Why dynamic NFTs can revolutionise resale markets like eBay
Unless you’ve been living off-grid for the last year, you can’t fail to have heard mention of NFTs - non-fungible tokens. In simple terms, NFTs provide a radical solution to proof of ownership, acting as an unforgeable digital receipt.
Though much of the focus has been on flexing cartoon-like Twitter profile pictures, the applications for NFTs are far-reaching, especially when you learn that the information they reflect can be dynamic. Dynamic NFTs can reflect changing external data over time, which might even revolutionise resale markets like eBay among a growing list of use cases.
The potential applications for dNFTs are still being explored, but one future use case, as highlighted by Chainlink, one of the leading Oracle providers, might be to provide a living purchase history of real-world assets.
Dynamic NFTs, resale markets & eBay
Two of the most important real-world assets with enormous resale markets are houses and cars. Dynamic NFTs could reflect changes in relevant data over their lifetime via Oracles. In the case of cars, this might mean mileage or service history or, for houses, the age of critical components like the roof or double-glazing.
In particular, secondhand car markets suffer from the trust problem that blockchains are designed to address. Odometer fraud is widespread, requiring car buyers to trust sellers not to have fiddled with the mileage, which means dNFTs can fix real-world problems, addressing one of the biggest criticism levelled at blockchain-based applications.
DNFTs aren’t just applicable to expensive physical assets. So long as the data can be harvested, the potential uses are much broader. The growth of the IoT (Internet of Things) means more and more items are capturing and transmitting information which might be consumed and relayed by Oracles like Chainlink. This will increase the potential applications for dNFTs which might include revolutionising secondary markets like eBay.
Buying items from complete strangers on auction sites like eBay relies almost exclusively on trust in Sellers and the accuracy of their reviews. The European Intellectual Property Office (EUIPO) puts the cost of fake imported goods at $134 billion per year and, as reported by Coindesk, is actively exploiting blockchain-based solutions.
So, selling on eBay could, in the future, benefit from dynamic NFTs.
The kind of data that an NFT might record could be as simple as proving when something was bought, along with the number of previous owners and how long they owned it.
But as in the examples of using dynamic NFTs to provide an immutable record of the provenance of houses and cars, any frequently resold item that can broadcast data over its lifetime that Oracles can collate and verify might benefit from dNFTs as a superior means of proof of ownership.
Right now, we’re seeing most NFT applications within digital applications like art, gaming and collectables, but the speed of adoption has been breathtaking. Major brands like Nike and Adidas have recognised the potential that NFTs present for new relationships with their customers, so it may be sooner than you think that the problem of trust in buying a second-hand car or smartphone from eBay is solved by dynamic NFTs.
OG Protocol helps web3 dev teams create dynamic NFTs across a diverse range of potential applications, from in-game items ageing over time or NPCs rushing to celebrate with a character whenever the owner’s balance increases beyond a certain threshold to physical property records.
Text by Mirio Mella