What is a Dynamic NFT: major differences, use cases and future prospects
NFT is one of the blockchain’s main trends these days. News outlets are full of headlines, and Influencers’ social networks are bursting with posts about this trend. This topic has been on everybody’s lips for the last two years. And if you think that you already know everything about NFT, then you may have missed something fundamental — a new kind of dynamic NFT, gradually taking over the market. What it is and what its prospects are, we’ll tell you in this article.
What is a Dynamic NFT and what’s the difference from Static NFT?
Source: Getty Images
The term NFT itself is pretty well known. A Non-Fungible Token is a kind of digital certificate registered in the distributed registry of the blockchain platform. This is precisely the kind of static NFT that we usually hear about and which are the first ones that come to our minds. Owning an NFT ensures that any file, be it music or an image, is unique, confirms the originality of that work and protects it from being copied, tampered with, and so on.
Thanks to NFT, a logo, branded soundtrack, slogan, or any other work can be unique and protected from illegal use. NFT allows you to quickly and conveniently secure your brand and protect your assets.
However, like any other popular and well-known industry, the NFT space is evolving and changing at a breakneck speed, changing trends one by one. Due to the constant modifications, it can be challenging to keep track of new and vital trends for crypto-enthusiasts and even for experts. And the emergence of dynamic NFT is precisely the trend that deserves your attention.
Dynamic NFTs or dNFTs, unlike static ones, have the ability to adapt to specific circumstances and events, changing characteristics, cost or demand.
Static NFTs implemented using blockchains provide immutability and security, but their significant disadvantage is that they belong to one particular blockchain. This type of NFT can only interact within the blockchain ecosystem and has no access beyond it. Dynamic NFT can interact outside the blockchain using external data sources.
Note: Dynamic in the name does not necessarily mean that the NFT must be a moving image, like a GIF or video. Dynamic denotes a change in the state of the NFT in the metadata or appearance.
How does it work?
Source: Decrypt
Dynamic NFTs tend to change and modify over time, depending on various conditions according to the programmable functions coded by their developers. These conditions may include interaction with other tokens, a specific time period or external data.
NFT changes and dynamics occur with smart contracts that allow the token to interact with the outside world. Once dNFT receives instruction in a smart contract and confirms it, it will display a predefined change in the token’s metadata, adapting to external data. For example, clothing changes depending on the weather, or emotions change depending on events in the world.
Smart contracts are largely responsible for changing, updating, and expanding the NFT. In fact, they are the ones who decide whether the NFT will change or not.
Dynamic NFT Use Cases
Dynamic NFTs represent a new stage in the development of the industry, and, as in the case of static ones, have a vast scope of application. First of all, dNFTs play a vital role in the development of the game metaverses, in particular the Play-to-Earn industry. In games, we often see static images that do not evolve or adapt to the environment and conditions. By using dynamic NFTs in blockchain games, users will be able to enjoy characters that change according to weather conditions, age, etc.
This will definitely make a splash among gamers and cause a new wave of popularity of the P2E and NFT industries. On top of that, the VRF feature of dynamic NFTs ensures authenticity and equality of item distribution during game events.
NFT Sports cards are another promising application for dynamic NFTs. Imagine that you own a unique NFT representing a real famous athlete — a football, basketball, baseball player or any other sport representative. But what could make this NFT even cooler? That’s right, the dynamics!
dNFT can have all kinds of information: game and championship results, goals scored, and other essential data. And your dNFT changes depending on external data: joy or the title of a champion when winning, sadness when losing, etc. It’s an entirely different level!
Real Estate market is another example of the successful use of dNFTs. Dynamic NFT showing a house or other real estate property can be modified based on actual changes occurring to the property, which is of great interest to future investors. The metadata can contain valuable information about the property’s history or its contents.
Another example of the possible future use of dynamic NFTs is digital identification, where the dNFT serves as a passport with which you can travel. All necessary changes, such as travel and payment history and your data will be reflected in the dNFT code. This method of application can also be applied to other documents: bank accounts, diplomas, etc.
Famous examples of dNFTs
One of the first NFTs to change its external state depending on conditions is the work of digital artist Mike Winkelmann, also known as Beeple. His work “Crossroads” was created in late October 2020 on the eve of the U.S. presidential election. According to the description, this work changes over time and includes three stages: “before the election” and two variations depending on the outcome of the election — Donald Trump or Joe Biden winning. The work was sold at Nifty Gateway for $66,666 before it was finally transformed, and then resold for a then-record price of $6.6 million.
Source: nftartwork.co.uk
Another famous example of dynamic NFT is the NBA’s “The Association” collection, launched in April 2022. The collection was a resounding success, with The Association ranked 14th among the most traded collections just one week after its launch and with over $13 million in trading volume. These dynamic NFTs change in appearance and value depending on the results of teams or specific players.
Source: OpenSea
We have already talked about the use of dynamic NFTs in metaverse and blockchain games, and now here is an example of a successful implementation. Otherside Metaverse from the creators of the popular NFT collection Bored Ape Yacht Club, which combines the mechanics of multiplayer online role-playing games and virtual worlds with Web3 support. The virtual world of the metaverse consists of 100,000 dynamic NFTs Otherdeeds, and land plots whose owners will be able to change their characteristics in the smart contract itself.
Source: OpenSea
The future of Dynamic NFTs
Without a doubt, dynamic NFTs represent the future of the NFT industry due to their innovative technology. dNFTs have greater practical relevance than static ones due to the use of smart contracts and the ability to evolve and adapt to current events and conditions.
Dynamic NFTs have a wide range of benefits, which will only expand in the future. dNFTs can be used for blockchain-based ticketing, for the transfer of ownership of physical objects, as a passport with automatic updating, etc.
Security is also a significant advantage for the future development of dNFTs. Dynamic NFTs are fully secured and have clearly defined ownership.
More and more connoisseurs of dynamic digital art are emerging in the market. The volume of the NFT market shows impressive growth every year, so the outlook for the dNFT market is more than encouraging.
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