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Have you heard of ERC’s? Today we are going over Ethereum Request for Comment Issue #721 (ERC-721). It is a non-fungible token standard designed to represent assets on the blockchain.
We’ll break down exactly what that means.
What is the purpose of ERC-721?
These smart contracts cannot be spent as a medium of exchange. For example a rare baseball card may have significant value, but good luck trying to buy milk with that card, even if it’s a 1909 Honus Wagner. This is a property known as non-fungibility. Even though those two things have value, they cannot be directly exchanged for each other.
So why would anyone want a non-fungible token or smart contract if you cannot spend it?
There was a pretty interesting event that sparked this proposal. You may remember a popular application called Cryptokitties that was released in December 2018. While transactions took place in cryptocurrency and data was imprinted onto the blockchain, the actual Cryptokitties did not exist on the chain.
Before then, there was nothing that could represent a unique asset. As a result, ERC-721 was introduced, and now these non-fungible tokens could represent assets like Cryptokitties.
What other assets could be represented as these non-fungible tokens?
Limiting the impact and application of ERC-721 to Cryptokitties would be a mistake. There are so many different potential use cases that ERC-721 opens up. For example, the tracking of ownership or a deed just became that much easier to accomplish on the Ethereum blockchain. Furthermore, any title, document, unique contract, or other asset is now able to be represent on the blockchain.