The History of Non-Fungible Tokens (NFTs) and the Philosophy of Entrepreneurship

The History of Non-Fungible Tokens (NFTs) and the Philosophy of Entrepreneurship

In October 2017, a Vancouver-based company called Axiom Zen launched a game called CryptoKitties, which introduced the concept of non-fungible tokens (NFTs) to the world. While ERC20 tokens had already been widely used on the Ethereum blockchain, they were not suitable for creating unique tokens. To address this, ERC721 was invented, allowing for the creation of one-of-a-kind digital items.

The idea of unique digital assets was not entirely new. The Rare Pepe Meme Directory, for example, had "experts" who certified the rareness of Pepe memes. This quirky example highlighted the growing demand for digital items that are truly unique. In fact, one could argue that Colored Coins, which are bitcoins that were part of the "Genesis transaction," were the very first NFTs. These coins were unique and identifiable, setting them apart from regular bitcoin transactions.

As the trading of rare pepes on Ethereum gained traction, two creative technologists, John Watkinson and Matt Hall, decided to create their own NFT project. They came up with Cryptopunks, a collection of unique characters generated on the Ethereum blockchain. Interestingly, Cryptopunks did not strictly follow the ERC721 standard, as it had not been invented yet. However, they were also not entirely ERC20 due to limitations. This made Cryptopunks an ERC721 and ERC20 hybrid.

The ERC721 standard, which stands for "Ethereum Request for Comment," was purpose-built to be the technical standard for non-fungible tokens on the Ethereum blockchain. Its main difference from the ERC20 standard is that ERC721 tracks ownership and movements of individual tokens in the blockchain. This enables the recognition of non-fungible tokens and their unique properties.

The first project to utilize the ERC721 standard was the famous CryptoKitties. The success of CryptoKitties led to the spin-off of a company called Dapper Labs, which secured $15 million in funding from top investors, including a16z and Google Ventures. This demonstrated the immense potential of NFTs and sparked a realization of their true power.

While the history of NFTs provides valuable insights into the crypto space, it is also important to consider the philosophical aspects of entrepreneurship. One key lesson that can be drawn from the philosophy of Ludwig Wittgenstein is the focus on language and its impact on identities, communication, and collaboration. By understanding the nuances of language, we can better comprehend how we evolve as individuals within society.

Philosophy is not merely an abstract intellectual exercise; it serves to improve our understanding of humanity and our personal growth. It has played a crucial role in shaping our society, from tribal living to the establishment of nation-states and the development of science. The purpose of philosophy is not to convey literal truth but to provoke and enhance our own thinking.

In the realm of entrepreneurship, a theory of human nature is essential. By understanding how individuals identify themselves, connect with others, view themselves as part of a group, and pursue the good, entrepreneurs can design products and services that resonate with people on a fundamental level. Everyone wants to be the hero of their own story, and great entrepreneurs make every user or customer feel like a hero.

The philosophy of Aristotle reminds us to revise our theories based on practice. The loop between theory and practice involves engaging with the world, applying our theories, and refining them based on the results. This iterative process ensures that our ideas are continuously improved and adapted to real-world situations.

Friedrich Nietzsche emphasized the importance of creating the new rather than copying the past. Entrepreneurs disrupt industries, markets, and products by inventing businesses that challenge the current "idols." They strive to create better versions of themselves and push the boundaries of innovation.

Language itself is a critical aspect of the search for truth. As Wittgenstein famously said, "If a lion could speak, we could not understand him." Language shapes our understanding of the world and influences how we communicate and collaborate. By examining language, we can gain deeper insights into the nature of truth and reality.

Engaging in discussions and sharing ideas is a core part of philosophy. From Socrates to modern philosophers, the exchange of thoughts and challenging of ideas has been instrumental in developing knowledge and understanding. Even in the digital age, finding time for philosophical discussions through platforms like Zoom can be a powerful tool for building greater understanding.

In conclusion, the history of NFTs and the philosophy of entrepreneurship intersect in intriguing ways. The evolution of NFTs from CryptoKitties to Cryptopunks showcases the growing demand for unique digital assets. At the same time, the philosophical principles of questioning, understanding human nature, and engaging in discussions provide valuable insights for entrepreneurs.

Actionable Advice:

1. Embrace the uniqueness of your product or service. Explore ways to create one-of-a-kind experiences for your users or customers.
2. Continuously refine your theories through a feedback loop of theory and practice. Engage with the real world to test and improve your ideas.
3. Foster discussions and exchanges of ideas within your team and with external stakeholders. By challenging and sharing thoughts, you can develop a deeper understanding of your industry and market.

By combining the history of NFTs and the philosophy of entrepreneurship, we can gain a holistic perspective on the potential of unique digital assets and the principles that drive successful businesses.