What is ERC 721?

When any new technology comes onto the market, there can be a lot of new jargon attached to it. These words and phrases can be a disaster to work out, until you begin to understand the vocabulary involved. For example, what is an ERC 721? What is an ERC at all? And what do they have to do with the cryptocurrency universe?

We will break down some of the important components, answering all of those questions, with an understandable explanation. Once you get all the moving parts in order, you can become a master of the crypto space in no time.

Operating on the Ethereum Network

To understand how this method of smart contracts, programmers, rules, and tokens operates, it is best to first comprehend the platform on which they all exist: Ethereum. If you aren’t familiar with the Ethereum Network, it is a decentralized platform based on blockchain technology. It was designed for the creation of, exchange of, and the security of digital assets.

Its native cryptocurrency is simply called Ether, abbreviated (yes, more alphabet for your soup) ETH. With the technology behind a blockchain network, the distributed nature of the system allows for additional security, not to mention the ability for ETH to add to its value.

Able to Exist Thanks to Smart Contracts

As we further explain a token, and specifically its use on the Ethereum network, it is also crucial to understand a baseline idea of what a smart contract is. A smart contract is an automated process, thanks to technology, that operates on an “If/Then” programming.

In simple terms, if “X” occurs, then “Y” will happen. For example, if you give me one ETH, then I will release the NFT. The process eliminates the need for manual processing by a human, not to mention creates an error-free and streamlined route for actions to take place on the blockchain.

The ERC Token Standard

Now that you understand some of the underlying terms and concepts that make-up its process, it is time to dive into the concept of the ERC Token Standard. The basic way to consider an ERC is as a document. Programmers write the document. Programmers use smart contracts to do so.

What is contained in these virtual documents are the rules that govern what a token can and cannot do. It is the standard by which the token must behave. The tokens on Ethereum’s platform must comply to all rules set forth within the document.

Once created by the smart contract programmers, these documents must be reviewed. In order to review an ERC, there is a process for that, too.

The Ethereum Improvement Proposal

The Ethereum Improvement Proposal (EIP) is the process in which the Ethereum community reviews the ERC documents. The EIP describes standards for the Ethereum’s platforms. Some of those platforms include core protocol specifications, client APIs, and contract standards.

Network upgrades are not a part of the EIP process. These are instead discussed separately in what is known as the “Ethereum Project Management Repository.” That makes it all clear, right? We get it, it is a lot of technical mumbo jumbo to some, but we’ll keep breaking it down, one component at a time.

A Chance to Revise

Through the EIP process, the community will review ERC documents (or go over the rules, so to speak). Once reviewed, the community may comment on the document, and allow the programmer the prepared the document a chance to make revisions.

To Become an ERC

Once a revision is submitted, the Ethereum community will accept or deny the programming document. Some of them are accepted after the EIP process. If it is, it is then passed on to be finalized. From there, Ethereum developers implement it.

Once the document is fully implemented on the platform, it is officially an ERC. An ERC is, thusly, first and EIP. Still with us? We weren’t joking about the alphabet soup!

Becoming a Standard

The standard token for the NFTs (non fungible tokens) is the ERC 721. This token discusses non-fungible tokens, as they cannot be divided. Fungible tokens can be.

NFTs can be owned and transacted by individuals, as well as consigned to third-parties, but cannot be split. The NFT also can represent nearly any digital file, not to mention some “real-world” physical assets, too.

What It Does

The ERC-721 is necessary for the functionality for NFTs to be transferred and tracked securely and accurately. Like the ERC-20 does for the fungible side of tokens, ERC-721 also allows for the standard API within a smart contract to be implemented (but for non fungible tokens instead).

The ERC 721

Known as the most popular current standard for the exchange of NFTs, the ERC 721 is the backbone on which other token standards, such as the ERC 1155, were also built.

The standard token for the NFTs (non fungible tokens) is the ERC 721. This token discusses non fungible tokens, as they cannot be divided. Fungible tokens can be.

NFTs can be owned and transacted by individuals, as well as consigned to third-parties, but cannot be split. The NFT also can represent nearly any digital file, not to mention some “real-world” physical assets, too. For these reasons, the ERC 721 makes the most sense to represent and work with NFTs most directly.

The ERC-721 is necessary for the functionality for NFTs to be transferred and tracked securely and accurately. Like the ERC-20 does for the fungible side of tokens, ERC-721 also allows for the standard API within a smart contract to be implemented (but for non fungible tokens instead).

The ERC 721 in Digital Art

Most people think of NFTs as simply art. The non fungible token, which can also represent art, also has the ability to be far more. Digital art does currently make up the biggest current use for the ERC 721 on the Ethereum blockchain.

Most have seen the headlines, with pieces like those created by Digital Artist Beeple. Also known by his birthname, Mike Winkelmann, this digital art star rose to the top of the food chain when his piece, “Everydays — The First Five Thousand Days,” set world records.

Selling for $69 million on the Christie’s auction block (of all places), this transaction caught the attention of far more than the basic IT crowd.

With the use of ERC 721 tokens, such artwork remains possible for the buying, selling, and trading of NFTs on Ethereum.

How the NFT Works with ERC 721

ERC 721 is an open standard, meaning it is able to be used across the platform. The concept behind the ERC 721 describes how to build non fungible tokens with the use of the Ethereum Virtual Machine (EVM) compatible blockchains.

Compatible Rules

With this programming, the ERC 721 has become a frequently used interface for all non fungible tokens because it has a set of rules which make it easy to work with NFTs.

NFTs do not have to operate on the ERC 721 concept. Instead, they can also be ERC 1155 tokens. The ERC 1155 built upon the ERC 721, improving its abilities and streamlining it processes.

Making NFTs Possible

However, without the ERC 721, the growth and development happening thanks to Ethereum’s EVM couldn’t continue. The ERC 721 is the core of the NFT. It provides a set of functions for the NFT. Everything from how to handle it, to token storage, to the transfer of ownership of the tokens, the ERC 721 is required. This programming makes it possible. Even when it comes down to the allowance for anyone to see who owns which token, it is this token standard that makes the tech possible.

NFT function is provided through the unique tech of the token standard itself.

The Tech Side of the ERC 721

If generalizations don’t paint the big picture for you, there is a far more in depth science behind the ERC 721. Utilizing the standing abilities and functions of the Ethereum blockchain, the ERC 721 token standard aims to create a standard by which a smart contract can be implemented to track and transfer NFTs.

Added Accountability

Tracking and transferring NFTs is what keeps the process secure, accurate, immutable, and streamlined. It works off the basic concepts of the blockchain, which is to create a distributed or decentralized ledger. This ledger is shared across a peer-to-peer network, open for all to peruse, review, and check such exchanges.

What It Does

We understand it must set rules, but what is it this particular token standard does? From the technical sense, the ERC 721 defines a “minimum interface a smart contract must implement to allow unique tokens to be managed, owned, and traded.”

ERC 721: To Sell Digital Artwork

Let’s look at an example of one of the most common uses of the ERC 721, an NFT representing a piece of digital art. While this piece can be any number of digital files, such as a .gif, .mp3, .mp4, or .mov file, let’s for the sake of this example say that it is a .jpg file.

Many people new to the NFT marketplace scene, and some that are well into it, question how something like a .jpg file, so easy to screenshot, or copy, or “steal,” can be owned exclusively by one individual.

Always Making It Better

On platforms such as Ethereum, this security of ownership is made possible by the blockchain. It is enhanced and improved upon by the ERC 721. The token standard is simply the language that implies improvement, a betterment, an additional ease that was previously not available.

Developers want to make their lives easier, and these standards help them to do so. In the case of the ERC 721, that means being able to transfer and track NFTs. Without this process being done in a secure and accurate manner, the ownership of an NFT would become muddled.

By operating within the blockchain technology of a platform such as Ethereum, coupled with the use of improvement programming like the ERC system, NFTs can remain secure and accurate, unchangeable by anyone.

Where Do You Store ERC 721 Tokens

Like most crypto currency, there is one way to keep track of, store, and transfer your digital assets. No matter what they represent, tokens must be safely secured. But, that is where a different tech comes into play.

The Digital Wallet

If you have taken any steps into interacting with the cryptocurrency space, you have more than likely started that journey with a digital wallet. Like a wallet that holds your cash in your back pocket, the digital wallet holds your crypto.

The naming of the digital wallet can be somewhat misleading, as it less stores your cash, and more stores your passcodes. From your personal “log in” passcodes, to your public-facing (imagine how to send me money code) data, the digital wallet is where the account information is stored.

Plenty of Choices

There are plenty of makers on the market with digital wallets compatible with the ERC 721 token standard. While Bitcoin may still have the largest marketplace, Ethereum is consistently second on the entire planet. And, at least in this case, that is nothing to scoff at in the crypto game.

Because of its popularity and easy of use, compatible with any EVM-created application, the storage of ERC 721 tokens has become a commonplace for the digital wallet makers. You will have no issue finding compatible wallets in which your can store your ERC 721 tokens.

The Token

ERC 721 remains a free, open standard. Since it describes how to build non fungible, unique tokens on the Ethereum blockchain, it is widely used. This means it is widely traded, bought, sold, and exchanged all on the marketplace.

While most tokens involved in transactions on the marketplace are fungible, the ERC-721 tokens are all unique. One site opts to “think of them like rare, one-of-a-kind collectables.”

ERC 721 Applications Beyond NFTs

Beyond the uses in NFT artwork, the processes to buy NFTs, there are other fun uses of the ERC 721 concept is in gaming. The collection of in game items is just one of the many applications for the tech. Basic games, such as “Ethermon,” exist using the ERC 721.

This game, much like the internationally popular Pokémon franchise, involves unique “monsters” which are collectable. Each monster starts at a level one. To gain in levels or values, they “battle.”

One Game’s Application of the ERC 721

While the game requires complex coding and programs to be written in order to operate, the contract operates because of the features of the ERC 721. In this case, the minting in the game is a function provided to by the ERC 721 contract that the game extends from on EVM.

In the Ehthermon game, the ERC 721 token standard safely assigns the ID to an address by checking that the ID does not already exist. In other words, it ensures that, as an NFT, there are no copies. There can be no duplicates. Non fungible tokens are defined in this way, and by applying the token standard, this game is able to ensure that securely and accurately.

Already Improving on the ERC 721

With an ever-changing world of tech, the ERC circle is no different. While the entire industry is still in the early stages, improvements and changes are already well underway. The entire concept of the ERC is to correct bugs, make a process easier, and streamline programming on the Ethereum platform.

One way that is already occurring is with a new “kid on the block.” The ERC 1155 is already taking some of the standard token status away from the ERC 721.

The ERC 1155: An ERC 721 Update

The ERC 1155 token standard can be considered a newer, faster, better ERC 721. But since ERC 721, 2.0 sounded a bit wordy, 1155 it is. (We’re kidding. The number functionality comes in due to the naming and the contract’s address.

The ERC 1155 built on the tech of the ERC 721, making it improved, with wider capabilities.

New Updates, New Changes

With the use of the ERC 1155, both the ERC 20 (the standard token used for fungible tokens) and the ERC 721 (the standard token used for non fungible tokens) were both combined, taking the best parts of each. Consider ERC 1155 much like the “love child” of the two predecessors. All the best parts of the “parents” combined and made a wonderful, new life.

Some of the features that the ERC 1155 built upon, and brought to the Ethereum network, include:

• An infinite number of tokens to be exchanged in one smart contract, atomic swaps
• The ability to work across blockchains
• Major decreases in gas fees
• Token balances to be indexed (without requiring the smart contract to do so)
• The use of semi fungible tokens

Changes are on the horizon. With the finalization of the ERC 1155 occurring in 2019, it has already gained a lot of traction, being adopted by many of the EMV applications already.

A Strong Future Ahead

Technology is always changing, improving, and bringing about more possibilities. The cryptocurrency is no different.

ERCs are just one small part of the bright future of the Ethereum platform, and the industry as a whole. One of the most exciting aspects of the cryptocurrency space is the room for that growth. There is so much that the technology can do in the coming years.

Some of those that will make a major impact on the field have yet to fully discover it, at all. There are facets not even created. How many industries can you say that about, that there are lands left to explore?

Will ERC 721 Continue?

While there are always updates and improvements being made on the Ethereum network, it is not likely that the basis on which these applications was created will ever fade away completely. While the second largest crypto exchange still has a heartbeat, these token standards will continue to build on one another.

Tech improving upon tech is an exciting and prosperous adventure, and ERCs are the way that Ethereum will continue to grow.

Staying On Top of Change

Keeping informed of these constant updates can be a job in itself. There are always changes. Markets are volatile. Concepts are ever adapting and changing.

Staying on top of those changes and being informed is the best way to continue to interact with the platforms. You are investing your digital assets, and it is important to know how to do so wisely.

Thankfully, your research and understanding of the ongoing changes, updates, and new technologies can be streamlined as efficiently as smart contracts by following the resources provided by FLOLiO. Our well-researched and frequently updated articles can allow you to stay informed of what the industry is seeing, even when things are changing daily.