IDEAS home Printed from https://ideas.repec.org/a/gam/jftint/v15y2023i6p189-d1154615.html
   My bibliography  Save this article

From NFT 1.0 to NFT 2.0: A Review of the Evolution of Non-Fungible Tokens

Author

Listed:
  • Barbara Guidi

    (Department of Computer Science, University of Pisa, 56127 Pisa, Italy
    These authors contributed equally to this work.
    Current address: Largo Bruno Pontecorvo, 56127 Pisa, Italy.)

  • Andrea Michienzi

    (Department of Computer Science, University of Pisa, 56127 Pisa, Italy
    These authors contributed equally to this work.)

Abstract

Non-fungible tokens (NFT) represent one of the most important technologies in the space of Web3. Thanks to NFTs, digital or physical assets can be tokenised to represent their ownership through the usage of smart contracts and blockchains. The first generation of this technology, called NFT 1.0, considers static tokens described by a set of metadata that cannot be changed after token creation. The static nature prevents their wide spread as they do not support any meaningful user interaction. For this reason, its evolution, called NFT 2.0, has been proposed to make tokens interactive and dynamic and enhance user experience, opening the possibility to use NFTs in more ways and scenarios. The purpose of this article is to review the transition from NFT 1.0 to NFT 2.0, focusing on the newly introduced properties and features and the rising challenges. In particular, we discuss the technical aspects of blockchain technology and its impact on NFTs. We provide a detailed description of NFT properties and standards on various blockchains and discuss the support of the most important blockchains for NFTs. Then, we discuss the properties and features introduced by NFT 2.0 and detail the technical challenges related to metadata and dynamism. Lastly, we conclude by highlighting the new application scenarios opened by NFT 2.0. This review paper serves as a solid base for future research on the topic as it highlights the current technological challenges that must be addressed to help a wide adoption of NFTs 2.0.

Suggested Citation

  • Barbara Guidi & Andrea Michienzi, 2023. "From NFT 1.0 to NFT 2.0: A Review of the Evolution of Non-Fungible Tokens," Future Internet, MDPI, vol. 15(6), pages 1-23, May.
  • Handle: RePEc:gam:jftint:v:15:y:2023:i:6:p:189-:d:1154615
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1999-5903/15/6/189/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1999-5903/15/6/189/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anil Donmez & Alexander Karaivanov, 2022. "Transaction fee economics in the Ethereum blockchain," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 265-292, January.
    2. Matthieu Nadini & Laura Alessandretti & Flavio Di Giacinto & Mauro Martino & Luca Maria Aiello & Andrea Baronchelli, 2021. "Mapping the NFT revolution: market trends, trade networks and visual features," Papers 2106.00647, arXiv.org, revised Sep 2021.
    3. Luca J. Liebi, 2022. "Book Review: Decentralized finance after Bitcoin & Ethereum," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 36(3), pages 403-405, September.
    4. Dowling, Michael, 2022. "Fertile LAND: Pricing non-fungible tokens," Finance Research Letters, Elsevier, vol. 44(C).
    5. Dowling, Michael, 2022. "Is non-fungible token pricing driven by cryptocurrencies?," Finance Research Letters, Elsevier, vol. 44(C).
    6. Jagger Bellagarda & Adnan M. Abu-Mahfouz, 2022. "Connect2NFT: A Web-Based, Blockchain Enabled NFT Application with the Aim of Reducing Fraud and Ensuring Authenticated Social, Non-Human Verified Digital Identity," Mathematics, MDPI, vol. 10(21), pages 1-25, October.
    7. Christian Pinto-Gutiérrez & Sandra Gaitán & Diego Jaramillo & Simón Velasquez, 2022. "The NFT Hype: What Draws Attention to Non-Fungible Tokens?," Mathematics, MDPI, vol. 10(3), pages 1-13, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Umar, Zaghum & Usman, Muhammad & Choi, Sun-Yong & Rice, John, 2023. "Diversification benefits of NFTs for conventional asset investors: Evidence from CoVaR with higher moments and optimal hedge ratios," Research in International Business and Finance, Elsevier, vol. 65(C).
    2. Choi, Jaeseo, 2024. "A Study on the Applicability of NFT in the Entertainment Industry: Application of the Means-end Chain analysis and Laddering," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302456, International Telecommunications Society (ITS).
    3. Zhang, Luyao & Sun, Yutong & Quan, Yutong & Cao, Jiaxun & Tong, Xin, 2023. "On the Mechanics of NFT Valuation: AI Ethics and Social Media," OSF Preprints qwpdx, Center for Open Science.
    4. Simona Andreea Apostu & Mirela Panait & Làszló Vasa & Constanta Mihaescu & Zbyslaw Dobrowolski, 2022. "NFTs and Cryptocurrencies—The Metamorphosis of the Economy under the Sign of Blockchain: A Time Series Approach," Mathematics, MDPI, vol. 10(17), pages 1-13, September.
    5. Proelss, Juliane & Sévigny, Stéphane & Schweizer, Denis, 2023. "GameFi: The perfect symbiosis of blockchain, tokens, DeFi, and NFTs?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    6. Horky, Florian & Rachel, Carolina & Fidrmuc, Jarko, 2022. "Price determinants of non-fungible tokens in the digital art market," Finance Research Letters, Elsevier, vol. 48(C).
    7. Wesley Joon-Wie Tann & Akhil Vuputuri & Ee-Chien Chang, 2022. "Projecting Non-Fungible Token (NFT) Collections: A Contextual Generative Approach," Papers 2210.15493, arXiv.org, revised Feb 2023.
    8. Zhang, Wenting & Liu, Tiantian & Zhang, Yulian & Hamori, Shigeyuki, 2024. "Can NFTs hedge the risk of traditional assets after the COVID-19 pandemic?," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    9. Qiao, Xingzhi & Zhu, Huiming & Tang, Yiding & Peng, Cheng, 2023. "Time-frequency extreme risk spillover network of cryptocurrency coins, DeFi tokens and NFTs," Finance Research Letters, Elsevier, vol. 51(C).
    10. Lin, Min-Bin & Wang, Bingling & Bocart, Fabian Y.R.P. & Hafner, Christian M. & Härdle, Wolfgang K., 2022. "DAI Digital Art Index : a robust price index for heterogeneous digital assets," LIDAM Discussion Papers ISBA 2022036, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    11. Ghosh, Bikramaditya & Bouri, Elie & Wee, Jung Bum & Zulfiqar, Noshaba, 2023. "Return and volatility properties: Stylized facts from the universe of cryptocurrencies and NFTs," Research in International Business and Finance, Elsevier, vol. 65(C).
    12. Bao, Te & Ma, Mengzhong & Wen, Yonggang, 2023. "Herding in the non-fungible token (NFT) market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    13. Urom, Christian & Ndubuisi, Gideon & Guesmi, Khaled, 2022. "Dynamic dependence and predictability between volume and return of Non-Fungible Tokens (NFTs): The roles of market factors and geopolitical risks," Finance Research Letters, Elsevier, vol. 50(C).
    14. Chowdhury, Mohammad Ashraful Ferdous & Abdullah, Mohammad & Alam, Masud & Abedin, Mohammad Zoynul & Shi, Baofeng, 2023. "NFTs, DeFi, and other assets efficiency and volatility dynamics: An asymmetric multifractality analysis," International Review of Financial Analysis, Elsevier, vol. 87(C).
    15. Fakhfekh, Mohamed & Bejaoui, Azza & Bariviera, Aurelio F. & Jeribi, Ahmed, 2024. "Dependence structure between NFT, DeFi and cryptocurrencies in turbulent times: An Archimax copula approach," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    16. Nakavachara, Voraprapa & Saengchote, Kanis, 2022. "Does unit of account affect willingness to pay? Evidence from metaverse LAND transactions✰," Finance Research Letters, Elsevier, vol. 49(C).
    17. Jinlu Shen & Xiangyu Zhou & Wei Wu & Liang Wang & Zhenying Chen, 2023. "Worldwide Overview and Country Differences in Metaverse Research: A Bibliometric Analysis," Sustainability, MDPI, vol. 15(4), pages 1-25, February.
    18. Urom, C. & Ndubuisi, Gideon & Guesmi, K., 2022. "Quantile return and volatility connectedness among Non-Fungible Tokens (NFTs) and (un)conventional asset," MERIT Working Papers 2022-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Urom, Christian & Ndubuisi, Gideon & Guesmi, Khaled, 2024. "Global macroeconomic factors and the connectedness among NFTs and (un)conventional assets," Research in International Business and Finance, Elsevier, vol. 71(C).
    20. Wang, Jying-Nan & Lee, Yen-Hsien & Liu, Hung-Chun & Hsu, Yuan-Teng, 2023. "Dissecting returns of non-fungible tokens (NFTs): Evidence from CryptoPunks," The North American Journal of Economics and Finance, Elsevier, vol. 65(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jftint:v:15:y:2023:i:6:p:189-:d:1154615. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.