ERC- 721 tokens are primarily used for trading non-fungible digital assets (like crypto kitties) on the Ethereum blockchain, whereas ERC-20 tokens are used for try fungible digital assets (such as CVC, BAT and many more), and initiating smart contracts that form the basis for the majority of ICOs.
However, it was announced today that ERC-1155 (created by Witek Radomski) has emerged as a new token standard that may replace ERC- 20 and ERC-721 as the dominant token standards in the Blockchain space.
The benefits of ERC-1155 tokens are that they enable multiple fungible and non fungible assets to be bundles together and trade with just a 2 step process, thereby reducing GAS expenditure and increasing the overall efficiency of asset transactions on the blockchain.
Currently, the primary use case of ERC-1155 tokens are for making atomic swaps between digital video game assets, enabling a video game player to swap a hammer and the sword for a shield and body armor for example. (Atomic swaps are trades of fungible or non fungible assets that can be made without going through an intermediary like an exchange).
Could ERC-1155 tokens be used to bundle transactions between fungible monetary items?
In the future, ERC-1155 tokens could be used to establish a new paradigm for how fungible monetary items in are traded. Users could be able to potentially trade a set of different tokens for another set of tokens, all with a 2 step process (for example: 5 TRX, 2 SLT, 3 CVC in exchange for 4QKC, 6 POWR and 8 WAN).
In order to perform this transaction currently you would have to trade each of the first 3 tokens with a common trading pair (ETH or BTC), then trade ETC or BTC with the other 3 tokens. This would be 6 transactions in total, whereas with the ERC-155 token you would complete all transactions in just two steps.
As cryptocurrencies push towards mainstream adoption, the implications of this innovation is enormous.
With the existence of this new technology, we could be edging closer to a period where exchanges will be seldom utilized for transactions between both security and utility tokens. Users will be able to swap tokens as seamlessly as they can currently swap WiFi options.
Such a transition from our current trading processes will be necessary in order to reduce the barriers to adoption and induct the average person into the world of cryptocurrencies.