Presentation on ERC721 Token given in EthereumBlr meetup group

1. ERC 721 Tokens
Non Fungible Token Standard
By
Priyabrata Dash
(Aka Priyab Satoshi)
https://medium.com/crypt-bytes-tech
@twitmyreview
bobquest33@gmail.com
https://www.meetup.com/India-Blockchain-Cryptocurrency-Meetup/

2. Agenda
• Introduction
• Defining Fungibility
• What ERC Mean
• ERC 20
• ERC 721
• ERC-20 v. ERC-721
• FUTURE OF ERC-721

3. Introduction
• Since its launch in November, CryptoKitties app has reportedly
seen $12 million worth of ether spent in buying and trading
various unique digital cats on its platform.
• The decentralized app became so popular that it slowed down
the average transaction time on the Ethereum network, sparking
conversation on online forums about the necessary growing
pains the network has to endure as developers tackle scalability
issues.
• Much less discussion, let alone excitement, however, has focused
on the powerful properties of CryptoKitties, namely their launch
as an ERC-721 token, known as a non-fungible token (NFT).

4. Defining Fungibility
• When a set of assets all have equal value to each other, they are defined as
fungible. As an example, a US dollar has the same value as any other US dollar.
• The person spending that dollar and the person receiving that dollar do not care
where that dollar came from or where it might eventually land. In the world of
crypto-assets, fungibility promotes high liquidity among tokens in an ecosystem.
• As all tokens of a particular blockchain are created equal, multiple transactions
can occur rapidly and instantaneously without the participants worrying if the
tokens all store the same value.
• A non-fungible asset, however, is not equal to its counterparts. The most tangible
example of a non-fungible asset is any sort of collectible. A baseball is just a
baseball until it is signed by Babe Ruth. Then, it gains additional value and
becomes a non-fungible asset, valued differently than all other baseballs out
there.
• Non-fungible assets generally have a greater scarcity than fungible ones, and
therefore hold more intrinsic and unique value. With scarcity and value now
measurable in the digital realm through blockchain and distributed ledgers, we
are just beginning to see the potential of non-fungible digital assets.

5. What does ERC mean?
• ERC stands for Ethereum Request for Comments. An ERC is authored
by Ethereum community developers in the form of a memorandum
describing methods, behaviors, research, or innovations applicable
to the working of the Ethereum ecosystem.
• It is submitted either for peer review or simply to convey new
concepts or information. After core developers and community
approval, the proposal becomes a standard.
• Therefore, as a result, we have a set of standards or proposals (e.g.
for tokens). Actually, these rules are simple set of functions that
Smart Contract should implement.
• In return, contracts, implementing the standard can be used via a
single interface. The best example is ERC-20 standard. All Smart
Contracts implementing this standard, by default can be listed to
crypto exchanges without any extra technical work.

6. ERC-20
• It is the most common and well-known
standard within all crypto community. 99% (if
not all) issued ICO tokens on top of the
Ethereum implements this standard.
• The key benefit we get here, is that any
application or other smart contract can interact
with a token in a standard manner without a
need of knowing other details about the token.
• Therefore, we have a very pleasant way to
create any ICO token and have a standard way
to interact with all of them like they are all the
same.
• For instance, crypto wallet developers can
avoid custom development and integrations to
add new tokens. All they need to know is the
Ethereum Token address that implements the
standard.

7. ERC 721
• The goal of this proposal, is to create a non-
fungible token. In ERC-20 and ERC-223 standards
we have a supply of tokens, where tokens are
fungible (i.e. single unit of that token is equal to
another unit).
• This makes it easy to trade those tokens, as all of
the token supply can be treated in the same
manner.
• However, there are various cases when you need
to have unidentical tokens, which are used within
the platform, and add some extra parameters and
price them differently.
• For instance, we could have a token which
represents some part of real estate object, and
each token might have some different parameters
added to it.
• Such standard would make it easy to create
marketplaces for multiple non-fungible token
types.

8. ERC-20 v. ERC-721
• Most tokens currently built off the Ethereum blockchain are ERC-20
tokens.
• ERC-20 tokens are highly useful and liquid, and have been used to
raise billions of dollars through ICOs.
• Many serve as utility tokens, which allow holders of those tokens to
access a particular dApp and its services.
• ERC-721 tokens, however, are purposefully non-fungible.
• By design, ERC-721 tokens are each given a unique and indivisible
set of properties, unequal to other tokens on its blockchain.
• Unlike ERC-20 tokens, which can be divided nearly infinitesimally (a
powerful tool for a future with distributed micro-lending and crowd-
lending), ERC-721 tokens cannot be divided, as they represent one
unique asset in its entirety (the same way the Babe Ruth baseball
cannot be split in half and maintain its value).
• As the explosion of CryptoKitties has demonstrated, ERC-721 tokens
will usher in a world of crypto-collectibles, where people recognize
unique scarcity on the blockchain just as they do in the physical
world.

9. FUTURE OF ERC-721
• Beyond the world of digital crypto-collectibles, however,
CryptoKitties poses an interesting case for a tokenized
future, where even physical assets are represented on the
blockchain and NFTs are owned not just for their intrinsic,
collectible value, but for their practical utility.
• We could see a future where land plots and houses or
corporate stocks are tracked and owned through an ERC-
721 token blockchain.
• Applications built off Ethereum such as Decentraland are
already building virtual worlds in which non-fungible
assets can be traded between users in the ecosystem.

10. Reference
• https://medium.com/crypto-currently/the-anatomy-of-erc721-e9db77abfc24
• https://en.wikipedia.org/wiki/Cryptokitties
• https://www.cryptokitties.co/Technical-details
• https://thebitcoin.pub/t/cryptokitties-isn-t-about-the-cats-hint-erc-721/23883
• https://ethereum.stackexchange.com/questions/36394/how-to-create-your-own-
erc-721-nft-token
• Please refer the reading list for the ERC 721 token in the link below for more
reference:
https://medium.com/crypt-bytes-tech/reading-list-erc-721-nft-token-standard-
7524b64ef5df