One could argue that Colored Coins are the very first NFTs to exist.

since Colored Coins are bitcoins that were part of the “Genesis transaction,” they are unique and identifiable from regular bitcoin transactions.

the Rare Pepe Meme Directory has “experts” that certify the rareness of the pepe memes. Quirkiness aside, this example drives the point home that people want unique digital items.

As the trading of rare pepes on Ethereum picked up, two “creative technologists” decided to create their own NFT project with a slight twist. John Watkinson and Matt Hall realized they could create unique characters generated on the Ethereum blockchain.

Interestingly enough, Cryptopunks do not follow the ERC721 standard, as it had not been invented yet, but they were also not entirely ERC20 due to its limitations. Thus Cryptopunks can best be described as an ERC721 and ERC20 hybrid.

The “ERC” stands for “Ethereum Request for Comment.” The most common standard is ERC20, which has rules that allow tokens to interact with each other in an expected manner.

Although ERC20 tokens work well for many functions on Ethereum, they are not best for creating unique tokens. For this, ERC721 was invented.

the ERC721 was purpose-built to be the technical standard for non-fungible tokens on the Ethereum blockchain. The main difference between the two standards is that ERC721 tracks ownership and movements of individual tokens in the block, which enables the chain to recognize the non-fungible tokens.

The first project to use the new NFT technical standard was the famous CryptoKitties.

CryptoKitties was launched in October 2017 in an ingenious manner by a Vancouver-based company called Axiom Zen.

Axiom Zen then spun out a company called Dapper Labs, which secured $15 million dollars in funding from top investors including a16z and Google Ventures.

Perhaps the most exciting development within the space is the numerous NFT games and projects that are collaborating with each other to make items interoperable.

After witnessing the activity within the CryptoKitties community and seeing top investors pour money into Dapper Labs, people began to realize the true power of NFTs.