This New Crypto Standard Taking Center Stage for NFTs
 |
| By Jurica Dujmovic |
I’ve spoken previously about NFTs and soulbound tokens before.
But today, I want to introduce something new that combines these with the broader web3 trend to potentially redefine digital identity and ownership.
And that is the new standard from the web3 data infrastructure company CARV called ERC-7231.
A standard is a set of rules that run crypto tokens on the blockchain.
For example, all tokens on the Ethereum (ETH, “B+”) blockchain run on the ERC-20 standard and are beholden to its rules.
At its core, ERC-7231 is an extension of the well-established ERC-721, the current NFT standard. But it transcends its predecessor by introducing a mechanism that binds an individual's myriad online personas — spanning both traditional internet platforms and blockchain ecosystems — into a single, cohesive NFT.
In the simplest terms, ERC-7231 enables users to link diverse online personas from multiple sources into a single NFT.
This plays into the digital identity trend I identified in December as one of five narratives pushing the NFT market in 2024.
This fusion not only amplifies the utility and significance of NFTs. It could also usher in a new era of digital identity management, marked by enhanced security, authenticity and user sovereignty.
Understanding ERC-7231
This standard operates on the principle of embedding a custom schema within the NFT's metadata. This is a feature that facilitates the dynamic updating of identity-related information directly on the blockchain.
The approach ensures the authenticity and veracity of the data. And it places the control firmly in the hands of the NFT owner.
In essence, ERC-7231 empowers individuals with full autonomy over their digital identities, aligning perfectly with the decentralized ethos of the blockchain space.
After all, we know how big crypto users are when it comes to true ownership of your own assets.
For the seasoned NFT collector or the discerning investor, understanding the mechanics and potential of ERC-7231 is more than a technical exercise. It's about recognizing a transformative shift in how digital assets and identities are perceived, managed and valued.
Whether it's a social media profile, a gaming alias or a professional credential, each element is woven into the NFT's fabric, creating a complete and cohesive digital identity from several sources.
The standard utilizes a custom schema embedded within the NFT's metadata that’s designed to be dynamic, allowing for the update and revision of the identity information as the user's digital footprint evolves.
And by updating and storing all that information on the blockchain, ERC-7231 ensures each piece of data is immutable and transparently verifiable.
This not only enhances the trustworthiness of digital identity but also provides a decentralized mechanism for identity verification, free from the confines and vulnerabilities of centralized systems.
Finally, ERC-7231 is designed with interoperability and future-proofing in mind. By establishing a common standard for integrating digital identities with NFTs, it lays the groundwork for a more interconnected and harmonious digital ecosystem.
This forward-thinking approach not only enhances the current utility of NFTs but also ensures that the standard remains relevant and adaptable in the face of evolving digital trends and technologies.
For investors, that means a multitude of advantages within the NFT and broader digital ecosystem.
Benefits for NFT Collectors and Investors:
- Enhanced Verification and Trust: With ERC-7231, collectors and investors gain an added layer of assurance regarding the authenticity and provenance of their digital assets. The ability to verify the linked identities and historical data of an NFT enhances its trustworthiness, which is paramount in the valuation and trading of these assets.
- Improved Asset Utility: NFTs embedded with rich identity data offer more than just collectible value. They can serve as gateways to personalized experiences, access rights and community memberships, thereby broadening the utility and appeal of NFTs.
- Market Differentiation: For investors, ERC-7231 provides a clear marker of differentiation in a crowded market. NFTs that adhere to this standard may be perceived as more valuable or secure, aiding in better investment decisions.
Beyond benefitting users, the adoption of ERC-7231 stands to significantly benefit the broader digital ecosystem in similar ways — by promoting trust through verifiable links, promoting interoperability across platforms and enticing new users into the NFT ecosystem by empowering them with greater control over their assets.
As ERC-7231 begins to find its footing in the real world, its adoption across various projects will serve as a critical barometer of its value and maturity within the NFT ecosystem.
For collectors and investors, this development heralds a new paradigm in which the provenance and authenticity of digital assets are no longer merely desirable attributes but intrinsic qualities.
Meanwhile, creators stand at the cusp of leveraging this standard to foster deeper engagement and establish more robust, verifiable connections with their audience.
Needless to say, I will keep a watchful eye on ERC-7231’s progress. I suggest you do the same.
Best,
Jurica Dujmovic
