ERC-721 stands for Ethereum Request for Comment 721 and represents a free, open standard that describes how to build non-fungible or unique tokens on the Ethereum blockchainA blockchain is a decentralized and distributed digital ledger used to record transactions across multiple computers in a way that ensures the data can only be modified once it has been recorded. Once a block of data is recorded on the blockchain, it becomes extremely difficult to change it without altering all subsequent blocks, which requires consensus from the majority... More. While most tokens are fungible (every tokenA token is a digital or virtual representation of an asset or utility that resides on a blockchain. Tokens can represent anything from a unit of value (like a coin) to a set of functionalities and can be used for a variety of purposes such as payments, access rights, or as a means of exchange in decentralized applications. Key Points:... More is the same as every other token), ERC-721 tokens are all unique.

Key Features:

1. Non-Fungibility: Each ERC-721 token is distinct and can’t be exchanged on a 1:1 basis with any other ERC-721 token. This is in contrast to fungible tokens like ERC-20ERC-20 stands for Ethereum Request for Comment 20 and refers to a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. It is the most common standard for creating and issuing tokens on the Ethereum network. Key Features: • Standardized Functions: ERC-20 defines a set of standard functions that a token contract on Ethereum must implement.... More, where each token is identical to every other token.
2. Metadata: ERC-721 allows for optional metadata for each token, meaning each token can have specific attributes or details associated with it.
3. Transferability: Like other tokens, ERC-721 tokens can be transferred between accounts.

Standard Functions:

• balanceOf(address _owner): Returns the count of all tokens held by _owner.
• ownerOf(uint256 _tokenId): Returns the owner of the _tokenId.
• safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes data): Safely transfers the ownership of a given token ID to another address.
• transferFrom(address _from, address _to, uint256 _tokenId): Transfers the ownership of a given token ID to another address.
• approve(address _approved, uint256 _tokenId): Approves another address to transfer the given token ID.
• getApproved(uint256 _tokenId): Returns the approved address for a token ID, or zero if no address set.

Benefits:

• Uniqueness: Each token has distinct information or attributes, making them ideal for representing unique assets like collectibles, real estate, or artwork.
• Interoperability: ERC-721 tokens can be used across different applications and platforms, such as games, marketplaces, and wallets.
• Ownership: ERC-721 tokens prove ownership of a unique item or piece of content, often used for digital collectibles.

Challenges:

• Complexity: Managing individual unique tokens can be more complex than managing fungible tokens.
• LiquidityLiquidity refers to the ease with which an asset or security can be quickly bought or sold in the market without affecting its price. High liquidity indicates that the asset can be easily converted into cash, while low liquidity suggests the opposite. Key Points: • Types of Liquidity: • Market Liquidity: Refers to the ability to buy or sell assets... More: Due to their unique nature, some ERC-721 tokens might not be as liquid as fungible tokens.

Examples:

• CryptoKitties: One of the first and most well-known implementations of ERC-721, where each token represented a unique virtual cat that could be bred, collected, and sold.
• Decentraland: A virtual world where each parcel of land is represented as a unique ERC-721 token.