What is Nft 2.0 and how is it different from the first version?
What has changed from NFT 1.0 to NFT 2.0?
NFT 2.0 can do everything that NFT 1.0 cannot. Here are the features of NFT 2.0 that make it even more unique:
NFT interconnection: This feature introduces layers to the concept of property. This means that an NFT can be linked to other NFTs, contain “fungible” tokens, and even be associated with multiple datasets.
Scalability: This capability allows NFTs to be changed in the future by adding metadata (data about the underlying asset), upgrading the artwork it is associated with, etc.
Dynamism: This feature makes NFTs more powerful by equipping them to give commands and perform modifications to other NFTs associated with them. It can even change the appearance of connected NFTs. The capabilities of an NFT depend on the project developer.
How do these features improve NFT 2.0?
Nested NFTs: Nesting of NFTs means that an NFT can have other NFTs. The developer of the NFT 2.0 protocol RMRK has created an infinite nesting, which results in an NFT having other NFTs that additionally have more NFTs. It goes on forever. Nested NFTs find use in the metaverse, games, art, virtual exhibitions, etc.
Custom NFTs: NFT 1.0 only associated one resource with the token. This means that the token can only be associated with one format. No matter where the NFT is viewed, it will appear the same to everyone. NFT 2.0 allows each token to be tied to multiple designs. Let us understand with an example.
Let’s say you buy an NFT book. But the book is available in several formats, such as PDF and audiobook with a cover image. NFT 2.0 identifies the device from which you are accessing the NFT book and displays the corresponding design. For example, if you are using an audio player, you will see the audiobook, but a PDF will be displayed if you are using a book reader.
Smart NFTs: Unlike NFT 1.0, the upgraded version allows smart contracts to be linked to NFTs. So when the NFT changes ownership, the smart contract will automatically change the ownership data on the token and save it on the respective blockchain. Additionally, the smart contract ensures that the creator of the NFT receives a royalty whenever the asset changes hands.
NFT in co-ownership: NFT 1.0 allowed the assets to be owned by a single entity. However, with NFT 2.0, multiple owners can participate and hold an interest in NFT. This allows aspiring owners with a loss fund to become partial owners of the underlying asset. Having more than one owner also increases confidence in the asset and in its ownership.
NFT rental model: NFT 2.0 goes beyond mere ownership and allows collectors to lease the underlying asset through smart contracts to other people. Since leasing an asset generates passive income for the owner, this model improves liquidity in an otherwise illiquid market. (NFT owners tend to hold their tokens for a long time, believing that their value will appreciate over time, thus limiting the flow of currency.)
These added features and functionality make NFTs smarter, more responsive and adaptive. With smart contracts, the human intervention behind buying and selling decreases dramatically, thus adding to the decentralized nature of the blockchain ecosystem fueling the NFT markets. Scalability also means that NFT storage could change in the near future.
(Edited by : Aditi Gautam)