As we all know, NFT stands for non-fungible tokens, and they are tokenized digital assets that are stored on the blockchain. But the NFTs that most people know are static NFTs that have no functionality, meaning that once these NFTs are created they remain the same forever. But looking at NFTs and what possible benefits they bring, people realized that giving NFTs the ability to change and be programmable is something that needed to be done. 

This resulted in the creation of dynamic NFTs, which are NFTs that can be programmed and interacted with. These dynamic NFTs give artists and creators the ability to create more interactive NFTs that are more engaging and give buyers way more functionality and fun. When looking at traditional NFTs, they remain the same no matter what happens to them, but these dynamic NFTs can change depending on external factors and data. For example, dynamic NFTs can change depending on market conditions, user preferences and behavior, and they can even change depending on the weather. There is even an NFT project that lets users mint their social media posts as NFTs, and these NFTs change and rank up as these social media posts gain likes, comments, and shares. 

Dynamic NFTs are created based on set rules which determine how this NFT behaves and changes as time passes. These rules are set by creators themselves and they are programmed into the NFT by codes using different programming languages, depending on the blockchain these NFTs are minted on.

As you might have guessed, there are many differences between regular and dynamic NFTs. One of the major differences between these is the token standard these NFTs are created with. Regular NFTs are created using the ERC-721 standard, while dynamic NFTs are created using the ERC-1155 standard. The reason dynamic NFTs use the ERC-1155 standard is that this standard gives NFTs the ability to be semi-fungible and be able to change. Dynamic NFTs also utilize smart contracts, just like cryptocurrencies do. These smart contracts give NFTs the ability to execute predetermined actions if certain conditions are met. These smart contracts also give creators the ability to decide how these NFTs are bought and sold, and even determine how royalties are paid out. Because of this, you can only store these dynamic NFTs on crypto wallets that support smart contracts. 

We already mentioned that dynamic NFTs bring many benefits to the Web3 and NFT ecosystem, but let’s take a closer look at these benefits.

Firstly, dynamic NFTs give us vast usability of these assets and functionalities that can be used for different purposes. The ability to interact with NFTs and give them certain functionalities makes owning an NFT more enjoyable. It also dismisses complaints that these are just pictures, and they become something more than simple art pieces.

Dynamic NFTs also give us the ability to introduce NFTs to many different fields and industries. Since these NFTs are coded and use smart contracts, creators are able to define some rules, decide how NFTs should behave, and so on. For example, in the gaming industry, game characters can be dynamic NFTs and they can change as these characters level up and unlock new skills.

Dynamic NFTs also help in the tokenization of real-world assets. There are many industries where we can tokenize certain assets and keep their data this way. With this, we can keep the data of certain assets in a secure blockchain ecosystem rather than traditional digital space. And with dynamic NFTs, this data can be updated as needed, depending on the asset that is tokenized. 

Now let’s look at these benefits more closely by taking a look at the use cases of these dynamic NFTs. As we mentioned before, dynamic NFTs bring many use cases to us and they can be implemented in many different industries and fields. 

The first use that dynamic NFTs can be beneficial is related to art and music. For example, music creators can release Dynamic NFTs which contain certain songs. If an artist releases new songs, they can add them to these NFTs, and people who own these NFTs can listen to these new songs. With this, artists can gain capital and people can support them by buying these NFTs, where in return they receive some of the music these artists have released and will release. The same goes for art pieces. Artists can release NFTs which change color or visuals, depending on certain conditions. This way, artists can release more entertaining art pieces and engage with the community. 

Dynamic NFTs can also find huge use cases in the gaming sector. Every die-hard gamer is proud of their in-game characters and items, especially if this is the game they have been playing for years. With dynamic-NFTs, these gamers can gain full ownership of their characters and items and still benefit from in-game mechanics. Since dynamic NFTs can change, these in-game characters can level up and NFTs can be updated simultaneously. 

Dynamic NFTs can be connected with real-life assets as well. There are many different real world assets, such as real estate, that have constantly changing prices. With the help of dynamic NFTs, people who own these assets can tokenize them and have them constantly updated. With this, these people can share information about their assets online with proof of ownership as well as all of the necessary information. 

Dynamic NFTs are a good introduction to Web3 and there is a huge potential for them to evolve into something very big. These NFTs remove some of the biggest criticisms that are directed towards regular NFTs, such as that they are just simple drawings that do nothing. But this is still too early to make any concrete statements regarding them. The Web3 and blockchain ecosystem is evolving each and every day, and there are many products that are part of it. Because of this, these dynamic NFTs are just a small portion of this big ecosystem, therefore it’s hard to say if they will take the front seat or will be left behind in the shadows. 

If you are thinking of investing in dynamic NFTs, it can go either way. Dynamic NFTs might become the next big thing and you might make a very big profit, or they can fail and lose all of your money. Because of this, you should approach this investment with caution and good preparation. Investing in already very expensive dynamic NFTs is most likely a bad idea, and it’s best to go for something more affordable. In any case, it’s best to invest the money you can afford to lose, and don’t make this investment damage your finances in the long run.