CertiK, a U.S.-based end-to-end cybersecurity solutions provider, notes that when it comes to progressive cryptocurrency and blockchain projects, Ethereum (ETH) has one of the most active communities that includes a diverse group of users, such as skilled developers and “crypto-religious” users to non-technical enthusiasts and “crypto-anarchists.”
According to CertiK, one aspect that “makes the Ethereum community what it is, would undoubtedly be its governing structure.” They explain that “the unit around which all governance occurs” within the distributed ledger tech (DLT) platform’s ecosystem depends on the Ethereum Improvement Proposals (EIPs).
As explained by CertiK, “independently of one’s technical background, anyone is eligible to propose a change, whether that relates to upgrades in core protocol features, client APIs, smart contract standards, and even informational/aesthetic updates.”
There are many different types of EIPs and are classified as follows: Standard Track, Process, and Informational EIPs. Standard Track EIPs can be quite “impactful as they apply to implementations on the Ethereum protocol itself,” CertiK noted. Standard Track EIPs include several sub-categories: Core, Networking, Interface, and ERCs.
As explained by CertiK:
“Ethereum Request for Comments (ERC) relate to implementations on application-level standards, including … smart contract standards, library formats, and wallet formats. [Examples may include] … the popular ERC-20 token standard and the ERC-137 Ethereum Name Service (ENS) name registry standard.”
While there have been some “game-changing” ERCs, ERC-721 is considered one of the most popular or widely adopted, according to CertiK. They confirmed that for this reason, it was “motivated by an effort to standardize the interface” for Non-Fungible Tokens (NFTs).
The CertiK team further noted that the ERC-721 standard ”allows for the implementation of a standard API for NFTs within smart contracts, thus providing basic functionality for tracking and transferring NFTs.”
NFTs are tokens that are unique (unlike ERC-20 tokens which are all fungible with each other). Each NFT represents a distinct asset. As noted by CertiK, an NFT is quite often a unique single edition or “limited edition” digital token, which holds additional data or media, and may interact with the Ethereum blockchain and decentralized applications (dApps).
Users can purchase NFTs in exchange for some Ethereum tokens and then they get to hold the NFT as a digital asset in their cryptocurrency wallets. NFTs may be sent to another digital currency wallet. They can be gifted/sold/auctioned in various NFT marketplaces, and other decentralized or non-custodial exchanges (DEXs).
According to CertiK, it can be easier to interact with ERC-721 and other crypto-collectibles, especially for non-technical users.
“The world of NFTs is more accessible and requires a lesser technical understanding of expert terminology and practices. … NFTs [are] special [because] they simulate the scarce conditions of a physical asset while being part of the digital realm, where anything from the date of creation of each respective NFT, its creator address, as well as its initial value are archived and transparent to the public.”
CertiK also mentioned that NFTs are like a standardized interface that “has the potential to easily bridge the physical with the digital reality.” They pointed out that “the distinctiveness of the ERC-721 standard” is that they “allow for individual ownership of assets, which can, in turn, be atomically tracked.” As explained by CertiK, this helps “unlock [many] … possible use-cases that all rely on tracking and tracing unique contracts/assets, while also authenticating their ownership statuses.”
As covered recently, a new NFT standard TRC-721 has been introduced by TRON to open new prospects for blockchain.
Ethereum-based NFTs Axie Infinity, Sorare and SuperRare recorded over $1 million in trading volume during November 2020, according to a detailed report.