non-fungible tokens increasingly have more use cases in different sectors of the crypto space. They are unique assets and have grown exponentially since the pandemic year. While ERC721 tokens have become mainstream, they had total sales of $25 billion in 2021.
Understanding what NFTs are and how they operate requires a basic knowledge of the ERC721 protocol. Hence, let us see what the ERC721 token is and what it offers.
What is ERC721?
ERC721 is a token development standard for developers on Ethereum’s network. The standard only works for non-fungible tokens and has more complexities than the ERC20 protocol. It has numerous optional extensions and operates across several contracts.
The word “non-fungible” implies that the tokens can neither be interchanged nor replaced. For instance, Ether is fungible because any Ether can replace another, irrespective of the location. Hence, every non-fungible token is unique and has no replacement.
About The ERC721
Dieter Shirley and a few other developers proposed the first ERC721 initiative in September 2017 as an improvement proposal for the Ethereum network. Shortly after its introduction, the OpenSea marketplace for NFTs was launched.
Improvement proposals often go through different reviews before being accepted as an ERC. So, the NFT token standard became functional in 2018. It was seen as the redefining protocol for token development because of the uniqueness attached to its tokens.
The ERC721 tokens are deeds because everyone who holds an ERC721 automatically owns full rights to the token and whatever value it symbolizes. However, they are preferably called non-fungible because:
– They have close utilities with properties
– They have numerous potential uses.
Unlike ERC20, tokens built on the ERC721 standard do not have the same values throughout the ecosystem. Their uniquenesses emerge from their ages, rarity, and quality.
Wallets can effectively display information about fungible and non-fungible tokens and give users leverage to use them. It is possible because the ERC721 standard defines some functions that make it compatible with the ERC20 standard. These functions offer Smart contracts that work with this standard the leverage to function like cryptocurrencies (Bitcoin, Solana, etc.).
While ERC721 provides uniqueness on its tokens, ERC721A features more perks on these rare assets. The ERC721A is a modification of the ERC721 and works on par with certain conditions that create slight alterations in NFT development and operation. The standard allows Token IDs to grow from zero to any level and reduces gas prices levied on NFT minting. However, the introduction of the ERC721A is not to disrupt the original standard. Instead, it is meant to fit tokens perfectly.
How To Get An ERC721 Token
ERC721 or non-fungible tokens are easier to obtain compared to ERC20 and other blockchain tokens. This is because of their intuitive technology and widespread adoption. Unlike their predecessors in the crypto space, they began in the wake of 2021.
The first step to getting an ERC721 token is heading over to a trusted NFT marketplace that lists the kinds of tokens you want to buy. An NFT marketplace is a platform for buying and selling NFTs. Some of them include Larva Labs, SuperRare, and OpenSea.
Before buying an NFT, you must have connected your Ethereum wallet like MyEtherWallet or MetaMask to the marketplace. After clicking, you can scroll through the list of available tokens and select the one that fits your choice. It is essential to have enough Ethereum in your wallet to cover your token payment and gas charges.
NFT marketplaces are intuitive in their user interfaces and experiences. Hence, purchasing a non-fungible token is as easy as following the marketplace’s instructions with a few clicks. Note that all major wallets that are compatible with Ethereum work with the ERC721 standard. Note that your software or hardware wallet is necessary for storing your non-fungible token.
Every NFT you buy is solely yours. Hence, you can neither lose it nor share the ownership with someone or an entity. However, your NFT’s safety depends on you. This means that you should not expose your wallet keys to anyone and not fall for scammers.
How ERC721 Works
ERC721, just like other token standards, operates on some functionalities. These functionalities define and distinguish it from other standards. They are listed below:
- The transfer of tokens between accounts.
- The display of token balances of accounts.
- Live updates of a token’s total supply within the ecosystem.
- Approval of token usage for third-party accounts.
- The revealing of the owners of specific tokens.
What can you do with ERC721 NFTs?
Digital art is the most common way that ERC-721 NFTs are used today. Users buy these NFTs for a variety of reasons, such as to support artists, invest long-term in the hopes that the price will go up, quickly flip/trade NFTs for a profit, or just because they like the artwork.
Frequently Asked Questions
What Is An ERC721 Token?
An ERC721 token is a non-fungible token that developers use to attribute ownership to digital assets. It is neither interchangeable nor replaceable.
What Factor Differentiates An ERC721 From ERC20 Token?
The factor that differentiates an ERC721 token from an ERC20 is fungibility. An ERC721 token is non-fungible and represents only one digital entity, while an ERC20 token is fungible and represents several entities.
Does The ERC721 Standard Work With Ethereum Wallets?
Yes, the ERC721 standard supports Ethereum-enabled wallets.
Examples Of ERC721 Token
Some examples of ERC721 tokens include BEEPLE2.
Where Can I Get An ERC721 Token?
You can get an ERC721 token from NFT marketplaces.
What is ERC721A?
ERC721A is a modification of the ERC721 standard. It facilitates reduced gas charges during NFT transactions.
Conclusion
The ERC721 standard is a program that facilitates the creation of non-fungible tokens on Ethereum’s network. Hence, tokens created through it are referred to as ERC721 tokens. Before ERC721 was introduced, tokens operated on blockchains as either currency, physical assets, or stocks. However, with the NFT token standard, creating verifiable and unique tokens that are linkable to unique products is easy.
Hence, NFTs are created to represent physical and digital assets like landed properties, certificates, messages, information, and many other value-accruing entities. These tokens have numerous functionalities across several industrial fields, spanning sectors like arts, sports, real estate, music, fashion, etc.
It is necessary to note that token standards like ERC1155 support non-fungible tokens. However, NFT buyers are less concerned about token standards when purchasing NFTs.
