What is ERC-721?  Understand the pattern that separates cryptocurrencies from NFTs created in Ethereum

What is ERC-721? Understand the pattern that separates cryptocurrencies from NFTs created in Ethereum

If ERC-20 is the standard Ethereum token responsible for launching 20,000 initial currency offers (or ICOs), then ERC-721 has introduced thousands of non-fungible tokens (or NFTs). Once the little known cousin of the ERC-20, the ERC-721 has thus become the mainstay of the Ethereum ecosystem, serving as the basis for billions of dollars in NFTs.

Blockchains are revolutionary because, for the first time, any kind of standard can be controlled by a computer program. Prior to the ERC-721 Token Standard, most blockchain tokens served either as a currency, a reserve of value (like gold), or as a form of stock or equity.

With ERC-721, tokens are easy to create that are verifiable, cryptographically unique, and can be linked to unique content from art to music to sneakers.

What is ERC-721?

The ERC-721 is, first and foremost, a kind of standard: a model or format that other developers agree to follow. Developers follow the same standard because it makes code programming easier, predictable, and reusable.

These values ​​are completely voluntary, but indicate compatibility with a wide variety of applications, including exchanges, decentralized applications (or DAPs) and wallets, following a widely used standard.

The ERC-721 is an Ethereum token standard for NFT. The word “fungible” means “interchangeable” and “replaceable”. Bitcoin (BTC) is fungus because any bitcoin can be replaced with another bitcoin. However, each NFT is completely unique. One NFT cannot replace another.

Who discovered ERC-721?

The initial ERC-721 specification was presented by Dieter Shirley as an Ethereum Improvement Proposal (or EIP), the process of introducing new standards to the network.

Anyone can submit an EIP, but it goes through a review and revision process before being accepted by the community. Once accepted, the EIP becomes a request for comments on Ethereum (or ERC), which is ideal for applications on Ethereum. The official authors of the ERC-721 standard are William Antriken, Dieter Shirley, Jacob Evans, and Nastasia Schach.

The older NFT CryptoKitties project followed the ERC-721 standard. The Kitty Collectible Card game used a beta version of the ERC-721 before the standard was finalized.

A brief history of the ERC-721 standard

– September 2017: Dieter Shirley Introduces EIP-721

– December 2017: CryptoKitties has become so popular that it overwhelms the Ethereum network, making it unreasonably slow.

– December 2017: NFT OpenSea Market Launch – By 2022, it is the industry’s largest, monthly sales record of 5 billion.

– June 2018: ERC-721 has been adopted as “final”, meaning there is widespread consensus among Ethereum developers to accept it as a standard.

– May 2019: Nike applies for and receives a patent that uses an ERC-721 standard

– February 2020: Introducing Decentland, a virtual world created using standard ERC-721 NFTs that represent virtual terrain and objects.

– March 2021: Beeple’s “EveryDAYS: The First 5,000” sold for .3 69.3 million at Christie’s Auction House.

– December 2021: 2021 NFT sales reach $ 25 billion.

What’s so special about ERC-721?

The main feature of ERC-721 tokens is that each of them is unique. When an ERC-721 token is created, it has only one. These NFTs spread the idea and application of unique resources in Ethereum.

Previously, ERC-721 tokens were also known as “deeds” (or deeds), because owning an ERC-721 means that the holder is entitled to that token and what it represents.

However, the authors of the ERC-721 decided to use the term “non-fungible token” for ERC-721 tokens because the term “deed” was very closely associated with ownership and NFT has many potential implementations.

How is the ERC-721 standard NFT made?

A token is a separate contract or piece of code in Etherium. An ERC-721 token is created by programming a portion of the code into a separate contract programming language, such as Solidarity, which follows the same model or codebase.

When the basic model is followed, it is possible to decide on the unique details of the token created such as the creator, the name of the token, the symbol, etc. It is possible to program additional functionality in your NFT, but the real fun is how NFT interacts with other standalone agreements.

How is it possible to get ERC-721 standard NFTs?

Buying and saving NFT has never been easier. Since the NFT craze began in 2021, dozens of NFT markets and thousands of NFT projects have sprung up.

In addition to ERC-721, it supports other token values ​​such as ERC-1155 NFT. However, most NFT buyers are more interested in NFT than the standard with which the token was created.

To buy your own NFT, just access the well-known NFT markets like OpenSea and Rarible. Connect an Ethereum wallet, such as MetaMask, and search until you find an NFT that fits your choice and fits your pocket. To buy an NFT, make sure you have enough Ether (ETH) in your wallet and follow the on-screen instructions.

All major markets have intuitive user interfaces that make it easy to purchase an NFT with just a few clicks. Also, most Ethereum compatible wallets support the ERC-721 standard. When you buy NFT, you are the right owner and no one can take it away or steal from you!

To store your NFT, you’ll need an Ethereum wallet, whether it’s a software wallet like Metamask or a hardware wallet.

What to do with ERC-721 standard NFT?

Currently, the most common case for NFT is digital art. Users buy these assets for a number of reasons, including supporting artists, in the hope that prices will rise, trade NFT quickly to generate profits, or simply expect them to appreciate the industry as a long-term investment.

But the use of NFT goes beyond the industry.

NFTs are commonly used in blockchain-driven games such as Gods Unchained, which represents a unique asset within the game. The online trading card game uses NFT which represents a digital card that can then be traded to other players or used in battle.

Some blockchain games allow you to move items to different games. This is the beginning of Metavers – a seamless, virtual environment where NFTs represent digital objects that can be transferred across different platforms.

Music NFTs are also becoming increasingly popular. Platforms like Audius make it easy for artists to create their work in the form of ERC-721 tokens.

Real-world uses are also beginning to emerge. For example, the ability to issue documents to your home as an NFT to make real estate transactions more efficient. You can use an NFT to represent high-value assets like a Rolex watch.

The future of NFTs and ERC-721 tokens is part of a similar story, but not exactly the same.

The ERC-721 was Ethereum’s first NFT token standard. This has paved the way for the expansion and use of existing NFTs. Since 2017, when the ERC-721 was introduced, other NFT compliant token values ​​have emerged, such as the ERC-1155.

The goal of these new standards is to address some of the major challenges surrounding ERC-721 tokens. For example, ERC-721 has limited functionality when it comes to interacting with other values, such as ERC-20.

Also, the ERC-721 token takes up a lot of space in the blockchain. Thus, they can create network congestion, resulting in high transaction fees which can make their acquisition extremely expensive.

That said, the ERC-721 will have a place in the future of NFT. While they may not be the best use for games and industries, they can serve as a link between blockchain and real-world resources such as assets, digital identities, products, and more.

Ethereum is not the only blockchain to support NFT. Other standalone contract blockchains such as the BNB chain and Avalanche have emerged in recent years, hosting their own NFT. Thus, new token values ​​based on ERC-721 have emerged, such as BEP-721 from the BNB chain, and SNIP-721, from the Secret Network.

Still, the ERC-721 is fully operational, helping to tokenize anything unique, from one’s birth certificate to a rare item of property, art or video game.

The most exciting proposal is how ERC-721 tokens can be used in individual contracts to create completely new ways of transacting and business models.

NFTs and ERC-721 are still in their infancy NFTs are unique in that they give the ability to tokenize something and prove ownership using blockchain technology. This is a powerful concept and it can still be explored a lot. The future of NFTs is limited only by its ability to find new uses for this technology.

* Translated by Daniela Pereira do Nascimento with permission decrypt.co.

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