Dynamic NFTs, updating with real-time data, are transforming user interactivity. They offer innovative uses like auto-updating tokens and NFT tickets. By automating processes and reducing fraud, this blockchain tech could revolutionize various industries.
While NFTs may have emerged with the reputation of being mere high-priced JPEGs, their focus in recent times has shifted rapidly away from aesthetics and speculation, towards real-world utility and application.
This can be seen in the droves of sports stars, influencers, celebrities, corporations and big name brands that have used NFTs to establish new communication channels with fans and customers, involving them in a level of interactivity, and even collaboration, rarely seen across such disparate industries.
But NFTs are in the process of changing, again.
What are NFTs?
First of all, an NFT is a non-fungible token which is represented on a blockchain by its wholly unique code and identifier. Because the blockchain is largely impervious to meddling or tampering, users can be assured that the NFT they have stored on the blockchain is safer and more resistant to fraud or replication than even valuables in a bank.
From there, people can then start to customize their NFTs with unique artworks, videos, text, audio, and just about any other type of media. More importantly, the NFT can be programmed to automatically do certain things at certain times, according to its preset parameters.
This includes things like automatically delivering a share of secondary share royalties to the previous owner of the NFT, receiving airdrops, and anything else programmed by the creators beforehand.
Dynamic NFTs, which are now emerging as the cutting-edge of Web3 use-cases, take this idea one step further. Rather than being limited to carry out the functions that its creator programmed before the NFT was minted, dynamic NFTs can receive live external data in real-time.
This allows the NFT to update itself and change according to real-world events, which opens up entirely new prospects for the end-user.
For example, LaMelo Ball, a Charlotte Hornets guard, who was also the NBA Rookie of the Year in 2022, issued a collection of dynamic NFTs which would see the tokens transform into an even rarer (and more valuable) version if he won ROTY. This is achieved through the use of Chainlink data oracles, which receive and transmit data in real-time to blockchain smart contracts.
More tactile examples of dynamic NFTs include the NFT-based event tickets issued by the MGM Grand Casino in Las Vegas, which automatically reacted in response to ongoing usage. Working in collaboration with the Web3 ticketing startup, YellowHeart, the MGM Grand’s dynamic NFTs acted as entry tickets, which, once activated at the gate, suddenly changed to become a free food and drinks token. After a certain amount of time had passed after the event had finished, the NFT became a pass to collect free memorabilia and keepsakes.
The trick here lies in automation and security. An untold number of man hours, office space and energy would normally be required to organize the delivery of not only the tickets, but to arrange all of the ongoing perks that their owners were subject to, and to then take preventative measures against forgery and fraud. It’s easy to see how dynamic NFTs in the ticketing industry could pose genuine competition for the likes of Ticketmaster, which regularly sees its tickets either scalped on a large scale, or fall prey to forgers.
Because of their reactivity to real-world events, dynamic NFTs also have the potential to make pointed social or cultural impacts, as well as commercial. A dynamic NFT created by the artist Beeple was designed to change its appearance according to the outcome of the 2020 U.S presidential election. Following the announcement of Joe Biden’s win, the NFT transformed into an image of Donald Trump fallen in a heap on the ground.
Other proposed use-cases for dynamic NFTs (some of which are being tested out right now) include acting as a deed for the housing market. A home could be listed in the form of an NFT, and every subsequent sale could be logged on the NFT itself, along with a record of any repair work or upgrades that have taken place. No estate agents or letting agencies would be needed.
While NFTs have a been utilized in the gaming industry for some time now, such games have found it difficult to scale, or even offer any in-depth gameplay features, because the static nature of most NFTs have made it impossible to handle the constant flow of information that derives from a player’s every click in a given game.
Dynamic NFTs help turn community members into value-added partners. LaMelo Ball’s series of collectibles evolve and grow in rarity according to the player’s season stats, which means the owner of the NFT potentially benefits from the achievements of the player on the court.
Ball’s collection was powered by Galaxis (formerly known as Ether Cards), a Web3 startup that draws from Chainlink data feeds to update its dynamic tokens. Galaxis was also behind many celebrities’ NFTs, which sold out over 90,000 collectibles in a matter of hours, and has also launched NFT projects along with Mike Tyson and Val Kilmer.
One of the biggest value propositions of dynamic NFTs is the ability to give an ownable object to community creators to hand to their communities, and create ongoing engagement within that community. While this may sound simple at first glance, consider how many emails you receive each day from just about every brand, company or website you’ve ever come into contact with. Then consider just how many of these you not only ignore, but actually consider to be a complete nuisance.
NFTs have emerged as one of the most powerful and creative ways to build communities around a particular brand, personality or service, from the ground up, while ensuring that those who take part maintain their engagement, and actually want to engage in the first place.
By virtue of their fool-proof security, resistance to tampering, and dynamic nature, these NFTs have the potential to revolutionize industries, from art and entertainment to gaming and beyond, offering immersive experiences and unique narratives that resonate with the end user.
The dynamism of NFTs is only getting stronger.