Static vs. dynamic NFTS: How do they differ?
Since the launch of the first non-fungible token (NFT) in 2014, the technology has improved significantly. Originally, NFTs were static, representing art and other digital collectibles that cannot be changed. Subsequently, dynamic NFTs (dNFTs) were created to expand the possibilities of non-fungible tokens.
So what exactly are static and dynamic NFTs and how are they different?
What are static NFTs?
Static NFTs are non-fungible tokens (what are NFTs?) that cannot be changed after minting.
The metadata of static NFTs – where tokens’ names, properties and file links are stored – cannot be changed or updated after issuance. When you create this type of NFT, it will become an immutable, permanent record on the blockchain.
Static NFTs are the most common; you’ve probably heard of people creating NFTs to represent artwork, photos, videos and others. With static NFTs, you can digitize real-world assets, store them on the blockchain in a secure, immutable and permanent way.
This type of NFT is primarily used for digital art collections and document storage because these properties rarely need to be updated. The Bored Ape Yacht Club (BAYC) and CryptoPunks collections are some of the most popular collections of static NFTs available.
You can also create and launch static NFTs using Opensea.
How do static NFTs work?
Like all non-fungible tokens, static NFTs are unique tokens that cannot be duplicated or replaced by other similar assets. They are launched on a blockchain using smart contracts. These assets record ownership or prove the authenticity of an object.
Each static NFT has a token ID, a unique code that identifies the NFT, and a contract address, where the contract is distributed on a blockchain; these cannot be changed.
You can also create static NFTs with metadata describing the contents of the non-fungible token, but this token data cannot be changed. NFT data is usually stored off-chain as JSON files.
No matter what happens or how long it takes, the metadata of static NFTs will not change. You can transfer the NFT to another owner, but it remains the same.
Characteristics of static NFTs
Static NFTs are the most widely used type of NFT due to their advantages. However, they also have a drawback, which dynamic NFTs seek to address.
- You can represent assets with fixed properties, including artwork, collectibles, and other physical and digital assets.
- These NFTs are useful for permanent data storage and decentralized databases on blockchains.
- Because they cannot be changed, static NFTs are usually more secure than dNFTs.
- Static NFTs were launched first, so the existing protocol and systems work perfectly with these NFTs. As a result, this type of non-fungible token is usually the most efficient.
- The world continues to change, so the metadata of NFTs may become out of date. However, you cannot change or update this data using the static NFT design.
What are Dynamic NFTs (dNFTs)?
Dynamic NFTs are a new type of non-fungible tokens that respond to external changes and inputs. Although dNFTs have unique, immutable token IDs and contract addresses like their static counterparts, their metadata is subject to change.
These NFTs have interactive and programmable features that allow your digital tokens to change and evolve as needed. dNFTs can react to user behavior, environmental data such as the weather, real-time prices and other external conditions.
This flexible nature is beneficial if you want to represent things that can change or external conditions, such as concerts, live recordings, in-game characters or tokens, and digital identities. For example, you can use a dNFT to represent a game character that changes or improves based on your activities or interactions.
Similarly, you can use dynamic NFTs to represent live concerts so that new songs are included as they become available. You can also store your social media profile on the blockchain using a dNFT to update your token based on your online interactions. The possibilities are endless.
A good example of a dNFT is “Crossroad”, created by Mike Winkelman, commonly called Beeple. This NFT was programmed to change to one of two animations based on the winner of the 2020 US presidential election.
How do dynamic NFTs work?
A dynamic NFT works like a static NFT in the sense that it is launched on a blockchain and has immutable, unique identifiers. All NFTs enable the construction of an immutable and verifiable record of authenticity and ownership. Dynamic NFTs too.
However, you can update a dNFT’s metadata manually or program it to update automatically when certain events occur. Although rare, dynamic NFTs can also be modified based on parameters other than their metadata, including user interactions or discoveries in external environments. This means that the data that triggers changes can be on-chain or off-chain.
Regardless, dNFT modifications can be completed through smart contracts, decentralized storage systems such as IPFS, and other means. However, smart contracts are the most common.
Suppose you use a smart contract to program changes, such as animations or appearance changes. If so, you also need blockchain oracles – third-party systems that offer information from external data sources such as web application programming interfaces (APIs) or the Internet of Things (IoT). These oracles will provide the smart contract with the necessary data to trigger the changes.
When creating a dNFT, you must define the rules for the changes and the necessary permissions in a smart contract. You can store these rules as code using languages like Solidity—Ethereum’s programming language. dNFTs typically use the new ERC-1155 token standard because it is changeable, as dNFTs record data in an editable format. However, dynamic NFTs can also use ERC-721, the general NFT token standard.
To interact with dynamic NFTs, you need a cryptocurrency wallet that supports smart contracts, such as Argent or Metamask. You can then collect, trade or spend dNFTs in decentralized applications (dApps).
Characteristics of dynamic NFTs
Like static NFTs, dNFTs offer several advantages but also have disadvantages.
- They enable a high level of interaction and unpredictability with non-fungible tokens; these tokens are easily modifiable, making them more attractive to collectors and NFT enthusiasts.
- With dynamic NFTs, artists can better express their art, updating them with new inspirations. This could also open up more income streams for NFT creators.
- These tokens provide new use cases in multiple industries, as they are highly programmable and can represent assets in development. For example, a developer could create an NFT that represents an evolving character, opening the door to progression-based video games or fantasy sports games on the blockchain.
- Because dNFTs respond to external conditions, these tokens can never be out of date. A dynamic NFT representing a house can accurately reflect its age, market value, maintenance history, age and more.
- dNFTs are more complex to create, so they have a higher risk of error and failure, which will affect the token’s value and functionality.
- Determining the legality and ownership of dNFTs can be more difficult as the nature of the underlying asset is constantly evolving.
NFT technology is on the rise
Both static and dynamic NFTs are unique, with different use cases. If you need a secure representation of your assets, a static NFT is probably best for you. Alternatively, if you want a record that accurately reflects information about your holdings, dNFTs are a better fit, as they offer more substantial interaction.
As NFT technology continues to improve and experience widespread adoption, it is likely to play an important role in shaping digital ownership and value exchange.
