NFTs exploded on the crypto scene in a relatively short time late 2020–2021, and due to that, It seems to me that the latest iteration of non-fungible tokens, NFT 2.0, may have arrived before most people could understand and experience the NFT 1.0 ecosystem.

I remember by 2018, when a Tech-friend told me that he had cryptoKitties, he tried to explain me, very hard, what these “virtual crypto cats” were and how he fed them and they were growing “Unique”, and although he was my boss in the early days of my professional career, we became very good friends and he has been always seemed to me like a very smart and inspiring person, but when he told me that thing about cryptoKitties, I couldn’t believe my ears and I almost paralyzed myself. But definitely he was ahead, like he always is, Javier a big -shout out to you here!

Cryptokitties, the world’s first ever ERC-721 token, ERC stands for Ethereum request for comment, and refers to a scripting standard used within the Ethereum blockchain and is one of the scripting Ethereum´s standars used by NFT´s.

So let´s dig into NFT´s evolution;

1. NFT 1.0, what are they? the initial phase of non-fungible tokens.

2. NFT´s criticisms.

3. NFT 2.0, an evolution of NFT 1.0

4. Smart Contracts, interactivity and personalization.

5. NFT2.0 what they might bring. Endnote.

1.NFT 1.0, what are they? the initial phase of non-fungible tokens.

NFT 2.0 is an upgraded iteration of NFT 1.0, the initial phase of non-fungible tokens. The genesis of non-fungible technology refers to blockchain assets with unique identification metadata.

So What are they? the easiest way to understand it, from my point of view, is by explaining the difference between “cryptos as coins, all are the same” and “NFTs as tokens, all are unique”.

Crypto as coins are indistinguishable, 1 ETH is indistinguishable from another 1 ETH, and because of that they are fungible, meanwhile NFT´s are non-fungible tokens, they are Unique one of each other, each Item/NFT token in not the same of other items, and for deploy them on the ethereum chain you will need other standars like ERC-1155 or ERC-721, meantime crypto currencies tokens based on the ethereum chain, developers need to use other type of standars for them to be deployed deploy, like ERC-20.

So, the main purposes in these very early days of NFTs were, tokenizing digital assets to make them unique and store them on the blockchain, as they could enjoy the advantages of fungible tokens, like immutability and cryptographic security.

Here a Bored Ape Yacht Club, one of the more famous collections;

2. NFT´s criticisms.

Discovering an NFT in its initial mint or even as a secondary market purchase, like Opensea, can generate enormous amounts of money.

Here the stats for NFT collections and individual assets that have sold for the highest prices, by CoinMarketCap,

Top 10, date writing:

here the whole list;

And these are the volumes in big numbers, today 18 Oct. 2022.

Anyway picking winners takes a lot of skill and luck, because it’s tricky to determine which collection will grasp the public’s curiosity and boost in price. Nevertheless, this mixture makes NFT projects exciting and enticing.

FOMO and greed has been driven NFT prices into the stratosphere, and we have seen many scams, how to avoid them is to value them very carefully.

There is a Bankless article where they explained wonderfully how to value NFT Fundamentas by analyzing NFT Fundamentals Across 6 Main Categories, because when analyzing a particular NFT, it’s important to note its category.

Nevertheless NFTs have long been criticized for their volatility and “bubble-like” nature. Many people have ended in the misconception that NFTs exist only as speculative assets with no utility whatsoever. Hence, they will only appeal to those looking to get rich quickly.

Despite the criticisms, NFTs have attracted lavish attention from retail investors, big brands, and celebrities.

Here NFT Brands Case Study Overview, Performance analysis of large brand’ NFT projects on Ethereum Blockchain by Dune Analytics.

The Brands and creators, as early adopters, face the problem of jumping blindly into NFTs. Projects that rushed into NFTs projects without any clear objective and are leading, eventually, to be abandoned.

To get into the he NFT market can be a complex process for individuals who aren’t tech savvy. The same holds for brands. Many still need to hire experts to help educate and navigate them through the NFT landscape or to create partnerships with tech startups so they can manage their NFT strategies in-house. Like Inditex that sends Pull&Bear to the metaverse in partnership with La Frontera VR and Meta Creative Shop.

Moreover, marketplace volatility scares many people, damaging the relationship between artists and their fans. But eventually , NFT buyers are growing despite market’s volatility and scams, which is is the price of these early days.

3. NFT 2.0, an evolution of NFT 1.0.

NFT 1.0 needed of better accessibility and legitimacy for them to evolve.

As the technology evolves, we see the NFTs maturing into a new generation, NFT 2.0. Although there are no drastically points of differentiation between the NFT 1.0 and NFT 2.0, yet the technology is becoming more accessible to the mainstream, like the evolution of the Ethereum platform with “The Merge” evolving from PoW to PoS, as I pointed out and linked at the top of the article. Also the rise of so many NFT minting platforms and marketplaces.

Despite, as I said before, there are no hard and fast points of differentiation between the NFT 1.0 and NFT 2.0 phases, let´s go through a detailed overview!

4.Smart Contracts, interactivity and personalization.

NFT 2.0 will bring a larger number of use cases than the first NFT generation, and will enable holders to do more with their tokenized assets in games, music, digital collectibles, tickets, coupons, and digital art, the most famous thing in NFT 1.0

For example NFT 2.0 offers co-ownership of NFTs, as in NFT 1.0 was individual ownership, that will enable their co-owners to buy and sell them off in parts.

image via Play to Earn
Thanks to Smart Contracts technology, NFT 2.0 enables users:

To modify their tokenized assets, to suit newer needs or purposes.
To take input from users and other sources.
To transfer assets across different decentralized applications, very helpful in sectors such as GameFi.
To evolve your tokenized assets with time and data.
…
The interactivity in Smart Contracts enables existing NFTs to execute modifications on themselves and other NFTs associated with it.

Regarding to personalization, NFTs 2.0 has the composability property, that gives the ability to customize an asset or create a new one, also composability lets collectors explore new possibilities by bundling different assets together as one.

Therefore NFTs holders can take their existing NFTs and create new utilities by embedding additional digital assets inside. So that your NFT can serve now multiple purposes, like a type of package of goods does.

5. NFT2.0 what they might bring. Conclusion.

This emerging technology and its use cases are evolving everyday with the power to change how we interact with games, music, and marketplaces.

Moreover, NFT 2.0 has an ever-expanding set of applications that will find their place in the future and merge between physical and virtual worlds / Metaverse.

If 2021 was the explosion for NFTs with the sales and all the hype, 2022, and the following years could be even more crucial, the potential of NFTs hasn’t even begun to be tapped.

let´s stay tuned! you don´t want to miss it!