The Real Value Behind the CryptoKitties Hype: ERC-721
CryptoKitties may have seemed like a flash in the pan, but within its story lies some vital insights. This blockchain based game has certainly brought more mainstream awareness to the blockchain/crypto community.
1. Regardless of the craze and questionable value some were willing to pay for its digital cat product, nearly half a million kitties were sold, amounting to over US$25 million.
2. This craze continued to highlight the capacity/scalability issues of blockchain technology, as the Ethereum network witnessed major slowdowns from the congestion caused by CryptoKitty activity. These issues will need to be resolved for blockchain to reach the masses.
What we need to pay more attention to is the blockchain standard behind these digital cats, which is the use of the ERC-721 token.
In simple terms, ERC-721 is a standard interface for building non-fungible tokens (NFTs). NFTs increase interoperability allowing for the transfer of assets between different blockchain networks, and at the same time create intrinsic value for a new asset class.
While many of the current decentralized apps (dApps) built using Ethereum smart contracts utilize the ERC-20 (identical token) standard, ERC-721 has taken the gaming industry by storm as developers begin to use this new standard to create unique tokens to tag each digital asset.
I won’t get into the technical aspects of the standard, but anyone looking to dig deeper can find more info here.
The use of ERC-721 can continue to expand mass adoption of the blockchain ecosystem, as companies begin to develop tokens to track and trade all forms of digital assets…eventually physical assets as well. These unique tokens give an asset its own digital footprint and provide new opportunities and new economies beyond just gamers transferring their digital assets to other gaming platforms. It also allows for artists, collectors, landowners and many more to monitor and monetize their goods.
NFTs are beginning to gain exposure, with Hong Kong hosting the first global conference centered on the topic, NIFTY. This effort was spearheaded by Kenetic and Decentraland. And the conference and hackathon were geared toward the gaming community, but many of the concepts and use cases can be applied to other industries. No one claimed to be an expert on the topic, and many had different points of views on the adoption of ERC-721. But the community, comprising of many leading blockchain and gaming companies/contributors from around the world, came together in Hong Kong to open the dialogue on the rise of ERC-721.
I’m looking forward to the widespread application of this new standard and its potential to bring liquidity to both digital and physical assets. What we are currently witnessing seems to be the blossoming of a greater blockchain ecosystem, as ERC-721 finds it footing.
