NFTs, CryptoArt & CryptoCollectibles
It Doesn’t Have To Be Cryptic
The term CryptoArt brings up a mix of emotions depending on who you ask. CryptoArt, and NFTs, combine the worlds of time-based media art, backed on the blockchain, decentralized, provably scarce and authentic, and most importantly pro-artist. Our friends at Artnome wrote an incredible article outlining what CryptoArt is at the time of publication, January 19, 2019. Please check it out for a deeper outline. However, for those with limited time, we will provide the sweet and short background.
What's the Importance of Non-Fungible Tokens?
There are many reasons. A non-fungible token (NFT) is unique and can represent any digital asset on the Ethereum blockchain, thus making it scarce, provable, and valuable. The advent of NFTs have created a new medium for artists and creators to showcase their creations or collections. In turn, a revolution is paving the way for artists to create and monetize their work while collectors have full transparency into the authenticity and provenance into their purchases.
NFT assets can take the form of digital art, collectibles, a creative extension of music, a synergy between all three, or entirely new and unexplored compositions. Creators continue to push the boundaries of creativity using NFTs, adapting them in new and innovative ways.
Many wonder, "Can't I screenshot the NFT without purchasing?" This is true, but you would not be able to sell it at the value of the original. Similarly, if you took a photo of the Mona Lisa it would be challenging to find a collector. Every time the NFT moves on the secondary market, the new owner and the price paid is automatically recorded on the blockchain, which is a digital archive of transactions no one can alter and everyone can see. The idea is that by having these certificates of authenticity be publicly available for everyone to view online, NFTs can guarantee the provenance of any asset they are connected to.
"The underlying thing that you're buying is code that manifests as images," said Donna Redel, who teaches courses on crypto-digital assets at Fordham Law School. "You're buying a different format of art." Similarly, you must keep in mind "You're not buying the picture," said Jake Brukhman, founder of cryptocurrency investment company CoinFund. "You're buying the property rights to the picture." NFTs, by design, are tools that artists can use to authenticate their work, independent from dealing with the traditional machinations of the legacy art world (provenance). Given this ability to create scarcity of digital work, NFTs also give artists the ability to set their own rates for their creations - and control of their secondary market - in essence democratizing access to new markets for artists all over the world.
Who created the first NFT?
Now where did this technological phenomenon come from? The history of NFTs and the man who first created one, Kevin McCoy, began on May 3rd, 2014. He minted his non-fungible token “Quantum," way before the crypto art market exploded.
Quantum is a pixelated image of an octagon filled with denoting circles, arcs or other shapes which share the same center, with larger shapes surrounding smaller ones and hypnotically pulsing in fluorescent hues. As of today, the one of a kind “Quantum” art piece (2014-2021) is on sale for seven million dollars.
McCoy is exceptional. He and his wife Jennifer have established themselves over many years as first-rate digital artists. "The NFT phenomenon is deeply a part of the art world," says McCoy. "It emerged from the long history of artists engaging with creative technology." Their work has historically been bought by enthusiastic art collectors, however — rather than entering into public bidding wars, McCoy prefers to sell at a gallery or one on one. Their work "Every Shot, Every Episode" is on display today and can be viewed at the Metropolitan Museum of Art.
Who can create NFTs?
Anyone, from artists to entrepreneurs, art advocates, corporations, authors, videographers, social media personalities, and even average Joes and Joannas, can create an NFT. No experience is necessary, and as long as someone can prove they created or legally own the content, they can mint an NFT. To get started on Portion, check out this step-by-step guide on how to create an NFT.
The History of Non-Fungible Tokens
The CryptoArt category was initiated by the cultural phenomenon such as CryptoPunks, Rare Pepe, and CryptoKitties. These pieces of ‘art’ gained notoriety due to the viral network effects and desire to pay large sums of money to acquire these pieces.
2012-2013: Colored Coins
This journey is a long story with many people, artists, and projects involved, so let’s dive in.
The idea of NFTs emerged from what is called a “colored coin”, initially issued on the Bitcoin blockchain in 2012-2013. Colored coins are tokens that represent real-world assets on the blockchain and can be used to prove ownership of any asset, from precious metals to cars to real estate, even equities, and bonds. Although not as sophisticated, this original idea was to use the Bitcoin blockchain for assets like digital collectibles, coupons, property, company shares, and more. They were described as new technology and gave raw possibilities for the future prospects of utilization.
In 2014 Robert Dermody, Adam Krellenstein, and Evan Wagner founded Counterparty, a peer-to-peer financial platform and distributed, open-source internet protocol built on the Bitcoin blockchain. Counterparty allowed asset creation and had a decentralized exchange, thus providing a way for users to create their own tradable currencies. It had numerous ideas and opportunities, including meme trading without counterfeit issues.
2015: Spells of Genesis on Counterparty
In April 2015 Counterparty partnered up with the team creators of Spells of Genesis. The Spells of Genesis game creators were not only pioneers for issuing in-game assets onto a blockchain via Counterparty, but they were also among the first to launch an ICO. The creators helped fund the development of Counterparty by introducing their own in-game currency called BitCrystals.
2016: Trading Cards on Counterparty
In August 2016 new trends began to emerge. Counterparty teamed up with Force of Will, a popular trading card game, and launched their cards on the Counterparty platform. Behind Pokemon, Yu-Gi-Oh and Magic, Force of Will was the 4th ranked card game in North America according to sales volume. Their entrance into the ecosystem, where they had no prior blockchain or cryptocurrency experience before, signaled the value of putting such assets on a blockchain.
2016: Rare Pepes on Counterparty
In 2016, memes entered the blockchain. In October of 2016, memes started to make their way onto the Counterparty platform. People started to add assets to a particular meme called “Rare Pepes.” Rare Pepes are a meme featuring an interesting frog character that has acquired an intense fanbase over the years. What started out to be a comic character named Pepe the Frog, has now steadily become an internet sensation as one of the most popular memes. By early 2017, with Ethereum gaining prominence, Rare Pepes started to be traded there as well. Portion's Founder, Jason Rosenstein, along with Louis Parker, ran the first live Rare Pepe auction which was held at the inaugaral Rare Digital Art Festival. CryptoArt was born with the Rare Pepe Wallet and it was the first time creators around the world could submit and sell their own artwork. It was also the first time digital art could have intrinsic value.
As Rare Pepes trading picked up, John Watkinson and Matt Hall, the creators of Larva Labs, created unique characters generated on the Ethereum blockchain. No two characters would be the same and they would be limited to 10,000. The project name, Cryptopunks, was referenced to an experiment with Bitcoin in the 1990s and can be described as an ERC721 and ERC20 hybrid.
ERC20, the most common Ethereum Token Standard, has rules that allow tokens to interact with each other, but is not the best for creating unique tokens. Enter, ERC721, which had a purpose to be the standard for NFTs on the Ethereum blockchain. ERC721 assists in tracking ownership and movements of individual tokens from a single smart contract.
CryptoKitties NFTs hit the ground running using ERC721. They are a blockchain-based virtual game that allows players to adopt, breed, and trade virtual cats using Ethereum.They exploded into popularity and landed features on major news stations including CNBC and Fox News. CryptoKitties was created by a Vancouver-based company called Axiom Zen and quickly went viral, earning funding from top investors due to their rise in users. Axiom Zen later spun off CryptoKitties into Dapper Labs.
2018-2021: The NFT Explosion
Between 2018 and 2021 NFTs slowly move into public awareness before exploding into mainstream adoption in early 2021.
The seemingly underground movement that was taking the crypto community by storm has slowly been transitioning into more mainstream art. This transition reached an inflection point in Valentine’s day 2018 when artist Kevin Abosch partnered with GIFTO for a charitable auction. The partnership led to a $1M transaction of a beautiful piece of CryptoArt called The Forever Rose.
Mr. Abosch continued to raise the stakes when he started using a combination of the Ethereum blockchain with his blood in a project called “IAMA Coin”. Abosch has not been the only artist adopting this exciting form of expression. It has slowly been gaining traction with artists exciting to push their creative boundaries.
The NFT market is more efficient and more liquid than incumbent methods of transferring assets. Numerous platforms have surfaced online, each hosting differentiators for creators and collectors alike. The main area of disruption is focused on limiting centralized fees where traditional art brokers, auction houses, often take up to 40%. Opensea is considered the largest marketplace for art, music, domain names, collectibles, and trading cards. Mintable's platform has its main focus on making the minting process super straightforward for the creators. Portion is positioning itself to be an NFT platform that bridges NFTs, DeFi, and DAOs where the holders of the governance token $PRT — the community — are in charge. Other platforms like, Niftex allows users to buy fractions of NFTs or “shards,” which are ERC20 tokens representing a piece of the full NFT.
How We See It
Portion believes that there is a bright future in this exciting new medium. We believe that any artist can and should tap into the powerful blockchain technology at some point. Being truly artist first, Portion envisions a world where artists can extend their creative liberties and reach new audiences excited to collect and appreciate their work.
Where To Next?
While the history of NFTs is intriguing, the future of NFTs has endless opportunities as the new space transitions from raw and experimental to exceedingly more useful and mainstream. Through tokenization, programmability, collaboration, royalties, and more direct connections between artists and collectors, NFTs may soon be a technology vital to everyday life. Concepts like DAOs, token-based Metaverses, community owned financial protocols, and NFT art were small scale experiments just a few years ago. Now they represent multi-billion dollar communities that combine protocol-driven design, economics, and governance as global collectives on the internet. It may be challenging to predict the future, but for digital art collecting, it's safe to say we have yet to imagine the extent of what will emerge in decades to come.