What is ERC-721?

The Ethereum standard for non-fungible tokens, in which every token has its own identifier and is owned individually rather than as a balance.

The interface defines ownership, transfer, and approval functions, so any wallet or marketplace that implements it can handle any compliant collection (source: EIP-721). The image or file itself normally lives off chain, at an HTTP address or on ipfs, and the token stores a pointer, which is why a collection can break if that pointer stops resolving. Approvals are the main safety issue: granting a marketplace permission over a collection leaves it standing until revoked.

The misunderstanding worth naming is what you own. The token records that a given identifier belongs to your address. It does not store the artwork, and in most cases it grants no copyright or licence. What the token conveys beyond the on-chain record is whatever the project's own terms say, and often that is nothing.

How it works

Where an erc 20 contract keeps a table of addresses and amounts, an ERC-721 contract keeps a table of identifiers and owners. Each identifier is unique within the contract, so token 1 and token 2 in the same collection are separate things that can sit in different wallets and sell at different prices (source: EIP-721).

The interface covers ownership lookup, transfer, and two levels of permission: approval for a single token, and approval for an operator over your entire holding in that contract. The second is what marketplaces request, and it is the one that persists.

The safe transfer function checks that a receiving contract can handle these tokens before completing, which prevents the common accident of sending a collectible somewhere it cannot be retrieved. Sending to a plain address carries no such check.

Metadata comes from a token URI, which points at a JSON document describing the item and linking to its image. If that pointer resolves to a server that goes offline, the token still exists and still has an owner, but every interface renders it as a blank. Collections that store the pointer on ipfs with pinned content are more durable, though pinning is a service someone has to keep paying for.

Example

Illustrative sale arithmetic. You list an item at 2 ETH on a marketplace charging a 2.5% fee, and the collection has a 5% creator royalty written into the marketplace's terms. Gross is 2 ETH, the marketplace takes 0.05 ETH, the royalty takes 0.10 ETH, and you receive 1.85 ETH before the network fee. Whether royalties are enforced at all depends on the marketplace, because the standard itself has no royalty mechanism.

Why it matters when you buy

Very few centralized exchanges list these assets, so buying generally means a marketplace, a wallet, and self custody, with no support desk if something goes wrong. Prices come from individual sales rather than an order book, so there is no reliable spread or depth to check. Compare the venues that do list conventional assets at the exchange pages.

Related terms

nft — the asset class, erc 1155 — the multi-type alternative, token approval — the permission being granted, ipfs — where metadata is often pinned, smart contract — what the collection is, erc 20 — the fungible counterpart.

Questions

Do I own the image when I buy an ERC-721 token?

You own the on-chain record that the identifier is yours. Rights to the underlying artwork depend entirely on the licence the project publishes, and many grant none at all.

What happens if the metadata server goes offline?

The token and its ownership record are unaffected, but interfaces will show nothing because they cannot fetch the description or image. Collections that store metadata on chain or pin it durably avoid this.

Can I deposit an ERC-721 token to an exchange?

Almost never on a standard spot exchange. A deposit of an unsupported token type is frequently unrecoverable, so check the venue's documentation before sending anything.