If you’re familiar with cryptocurrency and NFT, you may also be familiar with ERCs. ERCs govern almost everything on the Ethereum blockchain, from coin transfers, NFT transactions, to coin refunds. But there are numerous ERCs out there and not all of them are created equal.
So what exactly does each ERC do and how do they stack up against each other? Read on to find out!
What Are ERC Token Standards?
Ethereum Request For Comments (ERC) are application-level standards for Ethereum development. These multipurpose standards can consist of name registries, package formats, token standards, and many other elements.
At its core, ERCs are “blueprints” or “source codes” that define rules on how various elements in the Ethereum blockchain work. Because ERCs are adopted by most of the Ethereum community, it makes developing projects easier because you don’t have to build standards from scratch every time.
While anybody in the Ethereum community can submit an ERC proposal, not all of them can be full-fledged ERCs. EIPs (Ethereum Improvement Proposals) need to be reviewed and gain support from the community before it becomes a standard for the Ethereum blockchain.
Take ERC-20, for example. This highly-popular token standard defines the rules for creating and trading fungible tokens – otherwise known as cryptocurrency coins. Since this standard is so widely used by the community, almost everyone from token developers to crypto exchanges adopt ERC-20 smart contracts.
In addition to giving the Ethereum community new ideas, ERC smart contracts can also be used to build upon existing standards. For example, the ERC-223 standard expands upon ERC-20 by solving a bug that causes accidental loss of tokens in some cases.
There are numerous ERC token standards in use nowadays, but here are some of the most popular ones:
- ERC-20: The gold standard for fungible tokens used by numerous coin projects in the Ethereum community. It governs the creation and transferral of tokens on the Ethereum blockchain.
- ERC-223: An expansion on the existing ERC-20 standard that helps prevent accidental token loss.
- ERC-721: The main standard for non-fungible tokens, used in numerous NFT projects and digital assets.
- ERC-865: This standard allows token buyers to pay their gas costs by deducting from their purchases directly instead of using ETH.
- ERC-884: A standard that allows real-world stock to be tokenized in crypto form. For now, this proposal is only available for companies incorporated in Delaware.
- ERC-1137: A standard used for subscription services that require recurring payments.
- ERC-1155: This standard expands on ERC-20 and ERC-721 by providing the ability to contain fungible, non-fungible, and semi-fungible tokens within a single smart contract.
- ERC-1238: This standard governs the use of badges – non-fungible and non-transferable crypto tokens that cannot leave a user once assigned to them. This token is usually used to record experience level in video games or other similar use cases.
- ERC-1400 & ERC-1404: Token standards that govern the trade and use of real-world assets on the Ethereum blockchain.
What Is The ERC-721 Token Standard?
ERC-721 was first proposed by CryptoKitties creators William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs in 2017 because they saw that the ERC-20 token standard has some limitations. Entriken and company needed each kitten in their CryptoKitties collection to be unique and hold different values – which is why they proposed the ERC-721 token standard.
Nowadays, the ERC-721 token standard is seen as the go-to standard when creating NFT projects. ERC-721 is great for NFTs because its basic functionalities allows crypto users to:
- Keep records on the token’s owner history, so you can see every single transaction the token’s been involved in since its minting.
- Perform a non-fungible token transfer from an owner to somebody else.
- Allow another entity (usually NFT exchanges) to transfer tokens between accounts.
Key Characteristics Of The ERC-721 Standard
The ERC-721 token standard has several characteristics that make it great for NFT minting. They are:
- ERC-721 tokens are non-fungible, which means they’re one of a kind and cannot be traded with anything of equal value.
- Thanks to their uniqueness, ERC-721 can be used as a certificate of ownership, making them perfect for counterfeit-proofing methods.
- ERC-721 tokens can easily be traded between users, which makes them perfect for virtual trading cards.
ERC-721 Use Cases
The ERC-721 token standard has many uses in the digital world. However, what some people may overlook is that it also has many uses in the real world. Here are some common ERC-721 use cases you may find:
- Digital art: One of the most common uses of this token standard is in NFT art. ERC-721 tokens allow creators to not only sell reproductions of their art pieces to others, but also the rights to the art piece itself.
- Gaming: NFT-based gaming is also a fast-developing side of the crypto space. Games like Axie Infinity allow you to breed and battle NFT pets that you can later trade for real money.
- Real estate and physical commodities: NFTs can be used to replace property deeds and ownership certificates of physical objects. A digital property deed increases transparency and transaction speed, making real estate transactions safer and more convenient.
- Event ticketing: Music and sporting events can implement NFTs in their tickets so that only token owners can enter. This makes it harder for ticket scalpers and fraudsters to operate.
- Anti-counterfeit efforts: Some apparel brands have taken to including “digital twin” NFTs with their products. These digital twins act as a certificate of authenticity so you know the product is the real deal.
What Is The ERC-865 Token Standard?
The ERC-865 token standard was first proposed in 2018. This token standard is an extension of the common ERC-20 standard that aims to make things easier for cryptocurrency buyers.
ERC-865 makes cryptocurrency transactions on the Ethereum blockchain easier by allowing you to pay your gas fee in tokens instead of ETH. This means you don’t have to own an extra supply of ETH to pay for gas costs whenever you buy other coins.
What Are Gas Fees?
You need to pay gas fees for almost every interaction on the Ethereum blockchain. Simply put, gas fees are what people call the amount of ETH that you need to pay to interact with the blockchain network. Gas fees work just like a transaction fee in conventional banks – you need to pay a certain amount with every single transaction you make.
However, unlike most conventional transaction fees, gas fees can vary depending on the Ethereum blockchain’s congestion. This makes calculating gas fees a little more complicated – meaning you need to have a decent reserve of ETH if you make cryptocurrency transactions on a regular basis.
Benefits Of ERC-865
The ERC-865 standard benefits both token project teams and the token-buying public. For the everyday cryptocurrency buyer, ERC-865 makes it easier for them to buy coins because they don’t need to keep a reserve of ETH at all times. Instead of having to top up ETH every time they make a transaction, they can just buy away and let the gas fees be deducted from their token of choice.
For token project teams, ERC-865 helps lower the barrier of entry for their Ethereum-based tokens. People who have just gotten into cryptocurrency may not know what a gas fee is and the learning curve may turn them off from buying the token in the first place. With ERC-865 in place, that’s one less thing that crypto neophytes need to worry about.
What Are The Differences Between ERC-721 Vs ERC-865?
ERC-721 is a non-fungible token standard, while ERC-865 is a token transaction standard. This means that both ERCs have fundamentally different purposes. Here, we break down the key differences between these two standards.
Objectives
ERC-721 is meant to outline the concept of non-fungible tokens. Different from fungible tokens, NFTs are one of a kind and aren’t interchangeable, making them a good choice for collectible digital assets.
Meanwhile, ERC-865 is created to streamline token transactions by removing the separate gas fee payment. This way, the gas fees can be directly deducted from the purchased Ethereum-based tokens.
Visibility
ERC-721 is a very “visible” token in that you can see it at work. An NFT can be traded, displayed, and checked on the blockchain, so everyone is aware of its existence. Conversely, ERC-865 works in the background and it shouldn’t be noticeable to users.
Closing Thoughts
ERC-721 and ERC-865 both serve very different purposes in the Ethereum ecosystem. One defines the use and trade of NFTs, while one makes crypto transactions less of a hassle. So you can’t really pit one against the other to see which one is better.
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