What is an NFT - ERC721

What is an NFT - ERC721

ERC721 tokens also called NFTs or Non-Fungible-Tokens are non fungible tokens that represent a unique, indivisible, indestructible, verifiable and irreplaceable real-life or digital object.

Before ERC721 tokens, a token could only be used as a haven of value, a means of payment, or as a share.

Just as the ERC20 protocol describes the rules that a token must have before being launched in phase ICO, ERC721 gives developers a set of rules that make their lives easier when tokenizing digital or real objects.

The initial specification of ERC721 was proposed by Dieter Shirley under an EIP (Ethereum Improvement Proposal), which is the process of introducing new standards in Ethereum. Anyone can propose an EIP and if they win enough support and are approved by the community, they end up being accepted.

At the moment ERC721 tokens are being used to represent collectibles that are bought for mere speculation hoping that their value will increase over time.

Wallets like MetaMask allow the user to hold, transfer and receive ERC721 tokens as if it were just another currency.

Examples of NFT tokens

CryptoKitties

CryptoKitties is a game about digital kittens, from which you can breed new cats that acquire characteristics from their parents. Each cat is considered an NFT and therefore is unique and has different characteristics. Users can buy and sell CryptoKitties from each other by letting the market decide their price.

The CryptoKitty sold for a higher price is called Dragon and was sold for 600ETH (then $ 170,000) in September 2018.

dragon
Dragon the CryptoKitty

Decentraland

Decentraland is a virtual platform reminiscent of the video game “Second Life” and offers a world with territories and plots where titles are constantly exchanged proprietary. For example, a user decided to buy 64 lots of land and combine them into one, calling himself “The secrets of Satoshi’s Tea Garden”. The land was subsequently sold for $ 80,000 solely because of its prime location and easy in-game access.

decentraland
Decentraland

Superrare

superrare
Superrare.co marketplace

On the Superrare.co marketplace, artists upload their works in digital format and tokenize them to be awarded an NFT.

Once an artwork is tokenized, it is displayed in the Marketplace and people can bid on it. Many of them are being sold for astronomical prices of thousands of dollars, surprising considering that they do not exist physically but only exist digitally on this website.

Only invited artists can create and sell art on this platform and to be accepted it is necessary to pass a selection process and guarantee to Superrare that the uploaded art is not tokenized on any other page.

When an artist sells her work for the first time he will get 85% of the profits obtained and the platform will get 15% in commissions. After this, any successive sale will automatically generate 3% for the original author thanks to the associated smart contract.

Buyers of the works of art are content to have their name listed below the painting on the website and to be able to sell it again whenever they want if someone is willing to buy the piece from them.

Keep in mind that since they are digital works, nothing prevents a user from right clicking and downloading the work in mp4 or png format. It is not the fact that this work cannot exist elsewhere that causes interest, but rather the ownership of the ERC721 token that represents it.

In this way, Superrare is not only a marketplace but also a Digital Museum where the creators and owners of each of the exhibited works are listed next to each piece.

In addition, since the tokens are built on the Ethereum network, it is perfectly possible to see the entire history log from the origin of the creation of the NFT until today, visible to everyone in a public way.

Other uses

La obra de Alien vendida por 761,000 USD

NFTs can be used to represent items in video games, such as weapons or trading cards, but they could also represent real-life objects such as homes or vehicles.

Check OpenSea.io to see different digital objects that are being sold.

Daniel's Picture

About Daniel

Product Owner

Madrid, Spain CRIPTOMO

Comments