Non-fungible tokens (NFTs) are unique collectible crypto assets that have been around as early as 2012 when the concept of Bitcoin Colored Coins first emerged. These coins were simply satoshis – small fractions of a bitcoin – marked, or “colored in,” with distinct information that could link the coins to real-world assets. An example of this could be “this satoshi represents $500 worth of John Doe’s New York office building.” For the most part, however, Colored Coins were used to create and trade artwork like “Rare Pepe” digital cards on Counterparty, a peer-to-peer trading platform built on top of Bitcoin’s blockchain.
These cartoon frog images adapted from a viral internet meme were some of the earliest examples of unique digital artwork tied to crypto tokens. This paved the way for the ideation and creation of new non-fungible token standards – a set of blockchain building blocks that allow developers to create their own NFTs.
NFTs can be used to represent virtually any type of real or intangible item, including:
- Virtual items within video games such as skins, virtual currency, weapons and avatars
- Collectibles (e.g. digital trading cards)
- Tokenized real-world assets, from real estate and cars to racehorses and designer sneakers
- Virtual land
- Video footage of iconic sporting moments