NFTs exist on a spectrum from speculation through art to utility.
In the NFT universe there’s an emerging conversation around Dynamic NFTs (dNFTs). Dynamic NFTs are NFTs that can have their metadata updated based on triggers to its smart contract.
Michael Robinson has a nice Twitter thread that explains dynamic NFTs and shares a couple of use cases.
Dynamic NFTs are interesting because they add the ability for developers to evolve their NFT products over time, get to know their customers better, and offer increased utility in ways that perhaps couldn’t be imagined when the NFT launched.
In the thread, Michael uses both car and home examples. How a dNFT representing the physical item can track important things about the item. There are as many examples as the mind can imagine.
Imagine health records that get updated. Or school transcripts. Or work histories.
I’ve always like the idea of NFT-based credentials of sorts. Over the course of my career I’ve worked on some interesting projects. In 1998 I worked on one that was trumped as one of the top-ten most strategic IT projects of the year: Nasdaq Taps TIBCO for Revamp of Messaging Infrastructure.
Do you trust me? What was my role? I was the lead architect. Still trust me? That’s a big claim.
If, however, my employee record at TIBCO were an NFT, the CRM could have updated my record and I could prove it to you. Sure… you could call TIBCO and maybe they’d still have a record that I worked there. But a record of every project? You could ask my boss but would he remember? Every project for everyone on his team over decades?
Instead, that NFT (perhaps shared on LinkedIn) is proof with provenance directly from my employer without any necessary thrashing to call and verify references.
And that leads us to the main objections, which by now you’d realize aren’t real objections.
It’s useful to think about the home or car examples to counter the objections in the thread. There were really two:
- What about a database?
- Doesn’t Carfax or Zillow already do this?
These really are the same question in some ways.
What about a database? Well, whose database? My medical records are stored at the doctor’s, but I go to a lot of doctors. If my project example above was in a TIBCO database, would they still have it? Who’d have access to that data? Not me, that’s for sure.
Have you ever bought a home? The bank asks for information they already have, and a lot of what happens is the buyer or seller runs around collecting information from different organizations’ databases! Information about title, liens, property boundaries, taxes… So I ask again, whose database?
Middlemen have evolved like Carfax or Zillow. Do we trust them? Have you read their terms… how much of that trust puts the responsibility on them for mistakes, or is it buyer-beware? And, a middleman means overhead.
Further NFT Innovation
Dynamic NFTs are one piece of the puzzle when it comes to how NFTs will help us innovate for more privacy, more efficiency, and more trust.
Why you buy alcohol, you have to prove your age.
But you show your ID.
To a complete stranger.
Your ID contains:
- Your birthdate
- Your address
- You ID number
- And more…
The cashier only needs to know if you’re over a certain age… yet they get tons of information about you. Why do they need your date of birth? Your home address?
The information on your ID is needed to derive an answer, and today the human is the only way to trust that answer. If your ID were validated in a wallet, you could have a smart contract that gives just the answer you need, without exposing unnecessary information about your identity. This is what it means to have trust embedded in the network.
Which is why I like the response to “why not just carfax?” deep in the thread comments:
There’s nothing “wrong” with carfax. But this approach as the potential to remove layers of trust from the data and make the data more securely accessible in more contexts.
That’s what this is about.
It’s about trust built into the network and not about decentralized databases.
And, it’s about unlocking data kept by middleman to enable more innovations with data. If you’re curious about a specific example, read about how merchants can create their own cross-platform “verified purchase” owners to unlock the power of community rather than having their champions locked into retail silos like Amazon or Walmart.