Important points:
- Phygital NFT is a portmanteau term for physical and digital utilizing blockchain, metadata, and a unique tokenID
- 2023 is the year of Phygital experiences that add value to both realms together
- Phygital NFTs are most likely to go mainstream than PFP avatars this year
In 2022, the world saw rapid adoption of non-fungible tokens across various industries. According to DappRadar, $24.7 billion worth of organic trading volume took place in the NFT market.
Phygital NFTs are a new trend that merge physical items with digital certificates of authenticity using blockchain technology. It may become widely adopted in 2023 by traditional brands and companies.
From AR-enhanced clothing to tokenized real estate property, combining IRL experiences with digital assets for new business opportunities.
Some of the prominent examples of phygital NFTs include Nike’s CryptoKicks iRL, Azuki Golden Skateboard, Tiffany & Co. CryptoPunk pendants, and Prada’s Capsule Collection.
In fact, Nike ranks the highest-earning fashion brand in NFT sales ($184.31M) in 2022, based on a Dune report.
In this article, we will deeply explain what phygital NFTs are and how they work, as well as the potential implications and benefits of this technology.
What is the meaning of “Phygital”?
Phygital is a term borrowed from two words “physical” and “digital” combined together. An Australian media consulting agency “Momentum” was the first to coin this word in 2013 (source: CNBC).
The background of this term was mostly developed during the COVID-19 lockdown as it had a significant impact on the way people shopped for goods and services. With physical stores closed or operating at limited capacity, consumers were forced to shift their buying shenanigans online.
This resulted in a surge of online shopping, especially for items that were once only available in brick-and-mortar stores. Consumers could buy things online and get them delivered as physical items.
The concept of phygital is constructed because it utilizes the properties of both components. The ability to own physical goods while also having a secure and verifiable digital certificate that proves the item’s authenticity. This technology ensures consumers can safely purchase items online.
One of the complaints that are quite common among non-NFT individuals is the lack of physical products. They believe these assets need to have real-world uses. The phygital vision fulfills the demands by combining both elements of the realms.
As technology and its consumers evolve, NFTs are transforming into new forms too. The phygital aspect enhances experiences and promotes mass adoption.
From a common man’s point of view, this concept might look complex or maybe they won’t even know. However, industries and companies can understand its idea and utilize it in their models.
What are Phygital NFTs?
Phygital NFTs are the type of NFTs that utilize the two main realms for the phygital experience. Over the years, these non-fungible tokens have opened a new possibility. They combine blockchain technology, metadata, and smart contracts to sell or promote something effectively.
Many examples and use cases exist that have brought this trend among collectors and NFT enthusiasts. Holders can display ownership over items while also owning them in person for the experience.
Furthermore, Phygital NFTs contribute to the decentralized economy that Web3 is built upon and is developing into. Developers, artists, and creators can explore this new sector to target more users.
Phygital NFTs Examples:
- NFT tickets to concerts are the perfect example. Last year, Coachella gave away 10 virtual tickets called “Coachella Keys Collection.” The individuals who bought these NFTs got a lifetime pass benefit for the festival along with the real tickets.
- Avatar wearables are also a good instance. Nike, Prada, and other fashion brands have released virtual hoodies, shoes, and wearables. Buyers can claim the physical products from their shops as NFT counterparts.
- Artist Damien Hirst utilizes this technology for “The Currency.” He handpainted 100 pieces which buyers could purchase and also get as a non-fungible token.
- Timex collaborated with Bored Ape Yacht Club to give physical watches as a benefit of owning a Time and BAYC NFT.
- RTFKT partnered with FEWOCIOUS to drop exclusive metaverse shoes with artwork designed by the artist along with a physical claim.
- BlockBar stores physical wine bottles connected with NFTs. The owners can buy, sell, and trade them as NFTs on the marketplace. If the holder burns the digital version, they get the real one sent to their address.
Advantages of Phygital NFTs
Phygital NFTs are being massively developed into a proper model by companies and brands across the world. These assets have open doorways to unreachable places. There’s no doubt that phygital NFTs will become an important addition in the near future. Here are the reasons why:
1. Digital and Physical Asset Ownership
Phygital NFTs not only provide ownership over digital but also physical. When someone buys a non-fungible token, the data is permanently stored on the blockchain public ledger. If you redeem the physical, there’s still proof that you own it.
2. Scarcity and Authenticity
A crucial benefit of owning these collectibles is digital scarcity and authenticity. Only one digital art or asset of a unique combination of traits can exist and is fed on the blockchain. This means the physical items will be scarce and have proof of authenticity. If a shoe has an NFC tag, the buyer can simply scan it to see whether it’s legit or not.
This aspect broadens the value of the asset and lets it remain in demand for many years.
3. Augmented Reality
AR features have been highly popularized thanks to Snapchat and other web apps. Now, Phygital NFTs are taking another step toward bringing value to augmented reality. These types of assets can help generate revenue from real estate lands using AR technology.
Marketplaces can help buyers view digital items in physical locations to make the right decisions. AR games are most likely to adopt this technology for better experiences as well.
4. Best in-person experience
Phygital NFTs can enhance the in-person experience by combining both realms. Buying something becomes more interactive and has less of a chance of fraud. People can get NFTs for physical events and keep them forever in the blockchain as a memory. Similarly, they can buy exclusive favorite t-shirts as an NFT for both avatars and themselves.
Disadvantages of Phygital NFTs
The concept of Phygital NFTs is quite new and might take time to reach a bigger audience. It depends on the brands who use these collectibles with their products. There’s also the risk of the NFT losing demand or the physical piece having no resale value.
Many people show concerns about hacks and scams in the space that might prevent people from investing their money.
Top 3 Marketplaces to buy Phygital NFTs
Many trading platforms are listing these collectibles but they aren’t as common as PFP avatars. But here’s a list of places where you can buy them:
- OpenSea: It’s an Ethereum-based world’s largest and oldest trading platform where most non-fungible tokens are stored, including phygital.
- Imagineria: Based on the Solana blockchain, this website offers different products to buy as NFTs and also physically.
- Clubrare: It’s a community-led decentralized commerce ecosystem solely built for metaverse items and collectibles attached to physical products.
Marketplaces rarely mint any of these because mostly you can buy them from the producers directly. However, you can purchase collectibles from secondary markets as well such as OpenSea, Magic Eden, Rarible, etc.
How to buy Phygital NFTs?
You can purchase phygital NFTs in the same manner as any other NFT. Before minting your asset, be sure to carefully read the terms and conditions, conduct your own research if you are unfamiliar with the brand, and confirm that the brand ships to your country.
To purchase these collectibles, you will typically need the following information:
- Your crypto wallet address
- Payment information, such as a debit or credit card (if necessary)
- Personal information
- Your shipping address
Beware: Do not click on any links other than the ones posted by official accounts to avoid scams.
How to redeem Phygital NFTs?
Redeeming or claiming benefits from Phygital NFTs is generally easy. Each project may have different steps for claiming the benefits, but usually, it involves scanning a QR code or the NFC tag on the physical product, which redirects you to a website where you can claim the NFT by connecting your crypto wallet.
Another way is by burning the digital version for a real one. The owners mint the collectibles and then burn them on the official website, after that, the website ships the physical counterpart to your shipping address.
Conclusion:
Phygital NFTs bridge two separate realms in a more advanced way by utilizing blockchain and a decentralized ecosystem, giving individuals the freedom to explore different possibilities without being limited by a central authority.
The future of these collectibles is bright as more traditional brands and companies join the Web3 bandwagon.
Phygital NFTs may trend in 2023 as people realize their utility. An asset that gives you the best digital and physical experiences, why would anyone want to miss out on this?
Q/A
Q1. How to create phygital NFTs?
A. Phygital NFTs are created by attaching a physical asset to a unique NFT via various technologies like QR codes or blockchain-based solutions. The NFT is mainly a medium to hold a digital certificate of authenticity stored and transferred on a blockchain.
Q2. What are the benefits of phygital NFTs?
A. Phygital NFTs enable users to hold assets physically and digitally in an authentic way. Another would be its ability to resell. The verified NFTs are stored on the blockchain, buyers can trust buying these collectibles from the secondary market without any problems.
Q5. What type of physical items can be linked to a phygital NFT?
A. Any physical item can be linked with Phygital NFTs as long as it is authentic and is uniquely identified with a certificate of digital ownership on the blockchain.
Q3. How are phygital NFTs different from regular NFTs?
A. Regular NFTs only exist in a digital form specifically such as art or virtual land, while Phygital ones give owners the ability to hold a physical item with its counterpart as NFT.
Q4. Can you buy, sell, and trade phygital NFTs like other NFTs?
A. Yes, Phygital NFTs have the same value as any collectibles. You can easily trade, buy, and sell these types of NFTs on any trading platform or marketplace. In fact, you can transfer both physical and digital assets together.
Q5. How is the authenticity of a phygital NFT verified?
A. Each Phygital NFT contains a certificate of ownership stored on the blockchain that defines its authenticity. Anyone can access and verify this certificate to check whether it’s real or not via the public ledger.
Q6. Can you store and display phygital NFTs like physical collectibles?
A. Yes, you can showcase these types of NFTs the same way as any other physical collectible. The only difference is you have a certificate of authenticity with your NFT and you can also display it digitally on different platforms.
Q7. Are phygital NFTs built on a specific blockchain?
A. No, users can build, mint, and trade Phygital NFTs on any blockchain such as Ethereum, Polygon, TRON, etc.
Q8. What is the future of phygital NFTs?
A. Although the future is uncertain, phygital NFTs have the potential to blow up. Many collectors see them as an investment opportunity as blockchain becomes more common in the mass culture. We can also look forward to how these collectibles evolve and are adopted around the world.
