ERC stands for Ethereum Request for Comments. This acronym is used on the Ethereum blockchain to describe token standards, application-level specifications, name registries, library/package formats, and more. There are 9 key ERCs, but in this overview, we will focus on the ERC-721 definition.
What Is ERC-721?
ERC-721 is a standard that determines how to build non-fungible tokens (NFTs) on the Ethereum blockchain. It defines a minimum interface that a smart contract must implement to enable unique tokens to be owned, managed, and traded. ERC-721 doesn’t enforce a standard for token metadata or restrict developers from adding supplemental functions.
While most tokens are fungible, which means that they are identical in nature, divisible, and exchangeable, ERC-721 tokens are all unique and cannot be copied, substituted, or divided.
What You Need To Know About ERC-721
ERC-721 was created through an Ethereum Improvement Proposal (EIP) submitted on January 24, 2018, by William Entriken, Jacob Evans, Dieter Shirley, and Nastassia Sachs.
Its primary goal was to address the interface incapabilities of ERC-20, a technical standard for fungible tokens. While ERC-20 was sufficient for tracking the digital ownership of identical tokens, it failed to offer a solution for unique items.
An Ethereum decentralized application named CryptoKitties launched the first NFT project using the ERC-721 smart contract. It is a game that revolves around collectible NFTs in the form of unique digital cats.
NFTs based on ERC-721 can be tied to:
- Virtual collectibles: Cryptokitties, RarePepe, Axie Infinity, etc.
- Physical property: artworks, vehicles, houses, and so on
- Negative-value assets: loans, burdens, and other responsibilities
It means that NFTs can be utilized for representing unique goods from both the digital and real worlds, enabling users to prove ownership via blockchain records.
Note that the creation of an ERC-721 token also requires the contract to be compliant with the ERC-165 standard.
