'Smart NFT' is a fairly new topic even for the people riding the NFT train. While both smart NFTs and regular NFTs provide a way to verify ownership of a digital asset, there are some major differences setting them apart.
What makes Smart NFTs different?
A smart NFT consists of two components, RAM and ROM. ROM is the core component that is unchangeable whereas RAM is the upgradable component. The latter is what makes smart NFTs different because it allows for an NFT to evolve instead of staying the same forever. Let’s suppose you own an NFT of a digital item in a game. The effort that you put into the game can’t be reflected in a regular NFT since it's immutable. But if it's a smart NFT, it will be able to upgrade its appearance and characteristics when a set of predefined conditions are met. The upgraded smart NFT of your item could then be sold for a higher value on the market.
Aside from being upgradable, smart NFTs can also be multilayered. Multiple NFTs can be nested with each other to make a single NFT and conversely, a nested NFT can be broken down into multiple NFTs. For example, a smart NFT of a car in a game can have all of its components such as tires, engine, etc. as NFTs. Not only that but smart NFTs can also be infused with fungible tokens.
Another important quality of Smart NFTs is that they can be programmed to last only a certain amount of time. These types of time-based NFTs can be used as tickets for an event or as temporary assets for a game. They can also be used for renting out digital assets where the ownership is returned to the original owner after the specified time. Moreover, smart NFTs can be encrypted with a secret code that grants the NFT holder access to exclusive content or in-game levels.
Since smart NFTs are programmable, the possibilities are endless. Being a recent technology, we have only seen a fraction of their potential till now. As they are adopted more and more, we can expect to see some new and innovative use cases.
Phantasma and smart NFTs
Phantasma is a layer 1 blockchain/smart contract platform specifically designed for NFT and gaming. Phantasma has devoted itself to making smart NFTs a well-established concept in the cryptocurrency and NFT world. Developers can utilize the smart NFT technology to create games and applications on the Phantasma blockchain. Phantasma is powered by two tokens; $SOUL, the governance token, and $KCAL, the utility token. They already boast several popular dApps on their blockchain such as Ghostmarket, Pavillion, etc. Phantasma has presented smart NFTs as a core part of their ecosystem. As a result, it has successfully attracted a lot of developers and big-name brands. But Phantasma is much more than just smart NFTs and I’ll explain more about it in my next article.
Smart NFTs address many of the shortcomings of blockchain gaming today. Thus, they could very well establish themselves as an integral part of metaverse and blockchain gaming. We might soon see what they are fully capable of but they need to be embraced by a wider community first.
The information provided in this article is not financial advice and shouldn't be interpreted as such. Please consult a financial expert before making any investment decisions.
