NFT - Explaining Non-Fungible Tokens , ERC-721 vs. ERC-1155
Let us talk about Non-Fungible Tokens (NFT). The big debate on where to start with building my first NFT collection. If this is your first introduction to NFTs I will try to be as thorough as possible but I do recommend that you do your own research. I have only been looking into the space in depth for the past month. I have learned a lot about Non-Fungible Tokens (NFT) and I have bought some NFTs to experience it firsthand. I do want to emphasize I am not a expert.
In this article I want to cover the 2 types of NFTs available, ERC-721 & ERC-1155. Both of these have their own properties. I will try my best to explain it from my perspective.
To begin let me explain what NFT means Non-Fungible Token. Non-Fungible Token is something that cannot be duplicated. It is a One-Of-One scenario. The difference between Non-Fungible Token and Fungible Token is exactly that. Fungible Tokens have copies of equal value.
To give you some examples, a Fungible Token can be a 10$ bill. This 10$ can be traded for another 10$ bill and still have the same value. This 10$ bill can also be traded for two 5$ bill and still have the same value. In the crypto currency world Fungible Tokens are Bitcoin, Etherium, Solona, ect… (To be clear there is also ERC-20, ERC-20 is a token created on the back of these large coins. I am not very familiar with this topic so I will not elaborate. Please do your own research.)
Examples of Non-Fungible Tokens in the real world could be a house. There are many houses, and they can be similar, but none of them are the same. They have different characteristic, locations, or specifications. You would not be able to exchange your house with someone else’s and convince them that they are the same. This is also true with art. Paintings are Non-Fungible Token. “The Starry Night” painting by Vincent van Gogh has been replicated millions of times but none of them hold the same value as the original. The blockchain has allowed everyone to snuff out the forgeries.
Before we continue I think it is also important to explain what blockchain technology is. Once again, it is important to do your own research, I am not an expert.
Blockchain technology is a ledger of every transaction ever. Every block contains information of the current black and the previous block, hence creating a chain. The blockchain is protected in 2 ways, Proof-of-work and Peer-2-Peer. Finally the most interesting part is the creation of “smart contracts” which are used in the minting of NFTS. Rather than trying to explain the blockchain myself here is a video that does a great job at explaining it clearly. https://www.youtube.com/watch?v=SSo_EIwHSd4
Alright, now that we have defined what a Non-Fungible Token is, let’s talk about where we can buy them. To be clear Bitcoin, Etherium, Solana and more are each on their own blockchain. They are not interchangeable. Perhaps they may be in the future but today they are completely different entities.
Bitcoin does not have a NFT market. The biggest NFT market place is “Opensea.io” Opensea is on the Etherium blockchain. There are multiple NFT marketplaces on Etherium (I am not sure is NFTs can be moved from one market place to another on the Etherium Blockchain. If you do know the answer to this please leave your answer in the comments below.)
… There are many more, please add the ones you like in the comments.
All of this information is to finally explain my debate between ERC-721 and ERC-1155. Which one is better? This information is from my understanding and I may be wrong with my information on this pro and con list. Please correct me if I am wrong.
Let’s start with ERC-721, these tokens are the true golden standard token. The “CON” of this token is the high gas prices. I have bought 2 NFTs and the price of the gas was almost just as much as the NFT.
The second "CON" is that creating an ERC-721 NFT is complex. To create an ERC-721 NFT you need to have a smart contract. A smart contract is a written code that allows NFTs to be minted (created) onto the blockchain. Writing a smart contract is not an easy task. It is ideal to have a developer take care of that because any mistake would lead to causing major issues to launching the project properly.
The favourite “PRO” with ERC-721 is that when you purchase it you can see your NFT in your MetaMask wallet app on your phone.
Now for the ERC-1155 “PRO”s, nicknamed “lazy minting”, is very easy to create. The barrier to entry is very low. You do not need to create a smart contract. You do not need to pay any fees to create your ERC-1155 NFT collection on Opensea market place. The minting and gas fees are paid once purchased. The “CON”s are that these NFTs do not show up on your MetaMask app. They are visible on your Opensea profile. Unfortunately, the most inconvenient part of buying NFTs on the Etherium blockchain is also present on with an ERC-1155 NFT, high gas fees. I purchased an ERC-1155 NFT for 90$ USD and the gas fees were almost 70$. Gas prices do fluctuate but this is by far the most annoying part of buy NFTs on Etherium.
What do I believe to be the best solution?
Polygon is a Token available on Opensea and is also a ERC-1155 so it has a low entry barrier. But the gas prices are so low you barely notice them. I honestly don’t know much about the workings of a polygon NFT but it does avoid all the negatives of the other options while keeping the benefits. Polygon is more flexible and easy to navigate. Also it is much easier for first a time buyer, which is who I will be curating my NFTs towards.
To conclude, Non-Fungible Tokens are here to stay. There are so many of them and the future is full of opportunities for NFTs to simplify our lives. Take a look around at all that is being created on these market places. Watch a few videos that explain what is going on behind the scenes.
There is much more than I had a chance to touch on in this article. As for ERC-721 vs. ERC-1155, I would love to create a successful collection which sells out. Having an attractive NFT project with an ERC-721 is a lot of work. You need a good team and proper marketing.
After seeing all that needs to happen and what my potential reach is, I have decided to launch my collection with Polygon as an ERC-1155 on the Opensea marketplace. The simple reason is because it is simple and straight forward. I don’t want my customers to be confused and I want them to have a pleasant experience.
I hope you follow along my journey. Please use the comment section to ask questions or elaborate.
My NFT collection will be Camp Brave Bunny and I have attached all the relevant links bellow.
Other Non-Fungible Tokens Projects
- Bored Ape Yatch Club
- Crypto Punks
- The Sneks