How Does a Token Standard like ERC-20 Fundamentally Differ from an NFT Standard like ERC-721?
ERC-20 tokens are fungible, meaning each unit is identical and interchangeable, like a dollar bill. They are typically used for cryptocurrencies or utility tokens.
ERC-721 tokens, or NFTs, are non-fungible, meaning each token is unique and cannot be directly exchanged for another. This standard is used for digital art, collectibles, and unique assets.
The smart contract code dictates this fungibility difference.
Glossar
ERC-1155 Token Standard
Architecture ⎊ The ERC-1155 Token Standard represents a significant advancement in tokenization, enabling the creation and management of both fungible and non-fungible tokens within a single smart contract.
Erc-20
Architecture ⎊ The ERC-20 standard defines a uniform API for fungible tokens on the Ethereum blockchain, facilitating interoperability between decentralized applications and exchanges.
Smart Contract Code
Logic ⎊ This refers to the deterministic, self-executing instructions embedded within a smart contract that govern the behavior of a financial instrument, such as a crypto option.
Nft Standard
Standard ⎊ An NFT standard is a set of technical rules, most famously Ethereum's ERC-721, that dictates how non-fungible tokens are created, owned, and transferred on a blockchain.
Token Standard
Architecture ⎊ Token standards define a common set of rules governing the creation and management of digital assets on a blockchain, establishing interoperability between decentralized applications and exchanges.