In-depth look at ERC-721s (NFTs) and the future.(ERC-721's on the Ethereum Blockchain)
This educational post about ERC-721 non-fungible tokens is brought to you by https://mintable.app your home for digital items such as Gods Unchained cards, unique creations of your own, or any other digital item (ERC-721) you have. https://mintable.app
Quickly — What are NFTs?
NFTs (Non-fungible Tokens) are a type of token on the Ethereum blockchain that allows for individual metadata to be stored within each token. Meaning the token has information making it unique — therefore, it’s value is inherit to the value within the metadata — and not from simply being a token. A normal token is fungible, where it can be exchanged for the same type of token equally without any difference. A good example is a dollar — if you and I both have a dollar — we can swap dollars and it doesn’t matter, neither of us lose out they are equal. Whereas, with non-fungible tokens they are both unique, meaning if we both have an NFT, mine could be a CryptoKitty, and yours could be your Marriage Certificate — obviously we cannot exchange these two equally. Therefore making our tokens non-fungible. If you can grasp this concept you should be good to go, the rest is easy…. Since you can store any data you want as a token, it has allowed for tokenization across the entire board of items — real world and digital.
Tokenization: verb, 1. The act of representing an item as a token on a blockchain.
Example: Turning a security badge into a token on a blockchain that is scanned via your wallet.
Why NFTs have potential to change our world
NFTs are truly a game changer for Ethereum’s ability to touch the real world. This is why we see so many people discuss ERC-721s as ‘the next wave of adoption’. With their ability to fit into so many real world problems, the number of use cases for these non-fungible tokens is in the millions.
The reason there is potential behind a token that can store metadata is because it allows for a connection to the real world — like a thread, tying the metadata and trail throughout the blockchain — to the real world object. Something like this, has never been done before. We don’t have a secure way to tie assets from the real world — into a blockchain — for a few reasons:
- Its new tech, so its never been done before, simply because there wasn’t a blockchain 5 years ago with non-fungible tokens on it.
- No standardization before public blockchains and token standards (specifically ethereum)
- Security of maintaining the asset and validity of safe transactions.
Since these problems have been solved we can move forward and start to see a global adoption of a new standard for tokenization. Since this is a standardized way to track metadata as a tokenized asset — the standard can be adopted globally, just how standards for mobile phones are quickly adopted across the globe with little derivation; so to will tokenization standards which in turn allow for internal and external interactions globally on any type of asset. One example is the Russian-backed Cryptocurrency that is on Ethereum. Without standardization, they would have a harder time getting a foreign entity to adopt or accept their new crypto. If their token did not have an transfer() function that worked within the ERC-20 scope, I’d be very very surprised.
One of the reasons for the future spread of NFTs across the planet will be the increase ability to purchase and own ‘tangible digital items’.
Tangible Digital Items: adj, 1. Items in which were normally intangible — but due to tokenization on a public blockchain, ownership of that asset provides a means of tangibility.
Example: They said my cryptokitty was an intangible worthless item — but I own it, I can move it, it won’t disappear until I make it. Making it feel pretty damn tangible. Also publicly verifiable.
The change we can see from tangible digital items are something hard to imagine due to the vastness of possibilities. For example, Mintable allows for tokenization of any digital file, meaning you can have a token on the blockchain that represents your files. What changes would this bring to our ecosystems? How will trading be different when we have verifiable addresses to confirm the validity of assets?
Imagine a world where every retail store sells items — not via bar codes but via tokenized assets. Meaning —every item of value has an NFT representing it; if you have a Prada purse and I say “Wow is that really a Prada?” your response would be to show the NFT representing your Prada and verify that it is the wallet address of the purse. Or when checking out and purchasing an item from the store— the cashier scans items via the address of the NFT and not by their barcode.
This is only one example and could be expanded on so much further — that is why it is so hard to grasp the future impactfulness of NFTs to our world. The possibilities are really only limited by the programmers ability to think of creative ways to use NFTs.
What specific cases we will see in the future
As the spread of NFT growth takes the planet by storm, we will see many changes in the way we interact with businesses in our daily lives. Most likely this won’t be limited to just commercial/business interactions; but rather, we will see a huge adoption from government sectors and other regulatory type entities. This is simply due to the fact of how easily you can track blockchain data and users, as well as acting as a central register/database. Examples where you can replace central databases with NFTs could be: Marriage Certificates, Or land registrars, Or OSHA reviews, Or those food-grade ratings outside restaurants,Or driver licenses/qualifications…etc… As you can see the list is endless, from a government sector point of view, certificates, licenses, anything that is public record and needed to be stored for long term, would be a great candidate for tokenization.
But in a complete 180 from public data, is private data. Encrypting the data in the highest manner and storing on the blockchain would allow for removal of a large attack vector — the physical servers and networked connections of that server. (Of course a public blockchain taking over the government’s centralized servers is very FAR away from happening, it just could happen so I list it as an example to help grasp the scope of NFTs impacts.)
Moving away from government sector, we can look at retail sectors, documents, traditional online services, and digital items.
An easy example of NFTs being used in retail would be looking at something high end and with a lot of fakes. For example, Prada handbags, Rolex watches, diamonds, etc. All of these could be tokenized, allowing for a consumer to be able to check on the public blockchain, whether or not the real world item in front of her, was in fact verified as legitimate.
A more unforeseen example of NFTs — would be their grasp of the online sector of ‘sales and services’. Have you ever bought a digital item from Fiverr, or purchased an Audiobook from Audible? What if it was delivered in the form of an NFT and not as its current medium — a worthless email with a download link. If this was the case, the token representing your audiobook could be owned and passed around, sold even. One final example is buying a flight, or any online service to check in in a real world event. If you buy a flight, the e-ticket can be transferred to your wallet, again assuming this is a time where every customer has a wallet, because, you know, crypto has taken over the world at this point.
The changes to the way we interact with businesses could be vastly revolutionized if NFTs reached global adoption. This is, once again, why many people say NFTs will bring the next wave of adoption to blockchain. They just have so many use cases and impacts — how could they not be mass adopted?
What are some of the things we need to see for this all to happen
In order for all these points mentioned above to come true, a few things need to happen. Quickly — those things are:
- Mass adoption of Ethereum or some other public blockchain with NFTs .
- Scaled and well developed Ethereum — able to handle the entire world processing on it.
- Government/regulatory adoption and oversight of NFT use.
- Businesses incentivized to use the blockchain
Mass adoption of Ethereum and Scaled Ethereum
I’ve been using examples of people using Ethereum and NFTs — but the reality is, if Ethereum is still complex to understand, hard to become a user, and slow — then none of these cases will come true. Ethereum needs to be globally adopted, a scenario that looks like this:
Everyday consumers have an Ethereum wallet loaded with money in some form of a crypto. They interact with the blockchain almost daily if not multiple times a day. They don’t need to understand much, but at this point in the future, its much easier to take a crypto transaction than cash or anything else.
As you read this, if you are familiar with cryptocurrencies at all, you’ll know this isn’t the case. We have a long way to go. This includes the infamous scaling argument.
But! NFTs bring us one step closer, by slowly closing the gap between these problems and allowing for global adoption. They do this by getting users, slowly by surely, being stress tested, and being mixed into society. All of these things will allow for ethereum to grow at a staggering rate, where we could see a level of global adoption very similar to how mobile phones took off. Just ~30 years and +3 billion people use phones daily. In 20 years, what if everyone was using Ethereum?
Government/Regulatory oversight and adoption
Government regulations, policies, and bills all need to be passed/enacted in one form or another to see a mass scale adoption of NFTs. One example — (someone actually asked me if we can do this now) — say you want to tokenize and sell your car so that you have 5 NFTs and each one is 1/5th of your car’s value. So five people can share the car, or it can be sold in 5 parts. Can we do this now? Sure. Will the government agency in control of who owns cars (in America think the DMV), accept your NFT as proof of ownership? Nope. Can you do anything at the DMV with your NFT of your car? Nope. The DMV doesn’t recognize your NFT at all, as a real tangible asset. Therefore, until the DMV has said “we have decided to move our registration database to the Ethereum blockchain and tokenize using ERC-721 standards” will you be able to have the DMV even discuss your tokenized car NFT.
This leads to a further problem — once the DMV has said — “we are using the blockchain”, now they need to have a set of policies, best practices, established methods of interaction, and multiple court cases/laws passed supporting digital items on the blockchain as real world assets. This latter step is important — without having court cases or laws that outline the scope of what digital items actually are — we cannot have government agencies moving forward with blockchain adoption. Just as how the IRS’s lack of ruling on the type of asset cryptocurrencies were classified under, affected many crypto traders during tax season in the early years of cryptocurrencies, so to will a lack of court cases or legal standings, dampen the rate at which agencies can adopt blockchain technology. Specifically ERC-721s.
This all seems pretty far off and it is. But that is why this is the early years and the beginning of something huge. ERC-721s and NFTs will shape our future in many ways and that is why Mintable is focusing so hard on making the NFT ecosystem as great as it can be.
Mintable fits into the ERC-721 Ecosystem quite well
First, —Mintable is an ERC-721 service, minter, manager, and in the future an exchange. The base of Mintable is two things: One a home for your digital items . Mintable acts as an online dashboard to see all your NFTs. Here is a picture from our Beta version (coming out soon) for your profile dashboard.
It also lets any person generate a NFT smart contract within seconds. Even from your phone — now you can deploy a smart contract within 30 seconds and tokenize anything. This means you can add metadata and create a set of NFT collectibles, or maybe tokenize your artwork, or tokenize your marriage certificate.
The Second thing Mintable is — is an Exchange for Digital items
In a few months we will be releasing our full launch product, which allows for:
- You to create an NFT and upload any file to be on that token.
- You can post your token for sell, selling that file with the token.
Thats right, you can sell files as NFTs on Mintable.
(in a few months, but check out the alpha live now, or the beta coming soon!)
This means users can go to Mintable in order to upload a file as a NFT, and then post that file for sell.
Example: Photographer wants to tokenize his photos, so he tokenizes his photos (files) on Mintable and has a smart contract handling his NFTs. He can now post them for sell for $10 in USD. A smart contract DEX will handle the transactions and will post the NFT for sale. Now you can come along and buy that photo via sending ether to the DEX. The token is transferred to you and you own the file now — giving you the ability to download the file.
In this example above we have left out a lot of the technical details that we have been working on for the past 6 months, but yes you read it right — you will be able to upload files as NFTs and the file is only accessible to the person who owns the token.
This is the future of our ecosystem. No longer will we have items with no real value other than that given to it by some game’s dumb economic model, but instead we can tokenize anything digital and transfer real value as an NFT.
Hopefully this will be huge. We hope that in 6 months time we see a new ecosystem of NFTs, from files, photos, movies, texts, pdfs, courses, tokens, promises, data, etc, all completely accessible within minutes and as easy as using a normal marketplace.
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