What does it mean to “own” a Chilly Bit ?

There are basically two ways of adding a Chilly Bit to your collection.

The first way is by “minting” a Chilly Bit directly to your Ethereum wallet. Minting is the process of creating a unique ERC721 token on the blockchain. When you mint a Chilly Bit through the OpenSea Sale listing, you are effectively using your Ethereum coins to pay for the cost of creating the ERC721 token and transferring its ownership to your Ethereum wallet. This is necessary since every transaction on the blockchain has an associated cost (Look out for a new blog entry for details on this process)

The second way is by buying a Chilly Bit directly from another OpenSea user’s wallet. This means a previously minted token is changing ownership from the seller to the buyer. Since the Chilly Bit in this case already exists on the blockchain, there is no need to mint it again. However, the transaction necessary to transfer the ownership of the token still has a cost associated with it.

So, what exactly does it mean to be the “owner” of a Chilly Bit?

Let’s use Etherscan to look at a wallet that owns some ERC721 tokens.

We can see at the bottom of the image that this wallet is the owner of two ERC721 tokens. In this case, the wallet holds two unique Chilly Bit tokens, one with ID 1 and one with ID 1000. Chilly Bit tokens are unique in the sense that there will never exist two Chilly Bit tokens with the same Token ID number. This quality is why ERC721 tokens are sometimes referred to as NFT or non-fungible tokens.

Due to the immutable and transparent nature of the Ethereum blockchain, the holder of this wallet can instantly and irrefutably prove to others that his wallet is the one and only owner of Chilly Bit number 1 and Chilly Bit number 1000.

This is, at its most basic, what it means to “own” a Chilly Bit.

How do we get from an entry on the blockchain to our cute Chilly Bits?

Being able to prove ownership of an ERC721 token is important but ownership is only interesting to us if the thing we own has some value. Storing “valuable information” on the blockchain is possible but not practical due to the associated cost of any transaction on the blockchain.

The way we store value on the blockchain is by reference to an external source of valuable information. This reference is held safely, transparently, and immutably in the blockchain in the form of metadata embedded in the ERC721 token. This metadata could point to a server holding any information we want it to hold. This information could be the license key to a software application, a business contract between two or more parties, the deed to a house, a car’s pink slip, or simply a cute little virtual penguin.

Let’s open up Etherscan again in order to look at the metadata held in the Chilly Bit token with ID 1000.

This is a scan of the “smart contract” that defines the Chilly Bit token. A smart contract is basically a piece of code that lives on the blockchain. The advantage of having such a contract on the blockchain is that the contract stipulations are safely, transparently, and immutably stored for everyone to see. This means that every detail of the contract, including who created it, who owns it, and what the contract actually does can be audited by anyone who wishes to interact with it.

This particular contract is based on a boilerplate that defines a Chilly Bit token as an extension of the EIP-721 token standard.

We can use Etherscan to directly interact with the contract. For now, let’s just have the contract show us the unique metadata that corresponds to the Chilly Bit token with ID 1000

Here we asked the contract to give us the URL to the server holding the valuable information that corresponds to the unique Chilly Bit token with ID 1000. The funny looking link that the contract returned is what is known as an IPFS link.

This technology provides a way of storing information in a decentralized manner. The true advantage of IPFS links when it comes to NFT tokens is that the link is created in such a way that it is unique and unchangeable. This means that the information held in an IPFS link can’t be changed. Changing even one bit of information will cause it to be stored under a completely different address (look out for a new blog entry for details on this process, including how to ensure the long-term safety of your Chilly Bits).

In other words, a particular IPFS link WILL and CAN only ever link to one particular piece of information.

By storing the Chilly Bit metadata using IPFS technology, we can ensure that a particular token is transparently and immutably linked to a particular piece of information.

If we follow the link provided by the smart contract, we can see the metadata that corresponds to the Chilly Bit token with ID 1000.

This is the valuable information that we are interested in owning. The metadata in this particular case is stored in a special way using a text-based data format called JSON. This is simply done to make it easier to parse the metadata with code. This is how a website like OpenSea can easily read and display the metadata of the ERC721 token that is held in our wallet.

However, this is not necessary, since the metadata held in an ERC721 token could contain any kind of valuable information we might want to have proof of ownership of.

If we look carefully, we can see that the metadata itself holds another IPFS link. If we follow that link, we finally get to see the face of the friendly Chilly Bit number 1000

In conclusion:

Let’s quickly recap what we learned today:

1) Chilly Bits can be minted (created) or traded by anyone with a valid Ethereum wallet.

2) Each Chilly Bit is unique. There will never be two Chilly Bits with the same ID.

3) Each Chilly Bit can be owned by a valid Ethereum wallet.

4) The ownership of a Chilly Bit can be instantly and irrefutably proven by anyone that reads the blockchain.

5) The concept of a Chilly Bit is defined by a smart contract that lives on the blockchain.

6) The smart contract can be audited by anyone that reads the blockchain.

7) Each Chilly Bit contains a unique reference to a piece of valuable information. This information can be private or public.

8) The information is stored using IPFS technology. This ensures uniqueness and unchangeability of the stored data.

9) Chilly Bits are super friendly and super cute.