What Is ERC-721 ?
INTRODUCTION TO ERC-721
Welcome to the world of NFTs and ERC-721 tokens, these new terms and technology will penetrate many aspects of our lives in the future, which is NOW!
What does NFT stand for?
N-NON, F-FUNGIBLE, T-TOKEN.
The NFT topic is a very big debate, according to our research the first ever NFT project which set the foundation of this new arena was COLOURED COINS. This was back 10 years ago 2012. This project was built on the BITCOIN blockchain as ETHEREUM did not exist yet.
Thank you mummy, BITCOIN, for without you there would not be all of these different blockchains and Dapp’s.
COLOURED COINS represented real life assets like property and cars. Due to the technical complications building on the BITCOIN blockchain the project didn’t develop any further, but it did pave the way for where we are NOW. So, it was BITCOIN’S blockchain that opened pandora’s box of NFT’s.
In 2014 COUNTERPARTY a decentralized exchange and asset creator platform on the BITCOIN blockchain comes to life.
When talking about ART, in 2014 we have QUANTUM by New York artist Kevin McCoy. This is the first NFT art piece. It was built on the NAMECOIN blockchain in MAY 2014. QUANTUM was a pixelated octagon changing shape and colour.
2015 the first blockchain game built again on the BITCOIN blockchain was SPELLS OF GENESIS a trading card game. It also had its own in game currency called Bit Crystal’s.
Step on the stage the ETEREUM blockchain & ETHERIA one of the first NFT’s to be built on ETHEREUM this was the introduction of programmable code through smart contracts. Now developers have the playground they always dreamed off; doing NFT’s on the BITCOIN blockchain was just too difficult. As for NAMECOIN that network is dead, things change fast in this space, so mine where you park your money.
2016 Rare Pepe memes and trading card game FORCE OF WILL join forces with COUNTERPARTY. This opened the door to Rare Digital Art Festival. ETHEREUM began to gain traction due to people trading them in 2017; this is when ETHEREUM really starts to step up its game.
How about tokens?
There are different types of tokens that exist on different blockchains, the first one we will speak about is ERC-721 which run on the ETHEREUM network/blockchain. Remember ETHEREUM is the mother of all smart contract blockchains, it was the first to come up with a standard token system. It is the most popular smart contract blockchain as of winter 2022.
Just so that you are aware there are many different types of ETHEREUM based tokens like ERC-20, ERC-721, ERC-777 and others which exist on other blockchains.
WHAT DOES ERC MEAN?
It means an ETHEREUM REQUEST for COMMENTS. This is a document that smart contract developers write on the ETHEREUM blockchain. The tokens must follow the rules that have been written on these smart contracts.
Let’s define what a token is. To keep it simple, a token is used as a means of exchange for a service or product, a new form of money or you could say it’s nothing new because we have been using air miles, points when you shop at some places and tokens at the funfair. The only difference is now it has been digitized on the blockchain which gives us the opportunity to own and send them anywhere we want to without no permission from a central authority. Don’t you just love that? I know I do.
Before we really dive into what is an ERC-721 lets run through a little background on the creation of ETHEREUM.
There were eight founders that put there 2 pence into the creation of Ethereum, but the main one we often see at the forefront is Vitalik Buterin. Some articles say he was 17 years old others say 19, the point is he was a young buck, big up Mr Buterin you are the man, I’m sure you will be in the history books.
At the beginning there were 5 members including Vitalik, the others were,
Mihai Alisie, Amir Chetrit, Charles Hoskinson and Anthony Di Lorio. The other three came later, Gavin Wood, Joseph Lubin and Jeffrey Wilcke.
So, you see, we must give credit due to all the founders of ETHEREUM for without them we would not be going down the rabbit hole of ERC-721. Let it be known at the time of this writing ETHEREUM is the second biggest crypto out there, to be honest we could see ETHEREUM overtake Bitcoin by market cap and become the number 1 crypto out there.
Oh, by the way, some of these founders are no longer working on ETHEREUM, they have gone off to create their own crypto projects like POLKADOT and CARDANO. So, some of the top crypto’s in the market the founders all know each other but at some point, went off in their own direction to do it their way. Well, it’s all about decentralization, right? LOL. I will leave it there about the founders it’s a bit of a rabbit hole to go down, maybe in another section we can go in further into the story.
So, as we have it ETHEREUM had the first mover advantage in terms of a smart contract protocol. Programmable money you could say, without it there would be no ERC-721.
OK, what exactly is an ERC-721?
To go down this rabbit hole lets go to the year 2017; stepping on the scene Crypto Kitties, a breeding game in which you would create cats! That’s right Cats. Crazy right? I guess humans love these types of mundane games. It was very popular at the time; people would collect different cats and breed away. The ERC721 token made this possible by tokenizing the different aspects of the cats making them unique which in turn gave the developers to create NFT’S. A Non-Fungible Token; this means tokens with different values can now be traded within the ecosphere.
A NEW ERA.
The era of tokenization has now begun. Another Pandora box has now been opened and nothing is going to close it unless a meteorite hits the planet and its game over.
Now anything can be turned into an NFT. Artwork, land, a sword in a game, concert tickets etc. This is a major turning point; the game has seriously changed. Now not only you can own and control your own money via BITCOIN, now you can own digital items which you control. BOOM! I hope you can wrap your head round this and see where we are heading. If you’re reading this in 2022 then you are one of the early ones to the party. Right now, less than 1% of people on the planet understand and overstand NFT’s. Give yourself a clap, you are right at the forefront of a major point in the history of technology.
Now you can send someone a piece of Art to a friend across the planet at the speed of light via the ETHEREUM blockchain that could be worth a huge amount of money; don’t you just love the efficiency era we are now in?
No middleman/woman needed. Jeeze!
WHAT IS THE DIFFERENCE BETWEEN ERC-721 & ERC-20 TOKENS?
Simple answer, ERC-721 are non-fungible and ERC-20 are fungible tokens.
WHAT DOES NON-FUNGIBLE TOKEN MEAN?
It means these are unique cryptographic assets which reside on the blockchain and cannot be copied because of the metadata and also their identification codes. This makes it impossible for one NFT to be like another. Now because of this we can combine two different NFT’S and create a unique 3rd one a bit like breeding animals but digital style.
WHAT DOES FUNGIBLE MEAN?
Something that is fungible is like a dollar bill. I can give you another dollar bill for it or 100 cents or maybe 4 quarters for it, all these methods are interchangeable with each other, and they maintain the same value regardless the form. In the crypto world something that is fungible are the standard ERC-20 tokens, one ETHEREUM token can be swapped with another ETHEREUM token no matter who or where its coming from, they both hold the same value and are the same. Now we could make the argument that each dollar bill has unique serial number on them which is true. Are they now non fungible? In a sense yes but at the same time they are exchangeable for another dollar bill, so let’s keep it moving as this is a standard thing. Everyone just accepts it and that’s the way it is for the time been.
WHAT ARE THE BENEFITS OF FUNGIBLE Vs NON-FUNGIBLE TOKENS?
Both fungible and non-fungible tokens represent objects on the blockchain they have different advantages.
1, Due to the digital medium of these things we can chop them up into small bits as small as we want, they are extremely divisible or another word we can use fractionalisation. The value will not change no matter how small we go.
2, New markets now emerge, for example a content creator can charge a fraction of a token for some content or a service which they could not do before in the old way of doing things.
3, Due to the fractionalisation of these tokens fungible tokens increase liquidity in the currency markets.
1, Trading of things/objects/items that NFT’s represent, we can know trade digital objects with some of them having a physical counterpart easier and faster thanks to the uniqueness of NFT’s and the blockchain which is just a new form of a ledger system with three eyes verifying it.
2, Ownership. You know fully own these things because of the nature of NFT’s and the blockchain. BOOM!
3, Customisation. NFT’s not only hold the data/information of a thing they are associated with, but they can also be customised to store all the history of the thing or item they represent.
I hope this intro to ERC-721 has been simple to overstand to help you on your journey down this long rabbit hole to blockchain and crypto and don’t forget FREEDOM. Don’t stop learning in this space, the more you do you will increase your chances to earn even more money in this space. Your future is GOLDEN, I hope you have a good pair of UV sunglasses on. LOL
I only knew of ERC-20, but I have been enlightened by the other tokens ERC-721, ERC-777, and ERC-1155. This whole course is highly recommended for everyone.