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.
Among them, Phygital emerges as a new trend offering a new pathway to NFT utility by merging physical with digital using the blockchain. Phygital NFTs are most likely to be mass adopted in 2023.
From AR metaverse shoes, jackets, and hoodies, to tokenized real estate property, this type of NFT combines the IRL experiences with digital, opening new possibilities for business and transactions.
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 are phygital NFTs, why they are so popular, how they will revolutionize the traditional industry, and what is the future of these collectibles.
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 when people were limited from buying basic necessities. Everything shifted online from grocery stores to shopping brands. 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. For example, buying a shoe for an avatar in the metaverse and also getting one in the real world for yourself.
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 said to be the latest trends of 2023 because it has 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 buy them the same way you buy any other NFT except if some website has special requirements. Make sure to read the terms and conditions before minting the asset, do your own research if it’s a new brand, and always see if the brand ships to your country. The following things are usually needed to purchase these collectibles:
- Your crypto wallet address
- Debit/Credit card for payment (if required)
- Personal information
- 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 Phygital NFTs to receive benefits is quite easy. Every project has different ways, you can follow the instructions given but usually, it involves scanning a QR code or the NFC tag on the real product that redirects owners to the website where they can claim it 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 are most likely to 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?
