise of NFT Marketplaces

OpenSea launched in December 2017 and then introduced on Product Hunt in February 2018. It described itself as “eBay for crypto goods.” In the beginning, they committed to finding a good quality of NFT projects via Discord and kept the focus on their core competence as an exchange with a small team for 3–4 years. As a result, they could endure the crypto wintertime, and it paid off in the end. While OpenSea is taking over the industry inch by inch, new NFT marketplaces such as Nifty Gateway (launched in 2018), Super Rare (launched in 2018) started to make an appearance. Later, Nifty Gateway was acquired by Gemini.

On the other hand, after CryptoKitties craze, Sky Mavis, a Vietnamese studio, developed NFT based online video game Axie Infinity, a trading and battling game that allows players to collect, breed, raise, battle, and trade creatures known as “Axies” (characters based on axolotl), which are digitized as NFTs. Later, in 2021, the popularity of Axie Infinity has soared and its core model of ‘P2E (Play to Earn)’ model was getting in the spotlight.

2020–2021: 2021: The year of the NFTs

Undoubtedly, 2021 was the year of the NFTs and they took the cryptocurrency space by storm with animal-based profile photos, artworks, and partnerships with big brands. As proof of the hype, OpenSea recorded ATH(All -Time -High) of $3.42 billion in August 2021, and then surprisingly, it sets a new-record as it crosses $3.5 billion in NFT sales in January 2022. However, overall cryptocurrency trading volume has decreased (I will talk about it later in the next part.).

Specifically, Bored Ape Yacht Club (BAYC) was in the center of this crazy hype, and they brought a flurry of hype and sales to this space. BAYC was launched in late April by a team of four pseudonymous developers: Gargamel, Gordon Goner, Emperor Tomato Ketchup, and No Sass. Surprisingly, it just took 12 hours for all 10,000 to sell out for 0.08 ether (around $247.54 as of February 2022). Furthermore, after 2017, CryptoPunks have seen resurgence once again thanks to the enthusiastic response to the NFT market and people’s perception of CryptoPunks as being the earliest conception of NFT profile photos.

What’s more, leading cryptocurrency exchanges, Binance and FTX have launched their own NFT marketplaces on their platforms in June and in October each. Coinbase, another leading cryptocurrency exchange will launch its NFT marketplace soon as well.

Well, NFTs, blockchain technology and Metaverse intertwined.

While NFTs industry, along with all cryptocurrency spaces, is enjoying the honeymoon period, suddenly, Facebook has announced that they rebranded itself as Meta to build ‘Metaverse’. It became a megatrend of NFT space because NFTs would play a vital role in the immersive virtual environment. In the proposed NFT-powered metaverse, people can own avatars, land, digital apparel, and other items, and migrate them across platforms via your crypto wallet.

2022–2023: What’s Next?

Heading into 2022, unfortunately, the cryptocurrency market crashed and wiped out more than $1 trillion on 22nd January 2022, with Bitcoin prices cratering amid to around $36,000 from a record of nearly $68,000. It has just happened in the blink of an eye. Once crypto enthusiasts in 2021 started to become skeptics of the market.

However, interestingly, NFT market performance showed differently. Look at the graph below.

Considering the indicators above, the overall NFTs market has followed the trend of the cryptocurrency market since February 2017. However, as going into 2022, the NFT market has sidestepped while cryptocurrency struggled and investors’ sentiment became extremely fearful. The popularity of NFTs is growing tremendously.

As you can see above the graph, searches on Google for the term ‘NFT’ are outpacing those for ‘crypto’ for the first time and the number of searches has been increasing even in January 2022 during the period of the cryptocurrency crash. Furthermore, as I mentioned before, OpenSea set a new ATH record with $3.5 billion in NFT sales in January 2022.

This phenomenon is unprecedented in the cryptocurrency history.

What made NFTs so bullish during the latest crypto crash?

There will be various factors from locally and globally intertwined with each other to catch fearless investors’ attention.