ERC721 is a free, open standard that describes how to build non-fungible or unique tokens on the Ethereum blockchain. While most tokens are fungible (every token is the same as every other token; for example, one bitcoin is always equal to another bitcoin), each ERC721 token is unique and can be owned by individuals and transacted in peer-to-peer transactions.
ERC721 tokens are used to represent ownership over unique items, like a particular in-game item or a specific piece of real estate. They could also be used to prove ownership of digital content, such as digital art or even virtual pets. The ERC721 standard provides a mapping of unique identifiers (each token) to addresses (owners).
One notable aspect of ERC721 is that the standard includes an optional metadata extension, which allows for each token to have associated metadata (like the name of the item, a description, and an image). This can be useful in making the tokenized asset more understandable and accessible, particularly in graphical interfaces.
The ERC721 standard was made famous by CryptoKitties, a game on Ethereum where each “CryptoKitty” is an ERC721 token and is therefore unique.