A brief history of nonfungible tokens

As mentioned, the story took off with colored coins, which were created to represent and manage ownership of real-world assets on the blockchain. They were different from Bitcoin (BTC) because of the “nonfungible” element that provided them with a unique utility.

Demonstrating a humongous leap in Bitcoin’s capabilities, colored coins were composed of tiny fractions of a Bitcoin, which could be as minuscule as a satoshi. Use cases of colored coins, such as the representation of property, coupons, or usage as digital collectibles, subscriptions, shares and access tokens, helped people realize the potential of blockchains for issuing assets.

Bitcoin, however, was never intended to be used as a database for tokens, which meant that colored coins just remained at the concept level. However, the development did set off a series of experiments that culminated in NFTs. The first of the NFTs was “Quantum,” as mentioned before, an octagon-shaped animation. The arrival of Ethereum provided NFTs with the platform they required to flourish.

A major project of this period that enabled the development of digital assets was The Counterparty platform built on Bitcoin. A spectrum of “Rare Pepes” NFTs was released on The Counterparty, initiating the use case of NFT as artwork. “Spells of Genesis,” created on Ethereum, was another big NFT project after The Counterparty.