Last November, the launch of Crypokitties took the cryptocurrency world by storm, with some prices reaching $300,000 and congestion on the Ethereum network, which on average accounted for 30% of transactions on the network at the time. As user activity in Cryptokitties plummeted from its peak late last year, a number of variations on digital cryptocollectables emerged on the market. Behind the growth of digital crypto collectibles is the power unleashed by the emergence of irreplaceable tokens.
NFT (Non-fungible Token) defines a unique interface specification for Token interaction and circulation that is inseparable from the ecosystem.
On the blockchain, digital cryptocurrencies are divided into native coins and tokens. The former, such as Bitcoin and Qtum, have their own main chain and use transactions on the chain to maintain ledger data; The latter, such as BOT and INK, attach to existing blockchains and use smart contracts to record books. The token can be divided into two kinds of homogeneity and non-homogeneity.
The homogeneous Token, namely FT (Fungible Token), is based on ERC20 and QRC20 standards, which can be replaced by each other and split nearly indefinitely. While non-homogeneous tokens, known as NFT, are unique and non-detachable tokens such as crypto cats, tokenized digital tickets, etc.
FT can be used to represent all kinds of fungible things in the real world, such as money, points, stocks, etc. These things need to be split and then exchanged between users. FT is widely used to issue new digital currencies on blockchain. These digital currencies are often linked to equity stakes in companies or access to products to attract users to buy or hype.
Now the market is gradually returning to rationality, which also makes us realize the limitations of FT: things with real value in real life are irreplaceable, such as a commodity, a contract, a qualification, etc. These unique assets cannot be anchored with FT.
The key innovation of NFT over FT is that it provides a way to mark ownership of native digital assets (that is, assets that exist in, or originate in, the digital world) that can exist outside of a centralized service or repository. NFT ownership does not prevent others from inspecting it or reading it. NFT does not capture information and hide it, but captures information and discovers its relationship and value to all other information on the chain.
At the same time, NFT can anchor the concept of real-world goods due to its non-homogenous and non-detachable nature, such as tocized tickets, precious bottles of wine, and uniquely designed jewelry. NFT enables us to tokenize anything of value and trace the ownership of that information, thus realizing the intersection of information and value.
NTF is a differentiated digital asset based on blockchain. An NTF-compliant blockchain is like a database that can record any commodity. In theory, NFT can anchor all non-homogeneous things in reality, tokenize the real world, and form a digital asset world of value interconnection and information exchange.
The current forces of irreplaceable tokens can be divided into four groups:
There is no substitute for the token issuer
There is no substitute for the token market
There is no substitute for token infrastructure
Resources for non-substitutable tokens
NFT can be divided into the following types in specific application scenarios [1] :
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The collection
We also mentioned CryptoKitties, cryptocollections based on NFT design, and there are many other areas where cryptocollections can expand, such as art collections. We can store contracts, Copyrights, patents and other information that need to be stored on the blockchain in the form of NTF, so as to facilitate subsequent updates, circulation and transactions. When its owner come on, simply to issue this NFT tag information to declare the authenticity of the works and to the ownership of the work, at the same time, the digital certification is traceable, because art assets on the ownership of the record in the chain of blocks, in ensuring the legality of the transaction at the same time also can prevent the forgery of art and fraud.
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Game props
NFT is also revolutionizing the gaming world. Typically, in-game characters acquire tradable items such as weapons, clothes, real estate, etc. Creating an NFT for each item allows them to be traded with in-game points tokens or even real-world cash, creating an online digital economy for virtual goods. These NFTS are stored on a blockchain, and their information, ownership, and all transaction records will be transparent and non-destructible.
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The electronic ticket
If I have a ticket to a superstar concert and you have a basketball e-ticket, they are the same type of item but represent completely different values. Due to its immutable and traceable characteristics, blockchain and storage have a natural combination point, so storage has become one of the typical scenarios of blockchain application. Blockchain storage is applicable to all business scenarios that require storage, verification and evidence collection, especially those that need to solve multi-party trust issues or obtain judicial regulatory permission. At the same time, digitized ticket authentication can also prevent counterfeit and scalping tickets, so e-ticketing is an industry that NFT can transform.
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The identity authentication
We can apply NFT to identity authentication to achieve full record of individual behavior. For example, obtaining a non-tradable NFT for birth certificates, passports, certification of personal driver’s licenses, etc., while the NFT is non-tradable, it allows for interactive authentication of identity through permission controls. We can verify a person’s identity when recruiting NFT to check their college degree, and apply to check the identity information of doctors to verify their qualifications when seeing a doctor. Authentication tokenizes people, documenting all attributes and behavior history.
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Electronic deposit certificate
NFT is used to chain up and centrally store information such as contracts and documents in the real world, preventing forgery and facilitating traceability. At the same time, with the help of electronic signature, certificate and other technologies, to prove the authenticity and validity of the document. Electronic storage can effectively realize the electronization of intellectual property rights, Copyrights, Copyrights and other values, and the transaction characteristics endowed by NFT can make these values directly traded on the block chain, which facilitates the circulation of value.
Tokenization of the real world has been an industry-wide effort since the advent of digital currencies. Color coins, which became all the rage in 2013, was one of the first attempts to give digital assets unique characteristics. Colored coins are an add-on to Bitcoin, or in most cases, the minimum amount of bitcoin that can be divided. They are also called “colored” satoshis to represent real-world assets, such as a house, stock, bond, or commodity transaction. Contracocoins further allow users to create their own physical assets on top of the blockchain. Digital crypto collections based on the irreplaceable token NFT standard are built on this basis, and it is timely to continue to shoulder the original mission of color coin, linking real assets with digital currency. The realization of NFT is also one of the tokenization processes in the real world.
One of the most popular and recognized implementations of NFT today is the ERC721 standard protocol [2]. ERC721 is an EIP (Ethereum Improvement Proposals), which are proposed by developers and passed by the Ethereum Committee to become ERC. One of the Ethereum solicitors. ERC721 is A standard interface for non-fungible tokens and also known as Deeds.
ERC721, as a contract standard, provides the protocols that must be followed when implementing ERC721 tokens. Each ERC721 standard contract is required to implement ERC721 and ERC165 interfaces, as defined below. In addition to the standard interface, there are some extensible interfaces, such as the ERC721Metadata interface defines some of the basic information of the ERC721, ERC721Enumerable defines the enumeration interface, these are detailed in the standard, no further details.
interface ERC721 /* is ERC165 */ { event Transfer(address indexed _from, address indexed _to, uint256 indexed _tokenId); event Approval(address indexed _owner, address indexed _approved, uint256 indexed _tokenId); event ApprovalForAll(address indexed _owner, address indexed _operator, bool _approved); function balanceOf(address _owner) external view returns (uint256); function ownerOf(uint256 _tokenId) external view returns (address); function safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes data) external payable; function safeTransferFrom(address _from, address _to, uint256 _tokenId) external payable; function transferFrom(address _from, address _to, uint256 _tokenId) external payable; function approve(address _approved, uint256 _tokenId) external payable; function setApprovalForAll(address _operator, bool _approved) external; function getApproved(uint256 _tokenId) external view returns (address); function isApprovedForAll(address _owner, address _operator) external view returns (bool); } interface ERC165 { function supportsInterface(bytes4 interfaceID) external view returns (bool); }
All the above interfaces constitute the complete standard and extensible interfaces of ERC721. The _mint operation, _burn destroy operation, addTokenTo add tokenId to a given address, etc. These methods define and implement the ERC721 token protocol. Based on this, we can apply ERC271 tokens in many scenarios, developing tokens that follow the ERC721 protocol by inherits its main token contract, and adding corresponding business logic freely to enrich the application.
Due to the irsubstitutability of NFT and the popularity of digital collectibles caused by crypto cats, standard protocols based on NFT are being updated and iterated step by step. For example, ERC875 [3] and ERC998 [4] are both in the draft stage, but their views are worth thinking about. Among them, ERC875 attracts our attention, because NFT itself is the definition of commodity, and an important attribute of commodity is transaction. ERC875 builds on ERC721 by adding transaction capabilities that allow users to purchase NFT assets using native coins on the blockchain.
Here we briefly analyze the implementation process of trade transaction in ERC875 contract:
When the owner of the token wants to sell the token (he can sell more than one token at a time), the owner signs the total sales amount, the transaction validity period, the list of tokenId sold and the contract address with his secret key and announces them.
After obtaining the signature information, the buyer can recover the tokenId list and price information from the signature, as well as the V, R and S signature parameters in the code, and take the tokenId index, V, R and S as the trade input through the help of some given apps. Construct a transaction together with the token (msg.value) of the same price as the total amount of sales and send it to the contract address to call the trade interface;
In the trade function, encodeMessage function is called to encode MSG. Value and tokenId list information as message, ecRecover function is called to verify the correctness of the signature information V, R and S, and obtain the address of the seller’s home.
The TokenID of each commodity corresponding to this sale will be found out from the asset list registered under the seller’s address, and transferred to the asset list registered under the buyer’s address. The buyer becomes the new owner of this batch of goods. For the same sales signature information, there can be multiple buyers at the same time, in this case, the principle of first buy, first serve is followed.
NFT is also essential in Qtum’s commitment to building a highly compatible and scalable blockchain ecosystem. Qtum has completed the ecological compatibility of homogeneity token FT, and QRC20 token standard has attracted great attention since it was issued. Many projects choose to use QRC20 standard to build their own applications on Qtum, and have achieved good results. Therefore, we plan to launch the NFT standard on Qtum and encourage developers to implement NFT applications based on Qtum, including the following aspects:
Formulate QRC721 interface protocol. The protocol will be adjusted according to the latest application direction and community feedback with reference to ERC721.
Publish the QRC721 template. The developers plan to implement the basic features of QRC721 and complete debugging on Qtum to help more developers build qRC721-compliant applications.
Added support for QRC721. According to the needs of developers and the development of applications, support for QRC721 has been added in browsers, wallets and other Qtum related tools.
Through the research and analysis of NFT, we see a development direction of blockchain in the future, that is, it is used to mark goods in the virtual or real world, so as to realize the information recording, circulation, transaction, traceability and other functions of goods. This greatly broadens the application prospect of blockchain and provides a foundation for blockchain technology to reach the masses.
[1] What Are NFTs？ https://coincentral.com/nfts-non-fungible-tokens/
[2] ERC721: Non-Fungible Token Standard. https://eips.ethereum.org/EIPS/eip-721
[3] ERC875: A better NFT standard. https://eips.ethereum.org/EIPS/eip-875
[4] ERC998: Composable Non-Fungible Token Standard. https://eips.ethereum.org/EIPS/eip-998