Prologue

The Birth of NFT

The NFT (Non-Fungible-Token) technology originated with a game called "CryptoKitties" on the Ethereum blockchain in 2017. However, it did not start to attract attention from the general public until 2021. In fact, the idea of using blockchain technology to give creators the technical basis to claim ownership of their works had been around since before 2014. The first-ever digital art, "Quantum," attempted by Kevin McCoy and Anil Dash is said to be a typical example of that.

Afterward, people in the tech industry who were quick to notice the compatibility between digital art and blockchain technology launched NFT projects one after another, anticipating their commercial value. Unfortunately, it seems that the times had not yet caught up, and NFT art was not receiving much attention.

The turning point for NFTs came in 2017 when CryptoPunksNFT, created by Matt Hall and John Watkinson, was featured in an article on Mashable. This caused a stir in the tech industry and led to the founding of the NFT marketplace OpenSea in New York by Devin Finzer and Alex Atallah later that year. In 2018, John Crain launched SuperRare, which gave birth to famous digital artists such as Coldie, Matt Kane, and Pak.

In 2020, NBA Top Shot successfully connected NFTs with the fandom economy and gained explosive popularity after its release. This led to growing interest in NFTs all over the world. In 2021, the NFT market sentiment rose sharply after Beeple, a digital artist, sold his work "Everyday: the First 5000 Days" for $69.4 million. During the NFT boom market, NFT profile picture (PFP) content such as Bored Ape Yacht Club (BAYC) and Azuki gained attention in the market. Blockchain games (BCGs) began to emerge, led by Axie.

NFT Evolution: From Technology to Culture

In recent years, the value structure of digital content has undergone drastic changes. When we examine the changes in NFT content based on revenue models, they can generally be divided into two stages.

NFT 1.0: in the initial stage, NFT (Non-Fungible-Token) was considered a new technology that could claim ownership, but it was only valued for its technology and did not receive much attention from the capital market and the general public.

NFT 2.0: inspired by CryptoPunksNFT, businesses recognized the compatibility between digital content and NFTs. They built revenue models based on the basic logic of "value = artist's popularity," with SuperRare being a representative example. However, NFTs that focused solely on art were bottlenecked in their inability to share value and could only be enjoyed by a small number of people.

NFT3.0: The "NFT + fandom economy" model gained popularity following the success of NBA Top Shot. This model is a simple attempt to sell NFTs to the passionate fan base of existing IP content. Unlike NFT2.0, the value is based on the popularity of existing IP content, expanding NFTs to a user base that has never touched crypto before.

NFT4.0: PFP-based NFTs, such as Bored Ape Yacht Club (BAYC) and Azuki, became popular, causing the revenue model for NFT projects to gradually shift towards "value=community." In the NFT4.0 era, NFT content evolved from "just graphics" to an "access key" to specific cultural spaces. NFTs have become a "membership card" for people who want to share the same ideas and values.

Especially from NFT 3.0 and 4.0, the emphasis is on the cultural aspect rather than the technological aspect. Therefore, the methodology for NFT projects to succeed in this era is to have the ability to root in existing cultures or create new cultures.

NFT Liquidity Issues and Emerging Platforms

Following the cryptocurrency market's bearish trend and a series of scandals such as major exchange fraud, NFT liquidity issues have emerged, leading to the challenge of how to monetize NFT content. Emerging platforms like NFTfi and Blur aim to address these issues. Despite the FOMO and speculation around NFTs, there have been very few user transactions, and the prosperity seen on paper has mostly been wash trading by the project side, which has also been exposed.

Where will NFTs (Non-Fungible-Tokens) go in the future?