Increasing numbers of people are becoming familiar with the concept of NFTs. Non-fungible-tokens are unique digital properties that exist in the form of blockchain technology tokens. Many NFTs are digital collectibles that are visual in nature – images, videos, or works of art.
Most of the NFTs that have been created in recent years have been static NFTs. That means that, while their visual properties may change, their metadata remains unaltered once they are minted to a blockchain. The next generation of NFTs is here already, however – in the form of the dynamic NFT.
For now, let us take a stride into the future and look in detail at the concept of the dynamic NFT, also known as a dNFT.
Going beyond static NFTs with the dynamic NFT
The fact that every NFT is unique is part of its appeal. Its non-fungibility means it cannot be replicated. However, the fact that the metadata attached to blockchain technology tokens is usually fixed once they are minted does mean there are limitations to this model.
There are occasions when the ability to update the content of an NFT is actually desirable. Think of progression-based video games, or fantasy sports leagues on the blockchain. The data here will, by definition, need to change on a regular basis.
This is where the idea of the dynamic NFT comes in. In the case of these tokens, they retain the identification features that make them unique, while making it possible for their metadata to be updated. That facility is the key difference between a static and a dynamic NFT.
It is worth emphasizing that static NFTs can still feature animations, videos, elements that can be unlocked – in short, a variety of moving parts. But at the heart of their non-fungibility is the fact that the data that identifies them in the metaverse cannot be changed.
Dynamic NFTs will usually have automated changes encoded within their smart contracts. This will tell the NFTs, which are still most often Ethereum tokens, when and how their metadata should evolve.
There are other ways in which a dynamic NFT can be defined. For instance, user interactions can be linked to “hidden traits” rather than written into the metadata.
Potential use cases for a dynamic NFT
One scenario where a dynamic NFT is ideal is in character progression in play-to-earn blockchain games. When you start playing as a character, there will be a basic set of statistics written into the metadata. However, as you progress through the game and rise through its levels, that metadata needs to change to reflect your increasing abilities.
Similarly, there are occasions when NFTs are used to tokenize real-world assets – such as the details about your home, which you might one day want to sell on the market. Obviously, some of the data related to that property will change – its age, history of alterations and maintenance, and market value are just a few of the ways in which the NFT in question must be dynamic, so that the metadata can be updated to reflect the alteration in those details.
Ultimately, there are an enormous number of ways in which tokens across the NFT marketplace might need this dash of flexibility and versatility to reflect changes in the values and data they represent. This leads to the conclusion that there is exciting potential growth in the world of the dynamic NFT.
How the NBA saw the potential of the dynamic NFT
As the NBA Finals loomed in April 2022, the National Basketball Association displayed its appreciation of the potential of the metaverse and all that goes with it. In conjunction with the National Basketball Players Association, it launched a new dynamic NFT initiative.
A total of 18,000 NFTs were minted – 75 for each of the 240 players set to take part in the NBA playoffs. These Ethereum tokens were a classic example of a dynamic NFT, because a player’s on-court performance would change the appearance of their NFT. This is the ultimate 21st-century take on the cigarette cards our grandfathers used to collect.
One device that will assist in the process of creating and operating a dynamic NFT is an oracle. This is a third-party data feed connecting the blockchain to external systems. It is a device that can constantly update NFTs’ content based on real-world information and changes. Crucially, however, the dynamic NFT in question remains its uniqueness and value.
How ZirconTech can guide you through the world of the dynamic NFT
As tAs a highly experienced software development partner, ZirconTech exists at the cutting edge of technology. As a result, we have extensive knowledge of NFTs – and of the potential of the dynamic NFT. Whether you work with dNFTs or static NFTs, our know-how and expertise can help you.