Dynamic NFTs are a subcategory of the NFTs (Non-Fungible Tokens) broader class. These NFTs are fundamentally different from their static counterparts in that they can evolve, thanks to smart contracts and the conditions that their developers have encoded into them.
On the blockchain, NFTs are one-of-a-kind, irreplaceable crypto assets. These unique assets are created using a guideline, also referred to as a token standard that ensures that every NFT has a unique token ID. Static NFTs can digitize physical assets like real-estate deeds, passports, and certificates, apart from crypto collectibles and NFT art. Although these experimental NFT use cases are already a reality may not be able to completely depict real-world assets that carry non-static information. Static NFTs created by smart contracts have token data that is immutable, permanent, and unchangeable. Static NFTs are thus unchanged regardless of external factors and, thus, become obsolete in the case that information changes. However, NFT’s forte lies in addressing this constraint. Dynamic NFTs can alter under specific circumstances even though their token IDs remain the same.
What changes are possible in dynamic NFTs?
Here’s how it usually goes:
- A smart contract with a collection of metadata creates a dynamic NFT.
- Oracles supply data to the smart contract. These are services offered by third parties that deliver information from outside data sources, such as web application programming interfaces and IoT data (APIs).
- After that, the smart contract evaluates the NFT utilizing information from oracles to decode modifications made during the minting process.
- The dynamic NFT’s characteristics will then be updated as required.
Dynamic NFT applications:
- Identity: Dynamic NFTs might be used globally to represent digital identification cards or passports if blockchain-based identity becomes a reality. Changes might be automatically updated thanks to the flexibility of these NFTs, eliminating the requirement for new digital identification documents. This includes details like residential address, marital status, and contact information.
- Gaming: The ERC-1155 token standard is used mainly in NFT gaming, and dynamic NFTs are commonly found in blockchain games. Gamers can improve their avatars’ levels by employing dynamic NFTs to represent the characters they control in-game. The appearance or stats of a player’s NFT avatars may change as they acquire experience, reflecting the development of their characters. To keep players interested, game designers must incorporate the idea of progress, which is made feasible by dynamic NFTs. Other interactive activities that require external data to function, such as choose-your-own-ending games, could be facilitated by dynamic NFTs.
- Virtual Real-estate: Real estate tokenization has been practiced for some time however, static NFTs cannot account for variables that change over time, such as real estate values, ownership, and age. On the other hand, dynamic NFTs provide the flexibility required for customized information updates and may capture the finer aspects of real estate.
- Art: The traditional Japanese aesthetic art style of wabi-sabi, which emphasizes transience rather than permanence, is a prime example of how art that is ephemeral and in transition is well-liked all over the world. Digital artists can now portray this impermanence by using real-time data to encrypt changes in their work, which gives their creations a more distinctive quality, thanks to dynamic NFTs. NFT art can also be improved by emulating actual art installations that demand input from the viewer. In this situation, a dynamic NFT might alter based on how the token holder interacts with their asset, enhancing participation at digital art events.
