This article focuses on the core token standards and is the third in our series of articles introducing NFTs from a technical point of view.
By Qin Wang (Swinburne University of Technology & CSIRO Data61 ) and Rujia Li (Southern University of Science and Technology & University of Birmingham)
NFTs differ from previous tokens in their standard design. Related protocols cover ERC-20, ERC-721, and ERC-1155. NFTs are rooted in ERC-721, but all these standards have a great impact on its development.
The most prevailing token standard comes from ERC-20. It introduces the concept of fungible tokens that are issued on top of Ethereum once satisfying the requirements. The standard makes all tokens belonging to the same category in terms of both type and value. An arbitrary token is always equal to all the other tokens. As a result, this stimulated the hype of Initial Coin Offerings (ICO). Loads of public chains and DApps gained initial funding in this way.
In contrast, ERC-721 introduces a non-fungible token standard that differs from the fungible token. This type of token is unique and can be distinguished from another token from two folds. Firstly, every NFT has a unit256 variable called tokenId. Such tokenIds could be used as an input to generate special identifications such as images in the form of zombies or cartoon characters. Secondly, when a contract (containing NFT mint) is deployed, it is allocated at this unique address. The address is used to clarify what functions the contract includes as well as their usages. The pair of contract addresses and unit256 tokenId of an NFT is thereby globally unique.
Another standard ERC-1155 (Multi Token Standard) extends the representation of both fungible and non-fungible tokens. It provides an interface that can represent any number of tokens. This further extends the functionality of tokenId, where each of them can independently represent different configurable token types. The field may contain users’ customised information such as the metadata, lock-time, date, supply, or other attributes.
Qin Wang is a researcher focusing on blockchain technology, covering sub-fields of consensus protocols, security, and blockchain economies. More information refers to his homepage https://qinwang.tech/.
Rujia Li is a blockchain researcher with interests on privacy-preserving smart contracts and FinTech. More information can be found at https://rujia.uk/.
Read More: How NFTs Operate in Ethereum