What are ERC721 and ERC20?
Updated: Dec 24, 2020
If you’re new to the world of Crypto and DeFi, you might be wondering what these terms mean. ERC721 and ERC20 are part of Ethereum’s standards. These are a set of rules that allow other developers to follow, making the tokens created compatible with different applications. Below we’ll explore the 2 main ERC standards and their functions.
ERC20 tokens are the most commonly used token on the Ethereum network. Also known as utility tokens, they are designed to be used for paying for functions, goods and services. These tokens are fungible, transferable and have affixed supply of tokens. The ERC20 standardised rule minimised the complications when tokens interact with one another.
ERC20 has provided a gateway for companies to create blockchain products instead of developing their own cryptocurrency. Some tokens like KingSwap’s KING token are set to remain ERC20 tokens while other cryptocurrencies like Binance Coin have migrated to their own blockchains.
These tokens can be traded on crypto exchanges such as Coinbase, Binance or newer decentralised exchanges like KingSwap, UniSwap and SushiSwap.
There are limitations to this token like low throughput and slow transactions. However, newer standards like the ERC777 aims to improve this by lowering overheads and adding new features. The ERC777 is said to be backwards-compatible which might mean it can be more easily and widely adopted.
ERC721 was created by Dieter Shirley, William Entriken, Jacob Evans and Natassia Sachs. It is a set of standards, that allow developers to follow - making code writing easier, predictable and reusable. Following commonly used standards will ensure it remains compatible with different applications including dapps, exchanges and wallets. ERC721 is a token standard on Ethereum for non-fungible tokens (NFT). Each token is special and has its own code which has contributed to a booming demand for crypto collectibles like digital artwork and trading cards.
These tokens are produced by writing a piece of code in a smart contract which follows a base code. When the basic template is followed, the programmer can decide on unique details about the token being created such as the name, owner, symbols and even include extra functionality.
A wide range of ERC721 tokens or NFTs are available on Ethereum. The most well-known NFT, CrypoKitties is available there but there are many others, like KingSwap NFTs, that can be exchanged or traded on NFT markets like OpenSea, Rare Pieces and Emoon.
KingSwap has different NFTs with multiple characteristics. Not only are these NFTs unique and have their own quirky features, they also work to provide special benefits to holders. Some of the main NFTs are the King, Queen and Knight NFTs but every once in a while limited edition themed NFTs are offered.