Key highlights:

ERC-721 tokens act as a popular entry point for newcomers into the Ethereum blockchain

Artists can make money by selling digital art through ERC-721 contracts

NFTs enable Proof of Ownership

ERC-721 is probably the second most popular Ethereum token standard after ERC-20, the standard than enables ERC-20 tokens. The ERC-20 standard is the technology that underlies most of our favorite altcoins.

While there are a plethora of successful Ethereum Improvement Proposals (EIPs) that make our Ethereum interactions easier, the ERC-721 or NFT (non-fungible token standard) protocol is claiming more enthusiasts over time due to its unique ability to tokenize almost anything you can imagine using a single automated smart-contract.

That's right! Even more exciting is the fact that you don't have to be an Ethereum developer to deploy your own ERC-721 contracts. Anyone with or without blockchain understanding can create and deploy an ERC-721 contract using services such as Mintbase.

For example, you can upload a picture of your cat, or register a contract on the blockchain, decide the number of tokens issued, and boom! You just minted your first digital asset. What's next? Gift it, trade it, sell it.

Obviously, people are not in ERC-721 tokens just because they could tokenize their cats, but because they could also actually make a profit from their creations.

Whether you're here to learn a new skill or sharpen your already accumulated blockchain knowledge, this article will be going through some popular ways to make money utilizing ERC-721 contracts, regardless of your level of understanding of how a smart-contract or Ethereum blockchain itself actually work.

ERC-721 is essential to crypto art

If you're an Ethereum netizen, you're probably already aware of this new blockchain-powered trend, but what exactly is crypto art for a total newcomer?

Essentially, the crypto art movement is utilizing ERC-721 smart contracts to tokenize digital art which is represented by the token itself, or the minted token is the actual piece of art, and it is not pegged to a physical painting.

That way, digital artists can monetize their creations directly through the Ethereum blockchain. Crypto art collectors browse the most unique pieces that can be found in blockchain-based virtual reality realms, virtual galleries, crypto collectible marketplaces such as OpenSea.io, or directly through crypto art brokers, which perform a similar role to record labels in the physical music industry.

Crypto art collectors usually pay a sum in ETH as requested by the creator in order to purchase the limited edition token or make an offer in case the piece appears not to be for sale. Since the digital art creations are stored on the blockchain and you can carry your collection in your web3 compatible wallet, you can see other people's possessions even if they are not selling them.

Depending on the art piece, its creator's social status, and the scarcity/demand formula, some NFTs can be sold for thousands of dollars worth of ETH - just take a look at some of the pieces on display in SuperRare's showroom.

People who sell their art for crypto can then utilize their cryptocurrencies in the digital domain, or translate them into good old fiat currencies to cover their everyday needs and art consumables .

In order to participate in the crypto art scene, you don't necessarily have to be a blockchain expert. You can find some traditional artists who take upon this new opportunity for exposure and engage in a standalone market that's based on the Ethereum blockchain.

Utilizing ERC-721 contracts to tokenize physical assets

Now, what if you'd like to register something on the blockchain and divide it among a number of digital tokens, but it wasn't a digital Mona Lisa?

Since ERC-721 tokens can represent ownership, assuming that the contract is well-written enough and/or interoperable with other smart contracts, one could create a batch of ERC-721 tokens that represent a physical contract.

For example, we own a house in Florida and it's divided between the two of us. Your magnitude of ownership of the house is 70% while I only own 30% of the same house.

Issuing digital tokens in a relevant analogy of 7/3 whether that'd be 7000/3000 tokens or 70/30 tokens, we could sell the ownership of the house to smaller investors who could get 1% or even less of the house in digital ownership tokens.

Another contract ensures that owners get dividends while the house is being rented, or get compensated with their respective portion of a future sale, considering that all contract details have been met.

There are already a lot of blockchain startups that utilize NFTs to tokenize Real Estate and/or other physical assets, due to the ability to change ownership in a digital fashion, with minimum costs (a typical transaction can basically transfer ownership rights from one user to another), and practically no time.

Of course, this method of utilizing NFTs is not as simple as selling digital art pieces, and you'd definitely need a good lawyer in order to make sure the whole process is both understood by the smart contract as well as traditional financial authorities, especially when physical assets are involved.

ERC-721 tokens as Proof-of-Ownership

When the ERC-721 protocol became a thing, one of the first legal entities to utilize the smart-contract was the Austrian Post Service, who issued collectible post stamps as NFTs.

Now, besides the fact that this is a cool thing, it also demonstrated that NFT technology can be leveraged for a diverse range of use cases.

For example, owning an OGRE003 NFT will grant you access to the original soundtrack created for the popular Ethereum-based VR realm Cryptovoxels, as you have bought the soundtrack itself.

Other services use NFTs to sell digital tickets for music events and other public activities, and you can even use NFTs as private club cards, where the ownership of a card would also mean one is indeed a member of the club.

So basically, NFTs can be used as tokens of ownership. If you got an NFT ticket to an event, you can also enter the event area as you had the physical ticket.

Sure, this already works with smart cities where train tickets are basically QR codes in a smart hand-held device, and event tickets are processed by apps like Eventora, but taking this to the blockchain level makes things faster, cheaper and more secure, as you cannot forge or generate a false ticket. You either own the NFT or you don't.

Conclusion

If you have a general idea of how NFTs work, you've probably figured out that there are infinite ways of how one could utilize the ERC-721 protocol to generate value. Thus, this article was meant to give you a hint of some possible use-cases, and hopefully the push you needed to start exploring this neighborhood of the Ethereum blockchain on your own terms.

Let me know how you'd use NFTs, and what would be your point of entry in case you're new in the sphere. @rosspeili