NFT Glossary

Non-fungible token (NFT)

“Fungibility” means that units of a currency or commodity are alike and indistinguishable. Examples of fungible currencies are $1 bills, each of which is alike and represents the same value.

On the other hand, non-fungible tokens represent unique assets whose value is independent from one another. For example, an NFT might represent a piece of unique digital artwork, a Mickey Mantle baseball card, or a share of physical North Carolina real estate. Despite this difference, NFTs can be exchanged in the same manner as any other token on a cryptonetwork.

The ability to represent unique assets greatly enhances the composability and functionality of cryptonetworks, since many real-world assets are non-fungible. In turn, this enables blockchains to support more flexible economies.

ERC721

Pioneered by CryptoKitties, ERC721 was the first standard for representing non-fungible digital assets. ERC721 is an inheritable Solidity smart contract standard, meaning that developers can easily create new ERC721-compliant contracts by importing it from the OpenZeppelin library (we have a helpful tutorial on creating your first ERC721 contract here). ERC721 is actually relatively simple: it provides a mapping of unique identifiers (each of which represents a single asset) to addresses, which represent the owner of that identifier. ERC721 also provides a permissioned way to transfer these assets, using the transferFrom method.

If you think about it, these two methods are really all you need to represent an NFT: a way to check who owns what and a way to move things around. There are a few other bells and whistles to the standard (some of which turn out to be very important for NFT marketplaces), but the core of ERC721 is quite basic.

ERC1155

ERC1155, pioneered by the Enjin team, brings the idea of semi-fungibility to the NFT world. With ERC1155, IDs represent not single assets but classes of assets. For example, an ID might represent “swords”, and a wallet could own 1,000 of these swords. In this case, the balanceOf method would return the number of swords owned by a wallet, and a user can transfer any number of these swords by calling transferFrom with the “sword” ID.

One advantage of this type of system is efficiency: with ERC721, if a user wanted to transfer 1,000 swords, they would need to modify the smart contract’s state (by calling the transferFrom method) for 1,000 unique tokens. With ERC1155, the developer need only call transferFrom with quantity 1,000 and perform a single transfer operation. This increased efficiency, of course, comes with the loss of information: we can no longer trace the history of an individual sword.

Note also that ERC1155 provides a superset of ERC721 functionality, meaning that an ERC721 asset could be built using ERC1155 (you’d simply have a separate ID and quantity 1 for each asset). Due to these advantages, we’ve recently witnessed the growing adoption of the ERC1155 standard. OpenSea recently developed a repository on Github for getting started with the ERC1155 standard.Anatomy of the ERC20, ERC721, and ERC1155 standards. ERC20 maps addresses to amounts, ERC721 maps unique IDs to owners, and ERC1155 has a nested mapping of IDs to owners to amounts.

Crypto Art

It uses blockchain technology to serve or create digital works of art. There are two different directions for the combination of blockchain and Art: the first is the digitization and mapping of traditional works of art on the chain. Blockchain technology is used to solve the problem of copyright and traceability of works of art, which belongs to the internal application of the industry. The other is the original encryption art based on the public chain. Such works are launched on the chain in the form of NFT token, and are curated, distributed and auctioned through the virtual space and trading platform of the public chain.

IPFS

IPFS is a distributed file system for storing and accessing files, websites, applications and data. Most NFT files such as pictures, music and videos are stored through IPFs protocol.

Royalty

All NFTs automatically pay royalties to their creators when they are sold. It's still a developing concept, but it's one of the most powerful. Every time NFT is sold, the original owner of Euler beats origins gets an 5% royalty. Some platforms, such as foundation and Zora, support collecting royalties from their artists.