By Sergey Vartanov Khachaturyan
NFTs have served as a pivotal instrument to redefine digital ownership, art, collectables, and even real-world assets. They have been used to represent ownership of unique digital art, collectable cards, virtual real estate, and even tweets. The blockchain ensures the provenance and ownership history of the NFT, making it transparent and immutable. This has democratized art and collectables, allowing artists to directly monetise their work and providing a new form of asset for investors.
One of the most compelling aspects of NFTs is the community element. Owning a particular NFT often grants access to exclusive communities, events, or content. These communities have flourished because they offer more than just ownership; they offer a sense of belonging and engagement. For example, owning a Bored Ape Yacht Club NFT grants access to virtual parties and real-world events, creating a holistic experience around the digital asset.
Despite these advancements, NFTs in their current form have limitations. Currently, their utility is mostly confined to buying, selling, and trading. They are largely static, two-dimensional assets with limited interactive capabilities. While they have enabled new forms of digital ownership and community engagement, they have not fully realized the potential for dynamic, interactive experiences. NFTs still have much to prove in terms of long-term value and utility. Yet, the intrigue surrounding them is undeniable, hinting at an underlying potential waiting to be fully realised. Breakthroughs like ERC-6551 could be pivotal in this journey, shaping the next chapter of NFTs and solidifying their place in the digital landscape.
The current standard universally adopted by the developer community for NFTs is ERC-721.
This standard governs the creation and management of NFTs, which are unique cryptographic assets on a blockchain, distinguished by individualized codes and metadata.
The ERC-721 standard provides a blueprint for creating non-fungible tokens on the Ethereum blockchain, specifying a set of standard functions that smart contracts can implement. It allows for the ownership and transfer of these unique assets using Ethereum's existing infrastructure, and it's fully compatible with Ethereum wallets that support the ERC-721 standard.
The standard was first introduced in 2017 with the launch of CryptoKitties, starting the craze around NFTs that turned into NFT spring in 2021 with digital art and collectables largely propelling the ERC-721 standard forward, beyond the crypto native audience.
CryptoKitties was a pioneering game built on the Ethereum blockchain by Dapper Labs that allowed users to purchase, trade, and breed unique digital cats. It was the first mainstream application of NFTs, setting the stage for other popular collectables such as NBA Top Shot [Dapper Labs], Bored Ape Yacht Club [Yuga Labs], Cryptopunks [Larva Labs] and Sorare. Unlike traditional games, each CryptoKitty is a unique NFT, with distinct traits and characteristics, even if they share the same parentage.