NFT 2.0 Explained: What It Means and How It’s Different from Original NFT Technology

NFT 2.0 Explained: What It Means and How It’s Different from Original NFT Technology

The Non-Fungible Token or NFT market has long been criticized for its bubble-like nature, and while this is a sad reality, the root cause can be attributed to various factors. Notably, there is a general misconception about the technology being profit-oriented than utility-oriented, coupled with early adopters’ unending desire to get rich quickly.

For instance, the majority of early adopters believe that NFTs have little or limited use cases beyond tokenizing (i.e minting) JPEGs and auctioning them for outrageous amounts, or let’s say that’s what most people are made to believe. Truthfully so, that appears to be the case with the earliest iteration of NFT technology, albeit, this is about to change completely with the advent of NFT 2.0.

Essentially, NFT 2.0 is an upgraded iteration or evolution of NFT technology and as such introduces new updates while embedding more utility into the existing NFT infrastructure. 

However, before we delve deeper into the world of NFT 2.0, it is equally important to familiarize yourself with the initial NFT 1.0 iteration, especially as someone who is completely new to the NFT world. That said, what are the properties of NFT 1.0?

Understanding the Origin of NFT Technology

NFT 1.0, which is the genesis of NFT technology, refers to cryptographic assets stored on a blockchain using unique identification metadata that distinguishes one from another. 

In other words, the first iteration of NFT is more about tokenizing digital assets such that they are made unique and storable on a blockchain network where they become immutable, verifiable, and cryptographically secured. 

In essence, NFT 1.0 paved the way for digital asset ownership while enabling what we now understand to be the creators’ economy. This further backs the common generalization that the genesis NFT iteration is more focused on commercializing tokenized items, therefore, justifying the misconception among early adopters who are perceived to be more profit-oriented.

However, the current hype associated with most NFT projects as well as the general misconception has paved the way for the new NFT 2.0 iteration, which on the other hand, is more utility-driven. That said, let’s figure out what’s special about the new NFT iteration and what it means for the creators’ economy in general.

Understanding NFT 2.0

To begin with, NFT 2.0 is not completely different from NFT 1.0. In fact, the latter cannot operate independently of the former, and to be more precise, NFT 2.0 simply embeds new capabilities into the existing NFT infrastructure. 

Putting the aforementioned into context, while NFT 1.0 enables ownership and commercialization of tokenized digital items, NFT 2.0 extends the possibilities by creating new digital asset markets with advanced utilities (i.e use cases).

Particularly, the latest NFT iteration allows NFT holders to do more with their tokenized assets, which could be anything from unique digital artwork to in-game items, coupons/tickets, music, and essay, among other digital collectibles. 

So what’s different about this iteration? You may ask. Essentially, NFT 2.0 has four major properties including “generativity,” “composability,” “interactivity,” and “experimentalism” that distinguishes it from its predecessor. As each serves unique purposes, let’s look more into these attributes;


This particular attribute makes it possible for collectors to get creative and explore new possibilities by bundling together different assets as one. Mind you, these secondary assets are not limited to other non-fungible tokens, but also, they can be fungible assets such as cryptocurrency. 

In other words, NFT holders can expand the utility of their existing NFT by embedding additional digital assets. This way, unlike in its original state, the NFT item will be able to serve multiple purposes, thereby, creating a bespoke NFT package. 

Let’s put this in a more relatable context by using an artist as a case study. As an artist, your NFT artwork can function as more than just a piece of art. It can serve as a medium for distributing social tokens for instance. For instance, besides selling this artwork for monetary value, people who hold such assets can also gain access to other exclusive benefits.

A prominent example of a platform that makes NFTs better by using composability is KnownOrigin, which is a platform where NFT holders can embed new utility to their existing digital assets.


With composability attributes, the latest NFT iteration allows tokenized digital items to evolve from their original state. However, “dynamism,” which can be otherwise described as interactivity, makes it possible for existing NFTs to self-execute modifications made on them and other NFTs associated with it. 

Essentially, by equipping each NFT with smart contracts, they literally become “smart” and “intelligent” such that they can take input from users as well as other eligible sources. The introduction of smart contracts to existing NFT infrastructure also makes it possible to interlink and modify existing NFTs in the first place.

Also, depending on the input from external sources, the latest NFT iteration enables users to modify their tokenized items from their existing state to suit current needs or purposes, especially when used across different categories of decentralized applications including GameFi projects, Metaverse, IP Patenting, Ticketing, and many more.


Another important property of NFT 2.0 is its ability to create algorithmic randomness into tokenized digital assets. To understand how generativity works in NFT, let’s paint a scenario. 

Let’s assume you have three devices: an iPod that only supports text and music, an iPad that supports video, and a photobook that supports only photographs.

Recall that NFT 2.0 allows you to combine numerous assets (in this case, contents) into a single entity. As a result, an NFT uses algorithmic randomness that is powered by AI to choose which is appropriate for each device when it is sent to or retrieved by that device.

Hence, if you access an NFT with an iPod, for instance, only the audio will play, whereas other devices will play the video, music, and pictures, respectively.


Essentially, the three aforementioned properties make for the experiential property of NFT 2.0 in the sense that they collectively make it possible to capture a genuine user experience. This also implies that beyond the commercialization of a tokenized digital asset, a holder can further explore other use cases for an NFT in their everyday lifestyle. 

For instance, NFT is now widely used in the ticketing industry, enabling holders to enjoy the true definition of exclusivity when attending events physically or virtually. Not only that, NFT is utilized across various industries including entertainment, movie & video distribution, automobile, and many more.

That said, other important properties of NFT 2.0 include co-ownership of NFT items; here, unlike NFT 1.0, which enabled sole ownership, multiple people can come together to acquire a single NFT. This property makes it possible for collectors to share ownership of items as well as sell them in parts.

Ultimately, NFT 2.0 opens up new opportunities and expands the utility of NFTs for individuals and organizations. While each NFT 2.0 feature enables new use cases, their combined potential offers infinite possibilities.

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