The concept of non-fungible crypto tokens is not new. In 2013, Colored Coins was one of the first projects that attempted to tie unique properties to a digital asset. The idea was to use Bitcoin tokens to represent real-world assets like stocks, bonds, commodities, or the deed for a house. Counterparty was another project that built on this idea, but went one step further. It enabled users to create their own virtual assets on top of the Bitcoin blockchain. Both projects struggled to gain wide adoption when Ethereum emerged, allowing more simple token issuance and sales with a few lines of code. This spurred token sales as a new way of fundraising vehicles.
As opposed to ERC-20, which only covers a few asset attributes like name, symbol, total supply, and balance, ERC-721 allows for more detailed attributes that make an asset special, beyond the name, balance, total supply, and symbol. It allows the inclusion of metadata about an asset and information about ownership. When validated, such additional information can add value, guaranteeing the provenance of the assets. The ability to trace the provenance of assets can be very valuable in the case of art and collectables, but also along the supply chain of other goods and services. The success of ERC-721 probably also triggered other blockchain projects, such as the NEO blockchain, to begin the development of their own non-fungible token standards. Here some use cases for NFTs:
- Crypto-collectibles & Crypto-games:
- Asset Tokens
- Identity Tokens & Certificates
- Access Tokens
- Access Transfer Tokens
