what is an ERC721 Token?
Coinciding with the notorious boom in the cryptocurrency market in 2017, collectible tokens became popular on the Ethereum network, which differs from the tokens that have driven successful ICOs, those attached to the ERC20 standard. In order to be able to issue unique and consequently collectible tokens, it was necessary to develop a new standard: ERC721.
The prefix of the different Ethereum standards, ERC, comes from open proposals to collect comments from the developer community (Ethereum Request for Comments). The ERC20 standard, for example, requires tokens the ability to perform specific functions – transfers and validation, for example – and if the developer of a token meets that requirement, the token can be handled by any application conceived for that standard.
Just by adhering to that standard, the different tokens can then participate in a wide variety of smart contracts on the development of the Ethereum network. This standardization allowed the creation of many tokens associated with various value propositions, and their initial offerings contributed to the raising of close to 4 billion dollars in 2017 alone.
The idea of a collectible token, however, could not be realized with the ERC20 standard, under which all tokens are identical. This led to the development of NFTs (Non-Fungible Tokens) or unique tokens, under the ERC721 stansard. On the standard’s discussion page itself , the adjective ‘non-fungible’ is objected, that is, they are tokens that are not consumed, unlike ERC20 tokens.
The ERC721 was introduced at the end of last year. The proposal put forward by Dieter Shirley pointed out that these would allow smart contracts to function as unique tokens and that they could also be exchanged, the latter in similarity to ERC20 development.
Another important point is the indivisibility of an ERC721 token (half a cat is inconceivable) while all ERC20 tokens admit fractions up to one millionth. In addition, each ERC721 token has its own characteristics that differentiate it from the rest of the ERC721 tokens.
In October 2017, the Canadian company Axiom Zen pre-launched the game CryptoKitties at a hackathon in Waterloo, Canada, which allowed cats with unique characteristics to be acquired, raised, and subsequently found a mate. On the official launch day, December 2, 2017, the first cat in the series, Genesis, was sold for 247 ETH ($ 117,000) that day.
The game inspired other similar games based on the same standard, albeit with variations in the allocation of unique tokens. In the case of kittens, users have a wide palette of characteristics or “cat attributes” (a 256-bit genome) that may or may not be passed on to the next generation. The total population of CryptoKitties cannot exceed 4 million felines.
The great success of Cryptokitties gave rise to numerous games in the form of decentralized applications on Ethereum, including Etherbots, a game with robots that includes the novelty that it is put together piece by piece. Each of these is an ERC721 token. Something interesting about this game is that the robots face each other in battle, which enriches the economic aspect of the game
The success of this approach to collectibles or characters is based on the deep-rooted tendency in some people to collect physical objects, a trend that is now spreading to digital or virtual objects. While not all collectible tokens are necessarily tied to the Ethereum network development – the successful Rarepepes inhabit the Bitcoin network – the ERC721 standard is used in more than a hundred of DappRadar’s list of distributed applications.
A lot of creativity is observed in the development of these applications around collectible tokens. In the case of Etherbots, each robot created is a combination of unique tokens. In the Fishback game, whose official launch was on Sunday 18, the fish can be acquired -4.5% commission- or fish, they can even be thrown into a fight, in which each bite increases the weight of the aggressor and makes it more competitive.
In the same way that blockchain technology is constantly evolving, and Ethereum is an emblematic case for the values it adds compared to the pioneer Bitcoin, the standards provide an additional source of innovation. There is still room to take advantage of all the possibilities that the ERC721 standard offers in the area of token development.
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