In 2017, ERC-20 was the ETHereum token standard that launched a thousand ICOs. Today, ERC-721 has launched a thousand non-fungible tokens (NFTs). Originally the lesser-known cousin of the ERC-20, ERC-721 has grown to become a pillar of the Ethereum ecosystem, underpinning billions of dollars worth of NFTs.
Before the ERC-721 token standard, most tokens on blockchains functioned either as a currency, a store of value like gold, or a kind of stock or equity. With ERC-721, it became easy to create tokens that were verifiably, cryptographically unique – and that could be linked to unique content, from artwork to music to sneakers. Let’s dive more into ERC 721 meaning.
721 Meaning: What Does ERC 721 Mean?
Firstly, ERC-721 is a type of standard – a template or format that other developers agree to follow. Following the same standards makes writing code easier, more predictable, and reusable. These standards are completely voluntary, but following a widely used standard means compatibility with a wide variety of applications including exchanges, dapps, and wallets.
ERC-721 is a token standard on ETHereum for non-fungible tokens (NFTs), in which its key feature is that each token is unique. When an ERC-721 token is created, there is one and only one of those tokens in existence. These tokens, commonly known as NFTs, have spread the idea and application of unique assets on Ethereum.
Fungible on the other hand, means interchangeable and replaceable; Bitcoin is fungible because any Bitcoin can replace any other Bitcoin.
How Are ERC 721 Tokens Created?
A token is simply a smart contract or a piece of code on ETHereum. An ERC-721 token is created by writing a piece of code in a smart contract programming language like Solidity that follows the same basic template or base code.
Once the basic template is followed, you can decide on unique details about the token you are creating such as the owner, name of the token, symbols, etc. You can even program extra functionality into your NFT, but the real fun is how the NFT interacts with other smart contracts.
Who Invented ERC 721?
The initial ERC-721 specification was proposed by Dieter Shirley as an ETHereum Improvement Proposal (EIP), which is a process for introducing new standards to Ethereum.
Anyone can submit an EIP, but it goes through a process of review and revision before it is accepted by the community. Once accepted, the EIP moves to an ETHereum Request for Comments (ERC), which is a standard process for Ethereum applications. The official authors of the ERC-721 standard are William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs.
History Of ERC 721
September 2017: Dieter Shirley introduces EIP721.
December 2017: CryptoKitties is so popular that it congests the ETHereum network, causing it to slow down significantly.
December 2017: NFT marketplace OpenSea launches. By 2022 it is the largest NFT marketplace, with $5 billion in monthly sales.
June 2018: ERC-721 is accepted as ‘final’, which means there is a strong consensus among ETHereum developers to accept it as a standard.
May 2019: Nike files and is awarded a patent that utilizes ERC-721 standard.
February 2020: Decentraland, a virtual world built using ERC-721 NFTs to represent land and virtual objects, launches.
March 2021: Beeple’s "EVERYDAYS: THE FIRST 5,000 DAYS" NFT sells for $69.3 million at Christie’s auction house.
December 2021: NFT sales in 2021 reached $25 billion.
Use Cases Of ERC 721
Today, the most common use case for ERC-721 tokens (NFTs) is for digital art. Users buy these NFTs primarily for their non-fungibility, along with a number of other reasons including supporting artists, investing long-term in hopes that the price will go up, quickly flipping/trading NFTs for a profit, or simply because they like the artwork.
However, use cases for NFTs extend beyond digital art:
- NFTs are commonly used in blockchain-based games, such as Gods Unchained, to represent unique assets within the game. The online collectible card game uses NFTs to represent digital cards, which can then be traded with other players or used in battles.
- Music NFTs are also becoming increasingly popular. Platforms such as Audius make it easy for artists to mint their work as ERC-721 tokens.
- Real-world use cases are also starting to emerge. For example, the ability to mint the deed to your house as an NFT to make real estate transactions more efficient. Or using an NFT to represent ownership of high value assets such as a Rolex watch.
The use cases listed above are just a small slice of existing and possible scenarios, and it is no doubt non-exhaustive when it comes to ERC-721 tokens.
Closing Thoughts
NFTs, ERC-721 or otherwise, are still in the early days where “ERC 721 meaning” queries are just beginning to increase. These tokens offer anyone the ability to tokenize anything that is unique and verify proof of ownership using blockchain technology. It is a powerful concept in its own rights that is only just beginning to be explored.
The future of NFTs is limited only by our ability to find new and novel use cases for the technology. The most exciting prospect will be seeing how ERC-721 tokens can be used in smart contracts to create completely new business models and ways to transact.
