DYNAMIC NFT'S - An Interesting CHAINLINK (LINK) Project

DYNAMIC NFT'S - An Interesting CHAINLINK (LINK) Project

By kev_nag | kev_nag | 14 Mar 2021


For the benefit of those who might not know, an NFT (Non-Fungible Token) is a secured token representing ownership of something incapable of being  replicated and therefore unique in nature existing on the Blockchain. Remember Cryptokitties? Unlike  Ethereum, which is a fungible token where various Ethereum tokens are interchangeable, the NFT, being totally unique in nature (each token contains a unique, non-transferable identity of its own to distinguish it from other tokens), possesses a true digital scarcity and independent value. But NFT's are not relegated to the realm of digital art or trading cards, and, may be used to tokenize real world asset ownership in things like real estate and objects of fine art.

Within the system, the Blockchain acts as a standardized vehicle to list and trade NFT's and provides protection for the storage of information surrounding the asset's history (provenance). It must be recognized that the listing and free trade aspects of NFT's on the blockchain has a value in and of itself. However, the value achieved by the blockchain's disconnect from all other outside systems likewise creates a limitation for NFT's as they presently exist in a static environment. Right now, an NFT is incapable of interfacing with any data outside the blockchain. Allowing NFT's to interact with outside real world data and the solution to this connectivity barrier exists in the utilization of oracles being developed by CHAINLINK.

The CHAINLINK blog post (https://blog.chain.link/create-dynamic-nfts-using-chainlink-oracles/) defines dynamic NFTs as: "... perpetual smart contracts that use oracles to communicate with and react to external data and systems. The oracle allows the NFT to use external data/systems as a mechanism for minting/burning NFTs, trading peer-to-peer, and checking state." Through utilization of CHAINLINK oracles, NFT's can connect with web APIs, IoT data, and, in fact, with any verifiable data provider available and relevant. NFT developers may additionally leverage CHAINLINK VRF (Verifiable Randomness Function) "...to access verifiable randomness, interface with existing backend systems, and even trigger cyber-physical systems." Therefore, dynamic NFT's are possible that react to real world data and are capable of full integration with existing infrastructures and systems.

A simple example is in order. Let's say your favorite baseball player is Player X and you own a NFT numbered 1 of 100 showing Player X batting. Well in the existing static system the NFT has value based on content contained solely within the NFT itself as well as scarcity value. But now let's say our NFT of Player X is a dynamic NFT that incorporates Player X's statistics that are continuously updated within the NFT to value Player X in a performance based fantasy sports league. Player X now goes out and sets the season record for home runs as well as the highest batting percentage ever recorded. Being a dynamic NFT, this information is instantly added to the existing NFT increasing its value. 

There are many possible uses of dynamic NFT's but the one I found most intriguing is in the area of identity and identification. CHAINLINK is already working in this area to develop "digital identities" with the ability to interface with existing systems. CHAINLINK "... allows smart contracts to query identity-based blockchains to verify personal credentials, as well as to append data to a person’s identity based on an output from another business process" (https://blog.chain.link/create-dynamic-nfts-using-chainlink-oracles/). Just imagine the usefulness of protecting your personal data by using a dynamic NFT to "plug 'n' play with other applications requiring identity verification (not to mention the time saved in the process-no more long forms to fill).

I am merely an ordinary small investor who likes to share what I've learned and found interesting. Please take a few minutes and check out my other published articles. I am not in any way a financial advisor and as such, do your own research before investing. If you enjoyed this article please like it, comment and/or tip. Feedback is always welcome here.


kev_nag
kev_nag

Just an ordinary casual crypto investor.


kev_nag
kev_nag

Retired, finally. I enjoy learning about crypto and sharing my discoveries. Also, I follow the News closely and enjoy discussing current events. I have no political agenda, but advance views based in reality with a slant toward real world consequences.

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