ERC-721 is the token standard used for creating non-fungible tokens on the Ethereum network.
The Long Explanation
ERC-721 is a token standard for creating non-fungible Ethereum tokens. The ERC in the name represents ‘Ethereum Request for Comments’. While the 721 is more or less an identifier for the standard.
There are multiple ERC standards out there, although the two most popular are ERC-20 for fungible tokens and ERC-721 for non-fungible tokens. Note that this isn’t a technology, instead it is more of a technical guideline for developers creating tokens on Ethereum.
Non-fungible tokens (NFTs) are tokens that are unique in nature, setting them apart from even similar tokens by the same creator. This is different from fungible tokens which can be interchanged without any loss of value.
Bitcoin and Ethereum are examples of fungible tokens. Exchanging one ETH token for another will go unnoticed as both tokens have the same value. This is not the case for NFTs whose value is specific to the token.
As an asset class, NFTs exploded in popularity between 2020 and 2021 as mainstream investors began looking to them as near equivalents of the physical art market, and as great speculative assets.
The ERC-721 standard was created by Dieter Shirley, Jacob Evans, William Entriken, and Nastassia Sachs via an Ethereum Improvement Proposal (EIP) submitted on the 24th of January, 2018.
The introduction of the standard enabled developers to create tokens with distinctive details on the blockchain. Its application today can be seen in popular NFT collections like the Bored Ape Yacht Club (BAYC) and CryptoKitties.
Like those two collections above, the most common use of NFTs has been for the representation of digital artwork and collectibles on the blockchain. But its application isn’t limited to just art and collectibles.
Non-fungible tokens have been proposed (or used) for the storing and trading of physical products like vehicles and houses on the blockchain. They have also been proposed as a store of value for assets with negative value, such as loans.
