NFT History and Today--Learning from history where NFT is today Supervision: virtual NISHI

NFT triggered a global boom in 2021. Digital art and characters were traded at high prices and quickly became the focus of attention. In the same year, ‘NFT’ was nominated for the ‘You-Can New Words and Trendy Words Award’, which attracted the interest of not only individuals but also many companies and others in Japan.

NFTs are also known as ‘non-substitutable tokens’, and as the name suggests, they are tokens that cannot be substituted for other things.

Legal tender and cryptographic assets such as Bitcoin are not of this kind, as they can replace anything in circulation, regardless of when they were issued. However, NFTs are referred to as non-replaceable tokens because they do not have a single unique identity and each one of them cannot be replaced.

Some of the works that created a boom in NFTs include CryptoPunks, with its distinctive dots, and the Bored Ape Yacht Club (BAYC), with its unique fashion, etc., and a monkey with a somewhat languid expression, both of which are now worth several hundred million yen. Some of these works are now worth hundreds of millions of dollars.

But it is the work of digital artist Beeple that has had the biggest impact on people.

At an art auction held at Christie's, the world-renowned auction house, his work ‘Everydays: the First 5000 Days’ sold for approximately 7.5 billion yen (at that time). The shock was felt not only in the Web 3.0 domain, but also in many other fields. To this day, no successful bids have exceeded this price and no transactions have been confirmed on the secondary distribution market.

In line with the boom in NFTs, NFT-specific trading markets also grew significantly. One representative example is OpenSea, which many may think appeared in conjunction with the NFT boom, but has actually been in service since 2017. As a result of steady preparations, it emerged as NFTs gained more attention.

Initially, many trades were in the so-called ‘art’ category, such as the NFTs mentioned above, but as time went on, the categories that users paid attention to also changed.

One is the existence of GameFi. Some blockchain games have been played before the NFT boom, as blockchain-based blockchain games allow players to earn NFTs or in-game tokens through the game, which can then be traded for actual compensation.

After the NFT boom, Axie Infinity was particularly popular, as it established a ‘scholarship system’ whereby users could earn in-game tokens by lending NFTs they needed to play the game to other users as owners. This system was well received and many users played the game, especially in South-East Asia.

In mid-2022, ‘STEPN’, which allows users to earn compensation for walking, became popular worldwide. The simplicity and uncomplicated nature of the ‘walking’ gameplay has significantly lowered the barriers to entry into GameFi.

Despite the attention given to the NFT in terms of art and games, there was a period in 2022 when the momentum was slowing down. This is due to inflationary trends in the global economy and the crypto asset market, which has cooled down due to all kinds of incidents. Especially around the time of the collapse of the crypto asset exchange FTX, the volume of NFTs traded also stagnated.

There has also been a change in the category of NFTs traded. Previously, the focus had been on artistic or expensive NFTs, but gradually the focus has shifted to utility - ‘What can I do with that NFT?’ has gradually come to focus on the utility of the NFT.

Each NFT project has added value to NFTs by devising ways in which owning a particular NFT allows you to participate in special events or to receive regular benefits. Among these, the importance of community building is a unique feature of Web 3.0 and, by extension, the NFT domain.

Nowadays, the existence of communities cannot be ignored when operating NFT projects. The camaraderie and sense of common unity that comes from having the same NFT can be a great source of energy for a community. Therefore, by increasing the value of the community, the added value of the NFT can easily be synergistically increased.

To take it a step further, the heat of the community is directly linked to the value of NFTs.