It is no secret that in 2021 NFTs captured the interest of the world with everyone trying to figure out exactly how they worked and more importantly, speculating on which ones might have the highest growth in value in the immediate future. I believe however that there is one macro perspective to examine and analyze that could very well spell out the next big trend in cryptocurrency investing and that is the EIPs.
What is an EIP? An EIP stands for ‘Ethereum Improvement Proposal’ which as the breakdown of the abbreviation illustrations has to do with Ethereum, the second highest cryptocurrency by overall market cap. Basically you just have to think of EIPs as ideas that programmers suggest to the other developers who contribute to Ethereum’s development and as you might expect some get more attention than others. Bitcoin actually has this method of submitting new fixes to the cryptocurrency through their own Bitcoin Improvement Proposals (BIPs) which itself is based upon a process known as RFCs, but we won’t get into all that just now.
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Some of the EIPs do get more focus however when they are seen to be key solutions to critical issues that only rear their heads when the public piles on and puts pressure on the network. But the good news is that these improvements come over time and get suggested by people who know what they are doing (more than the average person at least) and get peer reviewed a thousand times over and get just about the same number of co-contributors. before they even think of implementing the changes to the main network. The key difference with cryptocurrency though is that these changes are not coming from private centralized companies who don’t have your best interests at heart, but rather they can come from anyone based anywhere who also don’t have your best interests at heart.
Jokes aside, this brings up a good point. Who are these people who are creating the potential changes to Ethereum? They are the developers who are coming up with new use cases and methods for specially Ethereum to become more capable, flexible and usable. It is their work we will focus on, starting with a breakdown of the crucial ideas that have turned Ethereum from a simple store of value into a complex ecosystem of possibilities.
There have been notable EIPs/ERCs over the years to make Ethereum what it is today but a short list of the ones we as the public use and know of today are (in chronological order):
- ERC20 — The standard token. This made Ethereum like Bitcoin (fungible) in the sense that there is no difference in each Ethereum token and its value is stored and calculated based on supply and demand, with supply created by mining and demand coming from the public.
- ERC 721 — The NFT standard. This made it possible to add unique (non-fungible) identifiers to ‘minted’ assets on Ethereum like images, videos and more.
- ERC 1559 — The network fee standard. Basically every transaction on Ethereum has a fee and this EIP allowed it to stop fluctuating so much with a new feature of ‘tips’ being added to transactions making them be processed faster if the sender wants it to be.
- ERC 3675 — Proof of stake. This moved Ethereum from using a system where graphics cards were used to mine new Ethereum tokens to a system based on how much you owned and staking it on the network in order to maintain it instead and earn rewards, reducing energy consumption by over 99.9%.
There are far more EIPs that ‘exist’ than ones currently in operation today as the numbers on their names might suggest but what you should take away from this is that they were each possible future additions at one point that could be made to the network and eventually were. These EIPs are harder to understand as to their functionality without concrete examples like NFTs have today but you can begin to scratch the surface of what is yet to come for Ethereum in the near future if you dig a little deeper. In terms of looking to the future, the most influential ones we will probably see in the near future in conjunction with NFTs are (also in chronological order):
- EIP 2981 — Royalty NFTs. Basically NFTs you would earn royalties from, like the number of plays on a song will pay out a certain amount.
- EIP 3525 — Semi Fungible Tokens (SFTs). Basically it is an NFT that can change into a different state but still be unique. They also can be exchanged for other NFTs of value, like tickets for the same concert but with different seats which determine their own values.
- EIP 4519 — NFTs tied to physical assets. Imagine buying a pair of physical shoes but you can also get a digital version of the shoes vice versa. If you buy the NFT version, you could get the physical one sent to you so that it doesn’t have to just be about buying the physical version first. They’re connected.
- EIP 4907 — Rentable NFTs. Imagine renting a car for a week and then returning it in real life, except you can rent an NFT and then have it returned to the original owner after a set period of time or when certain conditions are met.
- EIP 5192, 5484 and 5516 — Soul bound NFTs. These are like NFTs that can stay with you forever like qualifications or achievements. They can also expire and be in need of renewal.
- EIP 5528 — Refundable NFTs. Basically NFTs that have a function within their code to refund the amount you paid for them at your request if you change your mind later or if it turns out to be a scam, but you would lose access to the NFT in the process.
The list goes on with the more technical ones being harder to grasp for their use cases on the surface level. However, Rentable and Royalty NFTs have their general purposes laid out in their titles and can give you some idea of how they might evolve in the near future if these proposals are added. Even thinking about how they would work begins exactly to tread into the realm of hypothetical use cases that get fuzzier the more you think about them. However, when you consider the amount of products in your day to day life though that already function in similar ways like what streaming is to DVDs, it becomes apparent how each of the EIP’s concepts can have a place if executed properly within their own branches of application on the internet. I’m not suggesting that subscription NFTs will replace things like Netflix subscriptions as we know them today, but they could be the solution needed when the time comes to switch to blockchain databases if it keeps growing with interest.
The EIPs that are proposed by developers and the ones eventually added are not just concepts with some basic descriptions with nothing to back them up though. Each one comes with a detailed and organized documentation on how they would work and why they would improve the technology which helps others to contribute their own inputs to each of them and helps improve their chances of being incorporated into the next update as they gain interest . This stage of the proposals development is called ‘Standardization’ which is designed to ensure that new features and improvements are thoroughly reviewed and discussed by the Ethereum community before they are implemented. The ones who write these documentations are of course authored by those who propose them and they usually have some form of public profile that lets you know more about them.
The list of all developers who have ever contributed proposals to Ethereum is vast in length but the biggest players in Ethereum’s improvements are as follows:
- Vitalik Buterin — The co-founder of Ethereum, as you might expect.
- The Ethereum Foundation — A non-profit organization that supports the development of Ethereum.
- Joseph Rubin — Co-Founder of Ethereum and Founder of Consensys, which was created to help build infrastructure for Ethereum.
- Alexey Akjunov, Martin Holst Swende, Andrew Miller and Nick Johnson and so on.
As time has moved on since its inception though, more names have become known within the crypto community for those that understand their contributions. They are:
- Alex Beregszaszi — Software Engineer and Blockchain Researcher. He has authored several EIPs and is the co-founder of the Solidity programming language (which is used to write smart contracts on Ethereum).
- William Entriken — The lead author on ERC-721 (EIP-721), the proposal that made NFTs a thing.
- Zach Burks, James Morgan, Blaine Malone, James Seibel — Author and contributors to EIP-2981 (Royalty NFTs)
- William Wang, Mike Meng, Ethan Y. Tsai, Ryan Chow, Zhongxin Wu, ElvisDu — Author and contributors to EIP-3525 (Semi-Fungible Tokens)
- Anders Elowsson, LanceSnow, Shrug_0x — Author and contributors to EIP-4907 (Rentable NFTs)
- Javier Arcenegui, Rosario Arjona, Roberto Roman, Iluminada Baturone — Author and contributors to EIP-4519 (NFTs tied to physical assets).
And many more.
The reasons for why these highly skilled individuals would contribute their time and effort towards proposing or improving other people’s EIPs and ERCs are numerous and somewhat obscure unless you were to ask them personally which they have been in several individual interviews. Some might do it to give back to the community that have given them so much or others might see the decentralized nature of it all as a middle finger to the corporations out there that do things differently. Some might even like the challenge of it and see it as having bragging rights that they contributed to a massive global network, while others do it for no profit at all as part of the Ethereum Foundation. The point of their work is to give purpose to the idea that a group of experts can work and operate on a global ecosystem without having an enforced central authority to micro manage every fine detail, and that can make a huge difference to someone’s enjoyment in contributing. to something as complicated as Ethereum. While a core group of developers figure out what will and won’t be included in the next update, this group of people consists of the most highly dedicated programmers and they can come from and be based anywhere.
Their expertise and contributions are what have subtly keeping things improving over the years, with some people receiving the public spotlight more than others. For example, most people have heard of Vitalik Buterin as the creator of Ethereum who has 4.7 million followers on Twitter, but the lead author of the EIP that made NFTs a thing (William Entriken) only has 4000 followers. They both contributed immensely to the network as a whole but to be the creator of the improvement that arguably caused Ethereum to go mainstream and only have a fraction of the recognition for it is something that might drive some people up the wall. Some of them however may want this to be the case if they don’t like the spotlight as much. Regardless though it appears to be the case that the developer communities are the ones who follow the architects of the improvements more closely than the public does but that isn’t necessarily a bad thing. It is with this factor of knowing who these key people are that I believe can help bring us one step closer to seeing what the future of crypto might look like without thinking too hypothetically.
It is more important than ever to look closer at the people involved in Ethereum rather than the scary numbers and falling prices and see who is really making the big changes we will soon take for granted on the networks that will shape our digital futures. Not the influencers or celebrities, but the real coders and programmers who work with this stuff every day. Not all crypto projects are as transparent as Ethereum is but while it still holds the position of the second biggest cryptocurrency but market cap, it is imperative that you only need to look a little closer at who is making the changes and break down what those changes are. are to know where the next wave of cryptocurrency users might gravitate to like they did with NFTs. With information like that you can make your move before the herd returns to the markets, which may be the difference in being ahead of the game or falling behind.