39. The main differences between static NFT and dynamic NFT
In this rather complicated world and NFT market, there are two basic types of non-exchangeable tokens:dynamic NFT and static NFT. Both types have their unique benefits, but also their peculiar drawbacks. Today we will learn the most important differences between them. To better understand the topic discussed today, take a peek at the lesson “What are NFT tokens“.
What are non-exchangeable NFT tokens?
For those who didn’t bother to glance at the previous lesson, we will briefly remind you what non-exchangeable tokens are.
NFT are digital assets that are unique and non-exchangeable. Each, single non-exchangeable token has its own distinct value. They also cannot be replaced by identical assets. This is the main feature that distinguishes them from other cryptocurrencies.
NFT are cool in that they can represent a diverse range of assets. Including broadly defined art, movies, music, games or virtual worlds. Plus many, really many “other” attractions.
The non-exchangeable tokens are backed by blockchain technology, which is what guarantees their uniqueness and ownership. The blockchain also allows for the creation of smart contracts, which in a way automate NFT-related processes. Of course, you already know that one of the most popular platforms for creating NFTs is Ethereum. Non-exchangeable tokens, created on this platform, must comply with the ERC-721 standard.
It is important to understand that not all non-exchangeable tokens are created equal. As we have already mentioned, there are two, main types of NFT: static and dynamic. Which type of non-exchangeable token you choose will depend on its use case. Let’s now take a look at what are the main differences between static and dynamic NFT.
Static tokens are impossible to modify or change. Once they are created, they are permanent, and their record on the blockchain is immutable. For the sake of these functions, they very often represent those digital assets that are not intended for exchange. We are talking about works of art, collector’s items or digital identification documents. Static, non-exchangeable tokens are also a great option for permanent storage on blockchain.
Of course, static NFT have their advantages and disadvantages. They are certainly more secure, by virtue of the fact that once created, no changes can be made to them. They are also more efficient and compatible with already existing protocols or systems.
On the other hand, let’s look at the disadvantages of these static non-exchangeable tokens. By the fact that nothing can be changed in them, they are resistant to updates. So if we need to add to our NFT – some new information, we have to create it from scratch. This highlights another disadvantage of them –static NFTs are far less flexible than dynamic NFTs.
Another drawback is that most static NFTs are incompatible with certain platforms or intelligent contracts. As a result, this limits the number of applications that can be built using them.
Given this limitation, static non-exchangeable tokens are nevertheless the most popular type of NFT. Developers use them in many applications for the reason that their security and performance lend themselves to most use cases.
Use cases for static NFTs
- Art collections. Digital, of course. Artists sell their works of art as non-exchangeable NFTs. This allows collectors to have unique works that cannot be changed. That’s why static NFTs are ideal if we are talking about collecting and trading digital art.
- Identity verification. That is, what we mentioned at the beginning of our lesson. As static NFTs cannot be changed, they are ideal for storing digital identities on the blockchain. This type of non-exchangeable token is resistant to tampering and fraud. Interestingly, digital identity systems based precisely on this type of token are already being developed by Microsoft and IBM.
- Storing documents on the blockchain. This is another great way to use static tokens NFT. They are even ideal for storing these kinds of documents, precisely because once created, they cannot be changed. Currently, many companies are working on platforms for storing documents in the form of static, unchangeable tokens.
- Collecting items in games. This is another, also, great way to use static NFT. They can represent weapons, armour, creatures, vehicles, or land. As a result, players will have unique items without worrying about any of them changing.
Also referred to as dNFT. You’ve probably already guessed that unlike static NFTs, they can be changed and updated after creation. Dynamic NFTs are very useful for tokens that will need to be updated after creation. Such cases will include digital assets representing some object that will, for example, change location. Remember that in the case of dynamic tokens, the owner of the asset can update the token to reflect the change in ownership.
How do such dynamic NFTs work? They store data in variable blockchain format. It is because of this that we can modify dNFT. Of course, as long as we have the necessary permissions to do so. Such data, in the case of dynamic tokens, we can update manually or automatically. We already set the conditions at the level of the smart contract.
Did you know that one example of such tokens is CryptoKitties? Yes, this popular game with adorable kitties. The Dynamic token represents each cat in the game. Its owner can update data, associated with that cat (token).
Just like static NFTs, dNFT can have various applications. They can be found in games, as reflections of digital art, or even collector’s items. So, you can see how many areas overlap together. However, it all depends on the purpose of the token in question.
Advantages of static NFTs
- They are more efficient. Mainly in terms of storage and bandwidth. Why? Because static NFT must be stored once, no matter how many times they are sold on the market. Dynamic NFTs change their location every time they change ownership.
- They are easy to verify. All the data on these types of non-exchangeable tokens are contained in a single file.
- They are definitely more resistant to fraud and counterfeiting of any kind.
- Flexibility is another of their features. Static NFTs can even secure your credit, which, unfortunately, dynamic tokens cannot do.
Advantages of dynamic NFTs
- Increase audience engagement. If you offer someone something that is constantly changing and improving, people will come back for more.
- They give users a sense of greater immersion. With dynamic NFT, people feel they can constantly discover new things. This makes their experience more enjoyable and memorable.
- They increase fan loyalty. Why? Because of their volatile nature!
- They provide more opportunities for monetization. You will have noticed in time that static tokens are more practical in their operation. We can use dynamic tokens in many more ways.
- More innovation. By constantly changing, being creative, or innovating, you will make people come back to you for more!
You already understand the key differences, between dynamic and static NFTs. Which type is right? It all depends on your interpretation and the utility of your non-exchangeable token.