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- 1 Dynamic NFTs come with enhanced functionality and make this digital asset more viable.
- 2 The key feature is that it lets the creators make changes to them without creating new tokens.
Non-fungible token (NFT) needs no introduction even in non-crypto circles. This decentralized solution has gained huge popularity because of its real-world fruitful attributes. It has enabled artists to secure their work against plagiarism while opening new income streams for them. Now, it’s introduced a new version of itself which is gaining huge attention- dynamic NFT.
Dynamic NFT: A Clear Explanation
Dynamic NFTs take the functionality level of non-fungible tokens a step ahead. These tokens remain programmable and responsive to external changes. As a result, they offer more scope for personalization to artists, collectors, and owners. Also, they promote better interactivity and value creation in the digital creator economy.
For the uninitiated, non-fungible tokens are digital assets that can’t be copied. They remain unique and thus, secure items etched on them. From painting to videos, music, gaming characters, and GIFs, one can integrate any artwork into it. Now the question is, NFTs were already doing well, so why introduce dynamic NFTs?
Simply put, every technology evolves and gets better with time. The same thing has happened with this digital asset as well. The dynamic counterparts enable artists to make changes in their artwork easily. They don’t have to create a new NFT just to make some amendments.
For obvious reasons, it saves costs and brings more convenience to their work. Artists can change dynamic NFTs based on market prices, user behavior, and various other factors. A use case of that would be Pearpop’s dynamic NFT. This NFT allows creators to mint tokens for their social media posts on the Solana blockchain.
As a result, the NFTs gain more value when the posts get more comments, shares, and likes. So let’s explore the functionality of dynamic NFTs to know them better.
A Sneak-Peek Into Their Functionality
In essence, NFTs provide an immutable record of ownership. Dynamic NFTs do the same thing but with some additional features. The new version lets the creators decide how they want the coin to work. They create new parameters that reside in the blockchain in the form of codes.
The key difference between the two is the token standard. While the static ones use the ERC-721 token standard and the dynamics deploy ERC-1155. The latter allows the data storage in an editable format and is hence called “semi-fungible”. It uses self-executing smart contracts that are integrated within the structure of the coin.
These programs bring automation along with changes in certain functions. They facilitate modifications in the animations, appearances, and behavior of evolving NFTs. Moreover, they empower the users to interact with the assets in a virtual environment. To deliver such advancements, dynamic NFTs use oracles.
Oracles executes these changes through smart contracts which ultimately reflect in the tokens’ metadata. After the execution of the process, the desired changes occur in the token and its features. The smart contracts also determine the pattern of buying and selling of dynamic NFTs.
They also decide how the royalties are distributed to the creators. However, to use dynamic NFTs, users need a crypto wallet that’s compatible with smart contracts. With that ilk of wallet, they can sell, store, or trade NFTs on a marketplace easily. They can also use them on decentralized applications that support NFT’s dynamic features.
Benefits of Dynamic NFTs
These modified versions of NFTs bring plenty of advantages to users.
Versatility- The owners of dynamic NFTs can make changes in their artwork whenever they want. It helps them keep their work up to date and thus, get the right price too.
Interactivity- Dynamic NFTs enable artists to be more vocal about their work. Every time they make some change, they tell their audiences about it. It makes them more visible which is good for enhancing sales too.
Programmability- As mentioned above, creators get the liberty of defining the rules of how their NFT should work. It brings a higher level of automation and control to the creators.
Adaptability- Dynamic NFTs can be used in a wide array of services where updates are regularly done. They are appropriate for gaming, social media, digital art, etc.
Scope of Dynamic NFTs
Dynamic NFTs represent a progressive change in the crypto sphere. They signify that blockchain is expandable and works for the betterment of users. With this new version, the possibility of crypto becoming adaptable for more industries is evident. Nonetheless, the industry will have to wait and see how it pans out.
NFT is certainly an appealing option for its creators and users. Many experts opine that dynamic NFTs can do great things for crypto. They believe that a similar structure can be adopted in various other solutions. Above all, they see it as the future that brings many possibilities in the whole crypto domain.
Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.
