Non-fungible tokens (NFTs) are a specific type of cryptographic token. They represent an asset or item that is unique, unlike cryptocurrencies such as Bitcoin which function as a fungible unit of currency.

What’s the difference between fungible and non-fungible?

Fungibility is the quality of a good or commodity whose individual units are essentially interchangeable. As an example:

Fungible: 1 BTC is always equal to 1 BTC, and so on. Non-fungible: like your house, one house can vary greatly from another (size, location, etc.).

NFTs represent ownership over digital or physical assets. The token associated with the asset is assigned a unique identifier and an NFT represents the ownership of this token.

As each token can be uniquely identified, these tokens allow for proof of ownership over specific items like: Digital collectibles (digital cats, rare artwork) Digital art (a custom drawing from an artist) Gaming items (in-game currency, weapons, armor) Physical property (vehicles, property titles/deeds)/

NFTs may also include metadata about who owns them or who has access to use them. They are more than just a transferable form of currency, but rather a representation of unique digital or physical assets. The NFT is created, stored and managed in an off-chain container using a traditional database such as MongoDB or CouchDB. This allows for scalability benefits over the Ethereum blockchain itself.The most familiar examples of NFTs are CryptoKitties and Etheremon. Both of these applications use NFTs to represent ownership over virtual pets that can be stored and transferred on multiple platforms and devices for trading purposes.

What is ERC-721?

ERC-721 is the standard interface that defines a set of rules and events (functions) for interacting with non-fungible tokens (NFTs) on the Ethereum blockchain. It provides developers with a reference implementation for working with unique tokens.

It is a free, open standard that describes how to build non fungible or unique token on the Ethereum blockchain. It provides a definition for contracts and tokens that want to be compatible with other applications, wallets and libraries dealing with non unique tokens. 

 Why do we need ERC-721? The ERC-20 token standard has become a de facto interface for tokens on the Ethereum blockchain. However, fungible tokens do not describe any ownership details and do not provide an easy way to distinguish one from another. As we move towards real world adoption, we need a token standard that allows us to unambiguously identify unique token.