What is an ERC 721 token? The era of digital collecting (2024)

What exactly is an ERC721 token?

ERC-721 is a type of token created for the Ethereum network under the standards of its smart contracts. The proposal for the creation of this new standard was presented by the developer Dieter shirley at the end of 2017.

Specifically, the standard was designed with the objective of creating interchangeable tokens, but with the particularity of being unique and non-expendable. In other words, each token is unique in its entire existence and cannot be deteriorated or destroyed.

The objective behind this, is to develop unique tokens, where their intrinsic value is given by their rarity. This will surely make ERC-721 tokens very reminiscent of collectibles and you are right. Clearly, ERC-721 tokens were created with this same perspective.

In short, an ERC-721 token is nothing more than a token."collectable".

Thus, we can define the value of an ERC-721 token based on the rarity and particularity of its properties, which means that it will be more coveted by its future buyers or "Collectors".

This has allowed to build a whole new ecosystem of tokens on the blockchain. Ethereum,powered by the concept of digital shortage, where the value of objects is maintained and increases due to the uniqueness of their properties. And it is that, something that was easy to replicate, would not attract so much attention.

Why has the ERC-721 token been created?

The reason behind the creation of the ERC-721 tokens, is the possibility of generating a unique token with unrepeatable properties. If you still wonder at this point What use can these types of features have? Well, the truth is that it becomes tremendously convenient in cases where we want the "Particularity, singularity or uniqueness" of the token its main privilege. And therefore, that the desire to achieve it is inversely proportional to the number of similar tokens there are.

Consider the case where a museum wishes to register its most valuable works for auction. And that in addition, you can obtain one of these works thanks to a special raffle that will take into account the ticket of each specific participant. In this case, each ticket is issued with unique and unrepeatable characteristics. The person with the winning ticket will not only have a ticket, they will have access to a valuable work of art.

In this example, the ticket is our ERC-721 token, an issued token with characteristics that make it unique. And that uniqueness is what gives it all its value (the work of art).

With ERC-20 tokens, this example would be impossible to perform. The reason is that ERC-20 tokens themselves are divisible, expendable and interchangeable. Features that are not possible with the ERC-721 token, because its value and uniqueness remain intact by forming a "unit" at all times.

At the time of writing, there are a total of 1.941 different ERC-721 tokens created. You can review the data at any time from here.

Characteristics of ERC-721 tokens

Structurally, ERC-721 tokens closely resemble their siblings ERC-20 tokens. The Smart contract base that allows its operation, has in fact similar functions. However, some of these features allow both tokens to be differentiated in the desired way.

Among such properties are:

1. Each ERC-721 token has a name. This field is used to indicate the name of the token to external contracts and applications.
2. They have defined a symbol which allows DApps can access your abbreviated name.
3. They have defined the supply total of the token.
4. They contain a field indicating the Libra of tokens within an address.
5. Each ERC-721 token has a defined field of functions of the owner, used to define the ownership of the token and how it can be transferred.

6. They have defined a field called Owners, which allows to guarantee the non-fungibility of the token and cryptographically identify it.
7. It has a field called Approval, whereby permission is granted to another entity to transfer the token on behalf of the owner.
8. They also have another name field defined Thomas de possession, which allows a user to possess a certain number of tokens and wishes to withdraw them from another user's balance.
9. On the other hand, the field of Transfers, allows tokens to be sent to another user in the same way as a cryptocurrency and details which account sent the token and which received it, along with the ID of that token.
10. Due to the uniqueness of the token and the fact that a user can have several ERC-721 tokens, the field has been created Owner Token by index. This function allows token tracking by means of a unique ID.
11. Finally, the ERC-721 tokens have a field called Metadata of the token. It is precisely this that allows its non-fungible condition and houses all those properties that distinguish a token from all the others.
12. These tokens do not allow allowances in its structure.

The first use of ERC-721 tokens

https://twitter.com/CryptoKitties/status/937435141424660480

We are the first ERC # 721 compliant non-expendable token on the Ethereum blockchain. It is a fully functional dApp with smart contracts and a web user interface.

CryptoKitties developers on their official account on December 3, 2017.

Differences between ERC-20 and ERC-721 tokens

Among the main differences between the ERC-20 and ERC-721 tokens we highlight:

1. Unlike ERC 20s, ERC-721 tokens are NFT tokens or not fungible (Not Fungible Token). This means that the ERC-721 tokens do not deteriorate or are destroyed as it happens with the ERC-20 tokens.
2. Another difference between ERC-721 and ERC-20 tokens, is that ERC-721 tokens No. are divisible or divisible. ERC20 tokens instead are.

Uses and applications of ERC-721 tokens

One of the first examples of use we could experience with the CryptoKitties y Decentraland. Of these examples, the most talked about is perhaps the first. The DApp CryptoKitties, is a game that allows you to own, breed and match virtual feline characters. Each kitten represents an ERC-721 token and this one presents unique characteristics that differentiate it from any other kitty. A kind of digital mascot on a blockchain. In addition, CryptoKitties allows you to perform other actions, among which stand out: collecting and searching for other cats with even more peculiar attributes.

With this, CryptoKitties makes you a collector of virtual cats that base their value on rarity. For this reason it is not strange to observe that those who participate in this game put their crawls digital in exchange for significant sums of money. Perhaps the greatest example in this regard is the CryptoKitties Genesis Cat, which sold for an amount of 247 ETH (about $ 117.000 USD) on December 2, 2017.

Something similar has happened with Decentreland, a game where you get a lot of virtual land where you can build. On one occasion, for example, a Decentreland lot was auctioned for $ 9.000.

However, beyond the games section, the ERC-721 token has other possibilities. For example, we can use it to assign ownership and possession of different elements in real life in a cryptographically secure way. These elements can be houses, land, vehicles and even a virtual identity. As you can see, the ERC-721 token would play a role very similar to that of title or deed, which assigns ownership to whoever owns it.

It doesn't matter what it is, if what you plan to tokenize is unique in all its aspects, the ERC-721 standard is designed precisely to help you in that task and allow you to transform it into a token within the Ethereum blockchain.