The Coming Era of Dynamic or “Living” NFTs
Gone are the days of static non-fungible tokens, often referred to as simple NFTs.
Next-generation use cases for NFTs are granting these blockchain-secured digital assets far more utility … and very soon, they’ll be more prevalent in our lives than ever before.
We’ve spent a lot of time addressing NFTs in recent months, documenting their impact on the world of collectibles and art, for example, that allow emerging artists to cash in quicker on their talents. NFTs have also been used to tokenize other types of real property to preserve their characteristics in an immutable format.
Now, though, in addition to “static” NFTs, we have “dynamic” NFTs or dNFTs, a new generation of NFTs that can be modified by the owner and/or updated and enhanced by means of built-in smart contracts that describe when and how the dNFT’s attributes and metadata can be automatically modified and updated to reflect new, external data and conditions.
It should be noted that given the channels for automatic or owner-initiated updates to dNFTs, they’re not expected to be as secure as static NFTs – at least initially. But let’s face it, crypto safety in the NFT space is never 100%, given human error and the presence of determined and extremely skilled hackers.
In most cases, and to preserve the integrity of the dNFT, the automated changes are based on verifiable events that are then incorporated into the metadata of the dNFT via an “oracle,” a smart, blockchain-stored contract that links the on-chain code with verifiable off-chain data.
The Upside Appeal of Dynamic NFTs
Why would anyone want to change an NFT?
Incorporating new information and data into an NFT can keep it relevant or even increase its value and utility.
Certain assets will never and probably shouldn’t ever be changed, just like adding a more expansive smile to the actual Mona Lisa would be ill-advised. And it can be argued, for example, that a person’s tokenized military record, once they’ve retired or have left the service, shouldn’t be subject to editing or updating.
But for many other categories of digital assets, and there are more of them coming into view every day, it makes sense to objectively improve certain underlying unique characteristics over time to reflect some new situation, as we’ll see in some of the future use cases suggested below.
Use Cases for dNFTs in Your World
As NFTs are tokenized in more and more settings, the value of updating them is clear. We’ve emerged from NFTs strictly being used in the context of collectibles and preservation to their application in a dynamic, changing world.
Certain aspects of an art piece can be improved without altering the primary image. Think about an NFT with the portrait of some famous person like Abraham Lincoln or Wolfgang Mozart that incorporates a background that’s constantly changing to reflect the varying seasons. Also, an artist who’s sold their NFT can modify their original work with the advanced permission of the owner via a smart contract.