What is NFT 2.0?
NFT 2.0 is the latest iteration of non-fungible tokens (NFTs), designed to offer enhanced functionality to consumers compared to the earlier generation known as NFT 1.0.
While both versions rely on the same underlying technology, NFT 2.0 introduces a plethora of advanced features, making it a game-changer in the world of digital collectibles.
These are some of the features that make NFT 2.0 a remarkable upgrade:
- Its interlinking capabilities allow one NFT to be linked to another NFT or fungible assets, enabling the integration of multiple datasets.
- With NFT 2.0, digital collectibles can be easily upgraded or modified into better versions of themselves to achieve more by adding metadata or new information.
- NFT 2.0 anchors digital collectibles on a 1:1 basis to physical or other digital assets of equal value. This way, users can tokenize various items, including physical assets, machine components, abstract creations, and even other digital assets.
In essence, NFT 2.0 is an advanced version of the one-dimensional multimedia NFT ecosystem that gained significant attention in 2021.
It combines the foundational ideas of NFT 1.0 with new technology, enabling the seamless combination of diverse assets to provide a smooth experience for consumers.
This concept promotes direct interaction between the real world and blockchain technology, with the goal of advancing the mainstream adoption of NFTs.
Key Features of NFT 2.0
Below, we consider some of the major characteristics of NFT 2.0 and how they can radically change the trajectory of the NFT ecosystem.
Like most Ethereum-based concepts, NFTs thrive on smart contracts. Smart contracts are complex preset commands that operate automatically with zero human interference. In the old NFT ecosystem, smart contracts were static and could not be interacted with. But this all changes with NFT 2.0.
In this updated version, NFT owners can interact with smart contracts, making their assets more intelligent. Hence, they can modify the information stored in their NFT’s smart contracts and program them to meet specific needs for a new purpose.
For instance, users can directly adjust how an NFT functions when it moves to a different blockchain ecosystem or customize it to carry out specific tasks upon transfer.
2. Generativity and Algorithmic Randomness
NFT 2.0 introduces the possibility for users to combine different assets, thereby enabling the creation of algorithmic randomness within a digital asset.
In practical terms, users can determine the most relevant use case for their NFT. To achieve this, NFT 2.0 harnesses the power of artificial intelligence (AI) to incorporate personalized traits that make these digital collectibles more tailored to each user’s needs.
For instance, online platforms that offer video streaming, music playback, and image display can seamlessly integrate NFTs thanks to this updated version.
This is because NFT 2.0 empowers users to amalgamate these unique collectibles into a cohesive unit and deploy the one that suits the platform they are engaging with.
3. Composable and Upgradable
While NFTs in their base state are siloed and are one-dimensional, NFT 2.0’s fluid capability makes it composable. This allows users to customize their digital collectibles and create new ones based on their unique needs.
This way, an NFT can be upgraded from simply being admired on the blockchain to something users can better interact with. This radically expands the possibilities inherent in NFTs, making it possible for consumers to explore new possibilities with their collectibles.
Moreso, NFT 2.0 is not only segmented to unique, digital collectibles. The concept also infiltrates the ranks of fungible cryptocurrencies, allowing users to further tokenize and increase the viability of other crypto assets. This provides greater clarity, allowing more consumers to onboard into the crypto space via NFTs.
Types of NFT 2.0
NFT 2.0 is an all-encompassing ideology for a number of token standards that are currently being proposed in the Ethereum ecosystem.
Below are the examples of several token standards.
ERC-6956: Asset-Bound NFTs
This is an extension of the popular ERC-721 token standard, which is the bedrock for NFT 1.0. Basically, the ERC-6956 token standard allows tokens to be anchored 1:1 to a physical or digital asset.
As a result, consumers can tokenize their cars, properties, machine parts, abstract assets, and more. This token standard allows NFTs to have a more customer-friendly use case in the real world.
ERC-5773: Context-Dependent Multi-Asset Tokens
The ERC-5773 concept drives NFTs toward providing context-dependent data output. This means NFTs can have multiple display patterns depending on how they are accessed. For instance, if an NFT is used on a gaming platform, its avatar will switch to a 3D one, while if the same NFT is deployed on a marketplace, the PNG format is shown.
ERC-6059: Parent-Governable Nested NFTs
This is one of the hallmarks of the NFT 2.0 movement. ERC-6059 concentrates on enabling one NFT to own or manage another NFT without requiring approval from an externally owned account (EOA) or a smart contract.
This prompts the evolution of nesting amongst NFTs and a form of parent-child relationship springing up with NFTs. This hierarchical structure leads to NFTs having an entire ecosystem like a family unit.
ERC-6220: Composable NFTs
This token standard allows NFTs to selectively add different components to themselves through ‘equipping.’ This increases the composability function of NFTs, leading to more customization options.
ERC-6381: Unicode Emojis
This token standard also referred to as the Public Non-Fungible Token Emote Repository, allows consumers to interact with NFTs using Unicode emojis.
Essentially, ERC-6381 allows users to express their feelings and opinions about an NFT using emojis. This feature enhances the interactive aspect of NFT ownership, enabling users to provide feedback and share their sentiments about a particular NFT.
ERC-6454: Minimal Transferable NFT Detection Interface
This allows users to own soulbound NFTs, which are non-transferable. To do this, it can make a token non-transferable from the moment it is minted, after a specific block, after a set of transactions, or on a per-token basis.
These soulbound NFTs are immutable and bound to their owners for life, given that they operate as a digital twin. The digital twin concept allows NFTs to track the activities of a real-life object or person directly in real-time.
This makes it possible for performance to be monitored directly via the NFT, as they are linked.
Differences Between NFT 2.0 and NFT 1.0
Although many people expect that NFT 2.0 will inherently differ from its predecessor, the concept cannot operate independently of the former. Instead, it builds on top of the use case and technology that NFT 1.0 has crafted from its initial launch in 2014.
Nonetheless, the two concepts have several dissimilarities.
NFT 1.0 primarily serves as digital images that ascertain asset ownership. These collectibles are designed to reside on the blockchain, only to be admired or transferred by collectors and enthusiasts alike.
In contrast, NFT 2.0 characterizes any NFT that transcends the capabilities of NFT 1.0.
Below, we consider some key differences between NFT 1.0 and its 2.0 version.
|NFT 2.0||NFT 1.0|
|NFT smart contracts can be interacted with||Smart contracts only perform preset commands|
|NFT ownership can be fractionalized||Co-ownership is not present as entire NFTs are the properties of one individual|
|NFTs are used for multiple use cases, including tokenizing real-world assets (RWAs)||NFTs are only used to depict ownership|
|Digital collectibles are dynamic and function differently depending on the chosen channel of expression||NFTs are static|
|Emojis can be linked to NFTs||Emojis are missing|
NFT 2.0 represents a significant advancement in the cryptocurrency ecosystem’s bid to make itself even more practical for everyday use.
This concept takes the static nature of the initial wave of NFTs and transforms it into an ecosystem where these digital collectibles can have a more profound impact on individual users’ lives.
As a result, consumers can now personalize, own, manage, and interact with their NFTs. They can also dynamically choose the right NFT for each online platform and link them to valuable real-world assets.
NFT 2.0 is the next evolutionary step, and all signs suggest that it could be the key to broader mainstream adoption in the cryptocurrency space.