What are NFTs: The Evolution of Non-Fungible Tokens Explained

Ownership is deeply human. At first humans collected everything from beads, to shells to animal teeth. Our ancestors loved to collect things for self expression and for identity.

It’s not surprising then that collectibles evolved into the first forms of money. In the absence of a central bank or a government saying what’s legal tender, social consensus formed around objects that everyone could agree which were easy to exchange but difficult to fake. In a sense collectibles became portal physical manifestations for human capital as value and in doing so they catalyzed one of the greatest inventions of humanity: trade.

Humans created countless things to own, but starting with the printing press and evolving into photography, video games and movies we started packing up even more esoteric things like emotions, knowledge and experiences to buy sell and trade with one another.

In the wake of the internet, digital capture and storage were boons of trade and commerce because they helped us create and sell more stuff. However digital distribution was a threat to ownership because anyone could copy a mp3 file and distribute it to thousands of people at practically zero cost.

Digital objects don’t follow the same rules as physical objects…at least not until recently.

Even so, we still all use digital money, watch movies on Netflix and listen to music. Economies are able to get away with this because the actual content is sitting behind walled castles heavily guarded — where little money movies or mp3s actually trade hands. Instead large corporations tend lock away goods and lease rights to consumers who are tricked into believing they actually are owners, when they are in fact renters.

It is impossible for you as an owner to take one thing you’ve paid for and transfer it from one kingdom to the next without permission from the rulers. This starts sounding a lot more like feudalism and serfdom than true ownership.

10 years ago, Satoshi Nakamoto started writing the foundation for a new digital system. Satoshi saw that digital goods needed the same guarantees fo permanence an openness that mirrored the physical world. He recognized if we baked in these guarantees into the asset itself we could build a completely open financial system on top.

The future is already here — it’s just not evenly distributed. –William Gibson

Bitcoin’s proof of work used computational power as a means to guarantee the validity of each block that is built on top of the network.

Now where bitcoin was the first digital asset, what else can we build as a share of truth and information of the present and of the past? What else could you build on a system of rules and contracts that are as permanent and as trustworthy the laws of physics?

What if we could instead of creating digital assets that serve as money, we could bring back the idea of collectibles as personal unique markers of identity and self expression. Giving that these things are digital, why can’t we program them to do things?

In the past even though trillions of digital assets existed, they all shared one aspect. They were fungible.

Which means they were interchangeable just like a dollar bill and Bitcoin, it doesn’t matter which dollar bill you have. It just matters how many. However this concept doesn’t hold true to the unique items that we truly value in our lives: our homes, our art, our collectibles, our progress in video games. The things we own and have an emotional attachment to them are actually all non-fungible, but until now they could not be represented in a cryptographic way.

Roham Gharegozlou and his team began creating an open standard for our these goods could be represented and traded in a secure way. They called them non-fungible tokens or NFTs.

To showcase their technology, Roham’s team created and released a simple game called Cryptokitties in 2017. To this day, Cryptokitties stands as one of the most used projects on the blockchain other than trading.

Each crypto kitty is a collectible bundle of code with a family history and genetic makeup. The vast majority of kitties were created by users on the game and because they’re digital assets, nobody can change them or take them away.

Starting with games, we as users will begin to expect this level of service with all kinds of digital assets in the future. The most exciting piece about Cryptokitties is that everything including the rules of the game are committed to the blockchain as code that no one can ever take back.

What this means is that players have full transparency and ownership of not only the code underlying the assets, but of the underlying experiences they want to access.

Blockchain makes software as real and permanent as anything physical . For the first time in the online world, we can count on a service to be permanent and to outlast their creators, both individuals and creators.

Online services for the first time can be built to interlock to be built on top of one another without taking the risk of incompatibility in the future. Instead of Instagram owning the rights of your photo, you can encode your original photo on the blockchain and track its transaction and ownership history overtime.

Blockchain is creating a world of digital assets and open source software that is real and permanent as anything physical and is built to interoperate as easy as lego sets.

For the first time we have both the reason and the ability to tear down the feudal castles that control our online experiences. For the first time we can transfer to true digital freedom where identity, self expression and ownership is back where it belongs, in your hands.

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