What is the working logic of NFT? NFTs provide ownership rights by using blockchains as a database. While digital collections can be copied very easily, blockchain technology makes this impossible by providing safe and effective ownership rights within the framework of its features.
NFTs can only have one owner at a time. Ownership is achieved through the non-reproducible and unique credentials that NFTs contain. Identity information for NFTs is created through smart contracts, such as the ERC-721 standard, which assigns ownership and governs the transferability of NFTs. The information is then recorded on the blockchain in the network where the NFT is located.
These processes consist of three steps:
– Creating a new block
– Verification
– Recording information on the blockchain
What are NFT token standards?
NFTs use different token standards than cryptocurrencies. What makes NFTs special are these different token standards they use. Although each blockchain has its own token standard, the popular Ethereum-based token standards that come to mind when NFT is mentioned are ERC-721, which is generally used to create collectible items, and ERC-1155, which is used in the gaming industry.
What is ERC721?
It is the first standard that enables NFT production on the Ethereum network. It is a modified version of the ERC-20 standard used in Ethereum-based cryptocurrencies. Although it was first used in 2017, the ERC-721 standard actually predates Ethereum. When it first appeared, it was intended to be added to the Bitcoin world for certification of real estate and physical assets, but its success was achieved with Ethereum.
The ERC-721 standard creates digital signatures that ensure that NFTs produced are unchangeable and unique. Even if NFTs are created with the same smart contracts, they may have different values due to features such as age, rarity and even visual.
Unlike the ERC-20 standard, ERC-721 cannot be traded on exchanges and converted into another cryptocurrency like cryptocurrencies. They can only be traded on marketplaces and auction platforms developed for the exchange of these tokens.
The Cryptopunks project, the first NFT product, was created with this standard.
What is ERC1155?
The ERC-1155 standard was developed by Enjin on the Ethereum blockchain. The reason for its development is the high transaction cost and management difficulty of the ERC-721 standard. It was created to optimize these problems and to provide convenience in systems where many different items are used, such as games. Essentially, it enables tokens with the ERC-20 standard and assets with the ERC-721 standard to be traded together and large transactions to be made at once. For this reason, blockchain has become a preferred standard for game developers.
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