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.
But the appraisal isn’t the final story. If it was your grandmother’s wedding ring, it’s unique. No jeweler’s assessment can tell you what it is worth to you because it is unique. It can’t really be compared to other rings because of its unique heritage.
Rings that have no sentimental value, that have no unique worth, are fungible. The word “fungible” is a bit of legal jargon that means interchangeable with an identical item.
Your grandmother’s ring is non-fungible. It is unique because of its heritage.
Most cryptocurrency coins and tokens are fungible. One Ether coin is the same as any other. But some tokens are associated with unique real-world items — artistic masterworks, for instance. When you purchase the token, you are purchasing partial or full ownership of that single unique piece of art. Your token might as well have serial number on it. It’s non-fungible.
Every fungible token has exactly the same value, while non-fungible tokens can each have a unique 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.
Gamers like the idea of owning one-of-a-kind in-game weapons, vehicles, clothing, real estate, characters, and more: items that are theirs and only theirs. Some gamers form emotional attachments to their in-game resources. NFTs are an excellent way of representing them.
Once you’ve created or purchased an NFT gaming resource, you could conceivably use it with multiple games, allowing you to move from one game to another with the same custom avatar or magic sword.
For example, the Minecraft gaming platform uses NFTs to represent unique player resources. Minecraft includes a bustling marketplace where players can buy and sell NFTs.
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 structure — and therefore the functions — of each token.
The ERC-1155 token standard was created to function like a vending machine. Developers can deploy a single smart contract that can be used to mint unlimited fungible and non-fungible tokens.
The ERC-721 token standard only produces non-fungible tokens. It requires developers to deploy a new smart contract for each new token.
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 that if you want to support ERC-721 tokens from multiple projects, you will have to create a custom integration system for each token. That will cost you time and development expense. It’s 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 fungible and non-fungible tokens as they go.
ERC-1155 also allows 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 two 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 — which means high-value tokens can provide perks across multiple platforms.
The text is informative in nature and does not count as an investment recommendation. It does not express the personal opinion of the author or service. Any investment or trading is risky, past returns are not a guarantee for future returns – risk only those assets that you are willing to lose.