Web3 Meta-Crisis Wiki

ERC-721 Standard (NFTs)

4 min read

Definition

ERC-721 is a technical standard for non-fungible tokens (NFTs) on the Ethereum blockchain. Unlike ERC-20 tokens which are fungible (interchangeable), ERC-721 tokens are unique and non-interchangeable, each representing a distinct digital asset.

Core Properties

Non-Fungibility

  • Unique identifiers: Each token has a distinct token ID
  • Individual metadata: Each token can have unique properties and attributes
  • Ownership tracking: Clear ownership records for each unique token
  • Transfer mechanisms: Individual token transfer capabilities

Standardized Interface

  • balanceOf(): Returns number of tokens owned by an address
  • ownerOf(): Returns owner of a specific token ID
  • transferFrom(): Transfers ownership of a specific token
  • approve(): Approves another address to transfer a specific token
  • getApproved(): Returns approved address for a token
  • setApprovalForAll(): Approves or revokes operator for all tokens

Beneficial Potentials

Digital Ownership and Property Rights

  • Unique digital assets: Art, collectibles, virtual real estate
  • Intellectual property: Digital certificates, patents, copyrights
  • Identity and credentials: Digital identity documents, certificates
  • Gaming and virtual worlds: Unique items, characters, land parcels
  • Real-world asset tokenization: Property deeds, artwork, luxury goods

Creative Economy and Creator Rights

  • Artist empowerment: Direct monetization without intermediaries
  • Royalty mechanisms: Automated royalty payments to creators
  • Provenance tracking: Immutable history of ownership and authenticity
  • Fractional ownership: Dividing high-value assets into shares
  • Community ownership: Collective ownership of digital assets

New Economic Models

  • Play-to-earn gaming: Earning unique digital assets through gameplay
  • Virtual economies: In-game item trading and ownership
  • Digital collectibles: Sports memorabilia, trading cards, art
  • Membership tokens: Access to exclusive communities or services
  • Utility tokens: Access to specific functions or services

Detrimental Potentials

Speculation and Market Manipulation

  • Price volatility: Extreme price swings and market bubbles
  • Pump and dump schemes: Coordinated price manipulation
  • Wash trading: Artificial volume and price inflation
  • Market manipulation: Insider trading and price fixing
  • FOMO-driven purchases: Irrational investment decisions

Environmental and Technical Issues

  • High energy consumption: Proof-of-work mining for transactions
  • Storage challenges: Metadata storage and permanence issues
  • Technical complexity: User experience barriers
  • Scalability limitations: High gas costs for transactions
  • Centralization risks: Platform dependencies and control
  • Intellectual property disputes: Ownership and copyright issues
  • Money laundering: Use of NFTs for illicit financial activities
  • Tax implications: Unclear tax treatment of NFT transactions
  • Consumer protection: Lack of regulatory oversight
  • Cross-border issues: International legal complexities

Technical Implementation

Smart Contract Structure

interface ERC721 {
    function balanceOf(address owner) external view returns (uint256);
    function ownerOf(uint256 tokenId) external view returns (address);
    function transferFrom(address from, address to, uint256 tokenId) external;
    function approve(address to, uint256 tokenId) external;
    function getApproved(uint256 tokenId) external view returns (address);
    function setApprovalForAll(address operator, bool approved) external;
    function isApprovedForAll(address owner, address operator) external view returns (bool);
}

Metadata Standards

  • Token URI: Points to metadata describing the token
  • JSON metadata: Standardized format for token properties
  • IPFS integration: Decentralized metadata storage
  • On-chain metadata: Storing properties directly on blockchain
  • Dynamic metadata: Metadata that can change over time

Use Cases and Applications

Digital Art and Collectibles

  • Digital artwork: Unique digital creations by artists
  • Trading cards: Digital versions of collectible cards
  • Memorabilia: Sports, music, and entertainment collectibles
  • Photography: Unique digital photographs
  • Generative art: Algorithmically created unique pieces

Gaming and Virtual Worlds

  • In-game items: Weapons, armor, tools, and accessories
  • Virtual real estate: Land parcels in virtual worlds
  • Characters and avatars: Unique digital personas
  • Achievements: Digital trophies and accomplishments
  • Membership passes: Access to exclusive game content

Identity and Credentials

  • Digital identity: Self-sovereign identity documents
  • Educational certificates: Academic and professional credentials
  • Membership cards: Access to exclusive communities
  • Event tickets: Unique access to events and experiences
  • Loyalty programs: Unique rewards and benefits

Integration with Other Primitives

smart contracts

  • Automated logic: Self-executing rules for NFT behavior
  • Royalty mechanisms: Automatic creator payments
  • Access control: Gated content and services
  • Marketplace logic: Automated trading and auctions

Decentralized Autonomous Organizations (DAOs)

  • Governance tokens: Voting rights in DAO decisions
  • Membership NFTs: Access to DAO participation
  • Reward mechanisms: Unique rewards for contributions
  • Identity verification: Proof of membership and participation

Composability

  • Cross-platform assets: NFTs usable across multiple applications
  • Layered functionality: Combining multiple NFT features
  • Interoperability: NFTs working with different protocols
  • Modular design: Building complex systems from simple components

References

  • tokenization - The process of creating digital representations of assets
  • Digital_Ownership - New forms of property rights in digital spaces
  • Creator_Economy - Economic models empowering content creators
  • Virtual_Economies - Economic systems within digital environments
  • Intellectual_Property - Legal frameworks for digital asset ownership

Graph View

Backlinks