What Are ERC-721 Or NFT Standards?
This article will explain the different token standards that exist on the Ethereum chain. It will explain the differences between ERC-20, ERC1155, and with the main focus on ERC-721 (NFTs).
😬 Why You Should Care!
Token standards define a set of rules and functions that ETH-based tokens must comply with. The reason that smart contracts and apps can be interacted with is because of token standards, otherwise, they can become unpredictable and useless. Collectors care about their tokens being non-fungible. Imagine paying 1200 ETH for a cryptopunk and seeing another 10,000 copies of the exact same punk created in the same smart contract address. Turns out hypothetically the crypto punks were fungible, easily created, and replicated. There are 3 main standards that everyone should know.
Token Standard #1: ERC-20 (Fungible Tokens)
ERC-20 is what everyone in crypto is familiar with. It has a fungible token standard, meaning that all tokens are interchangeable. It is the most common token standard. For example, a $5 bill is equal to and has the exact same value as any other $5 bill. Any ERC-20 token equals any other ERC-20 token from the same contract. They represent the same thing, which means that the token is fungible. The cryptocurrency $ETH is fungible, as well as any other cryptocurrency on an exchange.
Token Standard #2: ERC-721 (NFTs)
ERC-721 is what people refer to ask NFTs (non-fungible tokens). This means that all tokens in existence are unique. This is the basis of the NFT world and the bedrock of the NFT metaverse. For example, a non-fungible object in real life would be a young boy’s teddy bear. He takes it everywhere and after a while becomes attached to it. This teddy bear is no longer fungible, even if there were 10 million of the same exact teddy bear in the world. It has become something that cannot be easily replaced. Think of your favourite jacket, pet, and a 1/1 artwork like the Mona Lisa. My point is, there are things that exist in the world that literally cannot be replaced. Why can’t these things exist online?
Even if the image/jpeg file is displayed as the same, the unique token ID number is different for each NFT. Many tokens can exist within a collectible contract, which is gaining in popularity for the NFT community to engage with. Although all the tokens in a certain smart contract are completely different, they are all governed by the same set of rules.
Token Standard #3: ERC-1155
ERC-1155 is the standard for contract managing multiple token types. It allows multiple token types to exist within the same contract. In other words, tokens can be fungible, semi-fungible or non-fungible. Many tokens can exist within a contract each with THEIR OWN metadata, supply and attributes. So for creators wanting to make their own collections:
Minting 1/1 tokens use ERC-721 collection.
Minting tokens with multiple copies use ERC-1155 collection.
Want the freedom to mix both of the above use ERC-1155 collection.
⌛ Conclusion
So as a summary, ERC-20: Fungible tokens. ERC-721: Non-fungible tokens. ERC-1155: This allows for combinations of token types. That is all! How easy is that?
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