If ERC20 launched a thousand ICOs, then ERC721 launched a thousand cartoon cats. The ERC721 is the lesser-known cousin of the ERC20, but a no less important part of the Ethereum ecosystem.

Blockchains are revolutionary because, for the first time, any type of value could be controlled by a computer program. Before the ERC721, most tokens on blockchains functioned either as a currency, a store of value like gold, or a kind of stock or equity. With the ERC721, it became easy to create unique tokens that were collectible like a digital cat or were used to represent something like a real living cat.

What is ERC721?

ERC721 is firstly, a type of standard and a standard is simply a template or format that other developers agree to follow. Developers follow the same standards because it 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.

ERC721 is a token standard on Ethereum for Non-Fungible Tokens (NFT). Fungible means interchangeable and replaceable so something like Bitcoin is fungible because any Bitcoin can replace another Bitcoin. Each NFT, on the other hand, is completely unique. One NFT cannot replace another.

Who Invented ERC721?

The initial ERC721 specification was proposed by Dieter Shirley as an Ethereum Improvement Proposal (EIP), which is basically a process for introducing new standards to Ethereum. Anyone can submit an EIP, but it goes through a process of review and iterations before it is accepted by the community. Once accepted, the EIP becomes an Ethereum Request for Comments (ERC), which is a standard for Ethereum applications. The official authors of the ERC721 standard are William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs.

Did you know?

Each

CryptoKitty follows the ERC721 standard and the cat collecting game used the beta version of ERC721 before the standard was finalized. The most expensive CryptoKitty was purchased in September 2018 for 600 ETH or about $170,000 at the time.

A brief history

  • September 2017 – Dieter Shirley introduces EIP721.
  • December 2017 – CryptoKitties is so popular that it congests the Ethereum network and caused it to slow down significantly.
  • June 2018 – ERC721 is accepted as ‘final’, which means there is a strong consensus among Ethereum developers to accept it as a standard.

What’s so special about it?

The main characteristic of ERC721 tokens is that each one is special. When an ERC721 token is created, there is one and only one of those tokens in existence. These Non-Fungible Tokens (NFTs) have spread the idea and application of unique assets on Ethereum.

Did you know?

ERC721 tokens are also known as deeds because being in possession of an ERC721 means that the holder owns the rights to that token and what it represents. However, the authors of ERC721 decided to use the term Non-Fungible Token (NFT) for an ERC721 token because the deed was thought to be too closely associated with property and NFTs could be used for so much more.

What else is different?

There is either one NFT or there are none. With ERC20 tokens, there can exist anywhere from one hundred to one-quarter to one million, but with NFTs there is only one.

How are ERC721 tokens produced?

A token is simply a smart contract or a piece of code on Ethereum. The ERC721 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 in your NFT, but the real fun is how the NFT interacts with other smart contracts.

How do you get hold of ERC721 tokens?

There are a variety of ERC721 tokens now available on Ethereum. The most popular and well-known being CryptoKitties, but there are also many others, which can be exchanged or traded on NFT marketplaces such as OpenSea, Emoon, and Rare Bits. Wallets such as MetaMask can be used to hold, transfer, and receive ERC721 tokens.  

What can you do with ERC721 tokens?

You can create your own ERC721 tokens or use NFTs in dapps like CryptoKitties, Decentraland, and GodsUnchained. At the moment, ERC721 tokens are mainly used as collectibles with the idea being that each NFT will become more expensive or desirable over time.

The Future

The future of ERC721 will be to tokenize anything that is unique. This can mean anything from a person’s birth certificate to property, art, or even rare items in video games. The most exciting and promising potential of ERC721 tokens will be seeing how they are used in smart contracts to create completely new business models and ways to transact.