A single title or certificate
One token that records one unique item, such as a certificate of authenticity or a digital record of a specific object.
Token standard
ERC-721: one token for one unique item.
ERC-721 is the format behind what people call NFTs. Each token is one of a kind. That suits a single title, certificate or artwork. It does not suit many investors sharing one orchard under rules about who may own a part.
- Introduced
- 2018
- Type
- Non-fungible
- Transfer rules
- None built in
What it is
ERC-721 was proposed in 2018 and is a final Ethereum standard. Ethereum is a public blockchain, a shared database kept in sync by many independent computers so that records cannot be quietly rewritten.
The tokens it describes are non-fungible: each one carries its own identifier and is not interchangeable with another. An NFT, short for non-fungible token, is simply a token written in this kind of format. Think of it as a numbered certificate rather than a banknote.
How it works, in plain terms
The token is managed by a smart contract, a small program on the blockchain that runs exactly as written. It keeps a list: token number 1 belongs to account A, token number 2 to account B, and so on. Each token can point to a description of the item it stands for, such as a document or an image.
An account is controlled from a wallet, the software or device holding the key that proves control. Anyone can open one. The owner of a token can send it to any other account, and the standard only checks that the sender owns that token.
Where ERC-721 is the right tool
Collectibles and art
Items whose value comes from being one of a kind, where open transfer between collectors is expected.
Proof of a unique right
Tickets, memberships or licences where each unit is distinct and should be tracked individually.
Why it falls short for regulated ownership of real assets
Tokenizing a real asset for investors usually means splitting it into many equal units, so that many investors can each hold a share. ERC-721 is built the other way round: one token, one indivisible item. Splitting it means extra layers of custom code, and each layer adds legal and technical questions.
Like ERC-20, the standard has no idea who a holder is. It has no place for investor identity, no transfer rules such as permitted countries or holding limits, and no standard way for an issuer to restore a holding to an investor who loses access. For a regulated security, those are the parts that protect you and your investors.
It can still play a supporting role, for example as a record of a single unique document. The ownership units themselves need a format built for regulated securities.
ERC-721 at a glance
- Introduced
- Proposed 2018, now a final Ethereum standard
- Type
- Non-fungible: every token is unique
- Built-in transfer rules
- None, beyond checking the sender owns the token
- Identity
- Not part of the standard
- Issuer controls
- None in the standard
Questions we get
Could each investor get their own unique token?
It is possible, but it makes transfers of part of a holding awkward and still leaves out identity checks and transfer rules. Equal, interchangeable units with rules built in are a better fit for shared ownership.
Is an NFT a security?
That depends on what it represents and the law where it is offered, not on the format. Your counsel makes that assessment.
Can ERC-721 and ERC-3643 work together?
Yes. A unique token can record a single item alongside ownership units issued under ERC-3643, if the structure calls for it.
General information about a public technical standard. Not legal, tax or investment advice.
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