Static vs Dynamic NFTs: Complete Guide

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The NFT marketplace is forecasted to cross 8.22 million ETH in trading volume with over 2.46 million unique wallets by 2022.

Over the years, we all have witnessed the impact of these digital assets and noteworthy acceptance by high-profile public figures, investors, and enterprises. Non-fungible tokens or NFTs are one of them. They have quickly gained popularity with some exciting fields of use that are transforming the way businesses used to operate. Moreover, these tokens have underlying technologies that are continuously evolving to improve security, use cases, and user experience.

In this article, we’ll explore NFTs and their two categories i.e. static and dynamic in detail and identify their differences as well as potential use cases in real-world applications.

Before diving deep let’s get a quick look into what NFTs are.

Understanding NFTs

NFT is a cryptocurrency just like Bitcoin or Ethereum. The only difference is that it cannot be interchanged with the same product. Instead, they are interchangeable based on the valuable data that takes the form of digital assets you own. That unique digital asset could be imagery, videos (mp4 or mp3) files, gaming 3D art, etc.

Static NFTs

Static non-fungible tokens are the ones that, once created, cannot be modified or changed in any way. They reside as permanent and immutable records on the blockchain. One of the biggest spotlights in static vs dynamic NFT is that static NFTs are fastened. These are unique digital assets such as collectibles, 3D imageries, artwork, digital documents, etc. that need a secure environment to be stored in. Static non-fungible token development is, therefore, a great way to store expensive and unique digital assets in a decentralized and hack-proof database.

They have several advantages over dynamic NFTs. One of the major advantages of static NFTs is that they are secure and cannot be modified after minting. Secondly, they are highly compatible with existing protocols and systems.

Use-Cases of Static NFTs

Some potential use cases of static NFTs are below.

Identity verification - NFTs can be used to store digital identities on the blockchain to avoid fraudulent activities by allowing only authorized users to be part of the blockchain network. IBM and Microsoft have also developed static NFTs to verify the identity of people digitally when they sign up to get access to their online accounts. The private information is stored in the form of static NFTs from where the system verifies credentials and grants access to the users.

Confidential document verification - Static NFT development is useful when it comes to storing private documents permanently on the blockchain. These documents contain highly confidential or private information that is better stored in a database where no unauthorized entity could access it. Healthcare, insurance, and other industries can use static NFTs to store medical records, insurance claims, educational certificates, etc.

Gaming assets - This is one of the most popular use cases of static NFTs in which gaming assets are collected. The gaming industry is making use of NFTs to allow players to collect several in-game assets such as armor, cars, fighters, weapons, etc. that they own and cannot be altered.

Digital art - Artisans can showcase and sell their unique artwork as NFTs. This allows the buyers to buy something that cannot be replicated. There are many platforms that sell visual art (3D imageries) in the form of NFTs and give opportunities to artists to earn from their talent.

Dynamic NFTs

Dynamic NFTs or DNFTs can be altered on the blockchain even after they are minted. The need for dynamic NFTs arose when blockchain systems were supposed to get connected with other systems. Static NFTs are highly secure and can not interact with other systems to draw information. Dynamic NFTs were introduced to address this issue and allow seamless communication and interactions for scalable blockchain solutions.

The data on dynamic NFTs is stored in a changeable format that allows the owner to modify data for several purposes. These NFTs are used when multiple modifications are required for the system to work. Dynamic NFTs involve both on-chain and off-chain computations using smart contracts. When the user requests NFT, smart contracts evaluate the computations and present the data to the end user.

Use-Cases of Dynamic NFTs

Below are the ways dynamic NFTs are used in real-world applications.

Rewards - Brands and online marketplaces always build loyalty programs and reward systems for their regular customers. NFT marketplace development offers an innovative way to give rewards to customers with digital tokens.

Crediting - The values of digital assets are changeable and they should be updated in the blockchain as well. Dynamic NFTs are used to update values throughout crediting processes.

Competition-based platforms - Dynamic NFTs are used in various platforms where there is competition. For instance, if we talk about multi-player games, the platform assigns unique game assets to the players in the form of NFTs. Additionally, the ownership of those unique assets can be changed within games according to the competition results, and that's where dynamic NFTs come into play.

Static vs Dynamic NFTs

This section gives a clear overview of the key differences between static and dynamic NFTs.

• Dynamic NFTs allow adjustments/modifications after minting but static NFTs do not

• Static NFTs are much more efficient with respect to bandwidth and storage. The reason is that data is stored in static NFTs one time whereas in dynamic NFTs the altered data might be a bigger file as compared to the previous one. Therefore dynamic NFTs need to be stored differently whenever it changes their value/shape

• Static NFTs are easy to manage and monitor. Dynamic NFTs, on the other hand, have connections with other systems that make verification complicated from all ends

• Static NFTs are hack-proof and more secure as compared to dynamic NFTs

To conclude, static and dynamic NFTs have potential applications in various industries including retail, banking, finance, healthcare, eCommerce, and gaming sector. I hope this guide helped you understand the major differences between these two categories of NFTs. So which one to choose to create an NFT marketplace? It depends on your requirements and how you want to secure and operate your digital assets.