ERC-721 is a token standard for non-fungible tokens on Ethereum. A pillar of the ecosystem, it supports billions of dollars’ worth of NFTs.
In a nutshell, 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). Fungible means interchangeable and replaceable; Bitcoin is fungible because any Bitcoin can replace any other Bitcoin. Each NFT, on the other hand, is completely unique. One NFT cannot replace another.
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.
The main characteristic of ERC-721 tokens is that each one is unique. When an ERC-721 token is created, there is one and only one of those tokens in existence. These tokens, as NFTs, have spread the idea and application of unique assets on Ethereum.
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.
It’s never been easier to buy and store NFTs. Since the NFT craze started in early 2021, dozens of NFT marketplaces and thousands of NFT projects have popped up.
In addition to ERC-721, other token standards, such as ERC-1155, can support NFTs.
Today, the most common use case for ERC-721 NFTs is for digital art. Users buy these NFTs for a number of 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. Some blockchain-based games even let you move your items over to different games. This is the beginning of the metaverse, a persistent virtual environment in which NFTs represent digital objects that can be moved between different platforms.
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.