Imagine inheriting a gold ring or receiving one as a gift. Wonderful. You’d probably want to know what the ring’s value is, right?
You may also want to have its authenticity tested. Typically, you would do a Google search, find the nearest jeweler, and get your ring appraised.
It is the same with an NFT or non-fungible token, except without all the hassle and with a ton of additional benefits.
Introduction to NFTs (Non-Fungible Tokens)
An NFT or non-fungible token is a completely unique blockchain-based digital asset. It has its own identifiers and is truly one of a kind—resulting in digital scarcity that can be easily verified.
In comparison, fungible tokens are identical sets of assets that can be stacked on top of each other with no ability to tell one from another.
A non-fungible token is like a hand-crafted gold ring that you have engraved with your spouse’s name, whereas a fungible token is like a gold block with no identifying markers on it.
This means every fungible token has exactly the same value, while non-fungible tokens can each hold a unique level of value based on its individual identity.
The Power of NFTs
Non-fungible tokens have many potential use cases. One of the most prominent applications for NFTs is for use in blockchain gaming.
Firstly, to embrace true ownership of gaming assets, think about gamers being able to own one-of-a-kind in-game swords, vehicles, clothing, real estate, characters and more. Items that are theirs and only theirs, that they can form an emotional attachment to.
Secondly, NFTs can also be integrated into multiple games and apps—allowing players to move from game to app to game using their NFTs everywhere they go.
In fact, these limited-supply dragon NFTs can already be used in a game called Forgotten Artifacts—where they emanate as loyal pets that follow you around the game’s dungeons.
As an added bonus, these NFTs also provide trading discounts on the Kriptomat exchange platform.
These are truly the most advanced form of digital assets to ever exist.
ERC-1155 vs ERC-721
All NFTs are not created equal, which is clear when comparing the ERC-1155 and ERC-721 token standards.
A token standard is a set of rules that defines the data and, therefore, the functions that each token is capable of.
The ERC-1155 token standard was created to function like a vending machine, where developers could deploy a single smart contract that can be used to mint unlimited fungible (identical) tokens and non-fungible (unique) tokens.
In comparison, the ERC-721 token standard only produces non-fungible tokens and forces developers to deploy a new smart contract for each new token.
ERC-721: The original non-fungible token standard
ERC-721 is like having to create a new vending machine for every bottle of Mountain Dew you want to distribute—creating a lot of wasted space, production cost, and development time when deploying NFTs to the blockchain.
The token data is also extremely inconsistent, most projects have divergent data structures within their ERC-721 smart contracts, which means, if you want to support ERC-721 tokens from multiple projects you will have to create a custom integration for each token—creating more wasted space, production cost, and development time when coding NFTs into your applications.
This is like each type of vending machine having a different power plug, forcing you to find a new adaptor or create a new wall socket every time you want to install a new type of vending machine.
This core production model of ERC-721 data is not scalable for mainstream games and would impossible to adopt on a mass scale.
ERC-1155: The next-generation multi-token standard
The ERC-1155 token standard allows developers to deploy a single smart contract and then mint new tokens in a matter of seconds. They can continue to use that one smart contract forever, minting infinite fungible and non-fungible tokens as they go.
For example, Enjin has created a blockchain development platform that revolves around a single smart contract. That smart contract is already powering over 40 games and it has created over 59 million tokens, thus far.
1155 also enables users to send batch transfers of multiple fungible and non-fungible tokens at once:
Furthermore, the superior design of ERC-1155 also allows for a swap of any amount of tokens in only 2 simple steps:
The strict standardization of token data means that if you integrate an ERC-1155 token from one project into your game or app, it is no extra effort to integrate tokens from other ERC-1155 projects as well—enabling projects to create high-value tokens that can provide perks across multiple platforms.
ERC-1155 tokens are the most technologically advanced form of digital assets in the world.
We are expecting big things in the years to come as a result of the use of this innovative, groundbreaking token standard.