NFT 2.0 — Paving Way For a New Era in Crypto Universe
Technology develops in fits and starts. It skims under the surface for some time, and then it seems everyone is talking about it. It’s the same case with NFTs. It went unknown in the mainstream media for years. Then from 2021 onwards, NFTs started getting the attention we’re now familiar with. Blockchain and cryptocurrencies feel complicated to the masses. But, when it comes to NFTs there is some sense of innate familiarity.
We’re now on the threshold of NFT 2.0. You need not worry if you missed NFT 1.0. Let us first understand what NFT 1.0 meant for us.
Properties of NFT 1.0
NFT 1.0 was about testing how the market would react to the concept of digital asset ownership. Some notable projects include CryptoPunks and Bored Ape Yacht Club. These NFT projects focused on creating unique digital characters stored on the blockchain. Buyers of these NFTs are happy to spend money based on the novelty of owning digital assets. They could be images, videos or texts. NFT 1.0 introduced us to the below properties.
- Immutability: NFTs cannot change themselves once generated. All NFT transactions link to each other like a continuous historical record. Anyone can find out who owns how many digital assets.
- Real Ownership: Blockchains can verify the ownership status of any digital asset. There is no room for any dispute or forgery, unlike in the real physical world.
- Conditionality: Smart contracts can ensure automatic payments based on certain conditions. For example, NFT artists are able to gain a percentage of future sales.
- A true creator economy: NFTs work on decentralized technology. This means creators are independent to make their own creative or financial decisions. They do not need to depend on a centralized platform.
What is NFT 2.0?
NFT 2.0 is the next evolution in NFT technology.
Any NFT that goes beyond what NFT 1.0 can perform is called NFT 2.0. NFT 1.0’s sole purpose is to sit on the blockchain and admire collectors. This was enough to start the NFT adoption firestorm in the beginning. But this is only the beginning. NFTs are capable of much more than just sitting on the chain. Let’s look at the properties of NFT 2.0 to discover how much.
Extensibility — An NFT must be extensible to be considered a 2.0 variation, which means it must be able to connect to other NFTs or projects in a meaningful/helpful way. Thus,
- An NFT can be linked to another NFT and vice versa.
- Fungible tokens can be ‘held’ by an NFT.
- An NFT can be connected to any other data set.
The number of layers of ownership is unlimited, which means the creators can create as many nested layers as they want.
Upgradability — This characteristic ensures that an NFT can be modified in the future. Artwork, metadata, and additional resources (which will make sense in the abilities section) are all examples of changes.
Dynamism — It gives NFTs the ability to do more than what they can do now. They may send commands, equip other NFTs, modify their appearance, and much more, according to the creator’s or owner’s preferences.
When you combine these three traits, you create NFTs that are far beyond anything you’ve ever seen before. Let’s look at the world’s most advanced implementation of NFT 2.0 technology to help you comprehend it better.
Unique Capabilities of NFT 2.0 development
1. Nested NFTs
NFTs can own and be owned by other NFTs, thanks to their nesting capabilities. Although this notion appears to be easy on the surface, the new options it provides the designers will astound you (of art and technology). The chain of ownership can go on indefinitely with RMRK’s nesting so that an NFT can own other NFTs, own other NFTs, own other NFTs, and so on till infinity. Gaming, art, the metaverse, exhibitions, and much more may benefit from this.
2. NFTs with multiple resources
NFTs don’t have to be doomed to a single fate for the rest of their lives. NFTs can now transition between a variety of resources. The image, video, or other media that make up the NFT is a resource. An NFT can thus have two pictures instead of one, and the holder can choose which one to display. This isn’t the only use for this feature, though. A book NFT can have three different types of resources: a pdf, an audiobook, and a jpeg cover.
These resources can be configured to only load when the user interacts with the NFT on the platform in question. If you’re using a book reader, you’ll see the pdf; if you’re using an audio player, you’ll hear it.
3. Reactive or Responsive NFTs
Conditional rendering makes reactive NFTs viable. This means that an NFT adjusts its resource allocation based on the fulfillment of specified criteria. For example, the time of day and NFT of a landscape switches between two resources (nighttime and daytime variations). When it’s night, the NFT displays the nighttime form, and when it’s the day, it shows the daylight variant. For this to work, the NFT needs two resources (in this case, photos) and criteria for prioritizing one over the other.
4. DAOs based on NFT 2.0
An NFT can be fractionalized into a DAO using this ability. Because some NFTs are too costly for a single collector to obtain, the DAO capability allows multiple collectors to pool their funds to purchase the NFT. Once completed, the NFT can have tokens connected to it, which will be distributed to the collectors based on the size of their investment. When it comes time to choose, the collectors can use their tokens to vote on what to do with the NFT. Once again, this is a concept with far more applications than its basic explanation.
Let’s explore a few pneumatic use-cases which encourage NFT 2.0 development here:
1. Robust NFT Storage
An NFT’s storage can be made more robust by using multi-resource capabilities. The majority of NFTs are now kept on IPFS (InterPlanetary File System). This means that the NFT has a connection to IPFS-hosted resources. But the issue about IPFS is that you have to pay to pin your material to nodes unless it’s continually being interacted with (another way of saying you incentivize storage providers to host your files for x amount of time).
2. Charity through NFT 2.0 with multiple Owners:
With NFT 2.0, it would be possible to have multiple owners coming for a noble cause and giving charity for a single activity. Imagine multiple generous donors coming on a platform and co-own an NFT for a combined contribution towards a set of orphanages. This can be a breakthrough in public funding where the investor gets a token of his generosity.
NFTs and already made a deep inroad into the psyche of users. The emergence of NFT 2.0 development opens the gates of a new world, indicating new possibilities and unexplored use-cases for the aid of users are on the way.