There are two kinds of people in this world;
- Those who see NFTs as a soon-to-burst bubble.
- Those who believe NFTs are the future of digital items and will be a core part of web3.
Forgive the classification! As a matter of fact, there are three kinds of people. The third class is those who are indifferent. They don’t care whether NFTs go south or north. They also don’t care about web3 and whether NFTs will fit into the decentralized web.
In the meantime, statistics and trends prove that the second group is winning. NFTs have currently proved to be an integral part of society. We know this because big names like Nike and Adidas have integrated non-fungible tokens into their brand. Also, gaming, fashion, sports, and financial institutions have adopted NFTs massively in the last two years.
But the extent of adoption and integration of non-fungible tokens with real-world items depends on the kind of collectible. Currently, there are two main kinds of NFTs – static and dynamic. This article will explain their similarities and differences and the benefits of each of these.
What are Static NFTs?
Static NFTs are non-fungible tokens that cannot be changed once minted. NFTs have metadata on the blockchain, which makes each digital item minted unique. This metadata can be likened to the item's features but is encoded with blockchain lingua. For static NFTs, this metadata does not change. It remains the same forever.
Here’s a practical example. When you take a photo with your phone, every photo has its metadata or informative label. This could be the date when the photo was taken, the dimension of the image, the file format, and so forth. This data typically remains constant. The date and time the picture was taken never changes. Likewise, static NFTs bear similar metadata once minted, and this data never changes.
Examples of Static NFTs
Here are some famous examples of static NFTs:
Beeple’s NFT – The First 5000 Days
In March 2021, a famous artist known as Beeple sold his artwork as a digital non-fungible token. Beeple had created an art piece per day for five thousand consecutive days since May 2007. The gifted artist compiled every piece of art into a fold and then opened an auction for it. The beautiful piece of art attracted an auction of up to $69 million, the price at which the static NFT was then sold. It’s one of the most expensive static NFTs ever sold to date.
Jack Dorsey’s First Tweet
Who would have known that you could sell a statement? Or, more specifically, a tweet! Well, Jack Dorsey helped us bring that into reality. In March 2021, the former Twitter CEO and founder listed his first-ever tweet for auction. The tweet read: “just setting up my twttr.” Jack auctioned the tweet, which was sold for a whopping $2.9 million. The buyer, Sina Estavi, attempted reselling the tweet a few months later, but his actions were unsuccessful.
Sina revealed that he had plans to sell the static tweet or non-fungible token for around $48 million. Sadly, the crypto investor got no offers nearing that price. To add salt to his injury, Sina received multiple offers for hundreds of dollars despite stating that the funds would be used for a good cause. Jack Dorsey’s first tweet surely serves as a great example of static NFT, but a bad example of a good investment.
What are Dynamic NFTs?
Dynamic NFTs are non-fungible tokens that can change over time. This means they do not have immutable metadata. The change in the metadata of dynamic NFTs is usually linked to real-world events. Dynamic NFTs are also called dNFTs. In real life, some outcomes are unchangeable, especially those that have happened. In contrast, expected outcomes usually need data that could change when things change.
For example, think of the world cup, a global sports event. The last world cup was held in December 2022, and Argentina won the trophy. At the moment, one could create a static world cup NFT that features Argentina as the winner, and the metadata would change over time. On the other hand, during the event, one could create a dynamic world cup NFT. The NFT would be able to change its color or image to the flag(s) of the winners for each day.
Then, on the final day, the world cup NFT could also have been programmed to reflect the winning team in real time. So when Argentina took the lead, it could have an Argentine celebration theme. Also, when France took the lead during the penalty shoot-out, it could have a France celebration theme. These amusing changes would continue until the final whistle when the winner had been decided.
Examples of dNFTs
Here are two famous examples of dNFTs:
The Cryptokitties NFT
Cryptokitties was one of the first blockchain games to be invented. Users could breed digital cats and sell them as NFTs on the Ethereum blockchain. Each cat was unique, and interestingly, players could improve the features of their unique cats. Since breeding required evolution in metadata, the NFT collection and game had to use dNFTs.
RRC Short Film NFT
In December 2021, Regenerative Resources announced that it would launch its NFT collection. The ecosystem services company collaborated with several high-profile artists to design short film NFTs. The short film NFTs had a single frame from inception which was meant to increase as more users bought or resold the RRC NFT.
To achieve this, the project integrated Chainlink oracles, and each time an NFT was purchased, more frames were released to holders. This process continued until the NFT holder could view the short film.
How do Dynamic NFTs Work?
From the example above, dynamic NFTs need a channel to communicate with the real world. That’s where oracles in blockchain come in. So how exactly do they work?
- The dNFT is minted on and created by a smart contract with metadata.
- The smart contract communicates with oracles. The oracles extract and transmit data from live events in the real world to the smart contract.
- The smart contract uses the information from the oracles to evaluate the non-fungible token and implement the needed changes.
- The new metadata reflects on the NFT as soon as the changes are implemented.
Differences Between Static and Dynamic NFTs
Here are the differences between static and dynamic NFTs.
|Feature||Static NFT||Dynamic NFT|
|Storage Space||They take up less storage space.||They take up more storage space than static NFTs.|
|Security||They are more secure, and their immutability makes fake static NFTs easily differentiated from the original.||They are less secure assets to hold because of their mutability.|
|Use Cases||Static NFTs are mostly minted as art pieces and digital documents that do not require alterations.||Dynamic NFTs are mostly used in gaming, sports, real estate, and other industries connected to real life.|
|Status||They cannot be updated, and their metadata remains constant eternally.||They can be updated, and their metadata can change.|
Use Cases of Static and Dynamic NFTs
Here are the use cases of static and dynamic NFTs:
Digital Art: Digital art could be static or dynamic. But art pieces with more aesthetics and comprehensive features could be dynamic. For example, the Julian Assange and Pak’s Clock NFT was a dNFT. It depicted a timer that counted the number of days Assange spent in prison.
Digital Identity and Certification: NFTs have found their way into digital identity, and these kinds of NFTs are typically static. When certificates are issued as non-fungible tokens, the degree bagged or the awardee's name doesn’t change. Likewise, the metadata, like a person’s date of birth, should also remain unchanged when verifying identity.
However, when certain identity information needs to be updated over time, dNFTs could be used rather than static NFTs. This could be metadata like an individual’s address or expiration date for certificates with one.
Documents: Legal documents like purchase agreements or ownership proofs can be minted as NFTs. When this is done, ownership can be verified on the blockchain. Documents like these are mostly static NFTs.
The Metaverse: The metaverse needs a combination of static and dynamic non-fungible tokens. Just like some items in the real world are permanent, the metaverse also has items that do not require a change in data. On the other hand, data alteration may be needed especially when virtual items evolve or ownership needs to be transferred.
Static NFTs are more common than dNFTs. While both have their benefits and limitations, static NFTs are relatively restrictive. On the other hand, dynamic NFTs seem to be the real deal for advanced web3 users. When launching an NFT project, the creative team would likely consider the potential use for the non-fungible tokens before determining whether to utilize static or dynamic NFTs. Interestingly, a combination of both can be highly effective for NFT projects.