Important Tips:
- Phygital NFTs bridge the physical and digital built using metadata and a distinct tokenID
- Nike’s CryptoKicks collection with RTFKT is a good example of these types of NFTs
- These collectibles will become popular in 2023 for bringing authenticity, enhancing in-person experiences, utilizing AR technology, and tokenization of assets.
In 2022, Phygital NFTs were popularized, mainly by fashion brands, to draw people into Web3. This year, this trend is predicted to go mainstream as many companies explore the possibility of combining their physical products with digital items, and also provide utility to consumers.
According to a CryptoPresales.com report, the value of NFT sales leaped by 10% YoY to $21.9 billion in 2022 with the highest percentage recorded in PFP avatar collections but now the market seems to be switching towards phygital NFTs.
What are Phygital NFTs?
For those who don’t know Phygital NFTs are a type of NFT in which physical items can be redeemed for non-fungible tokens through a QR code or NFC tag on the blockchain or vice versa. It is a blend of physical and digital that opens a wide range of possibilities for creators, brands, and companies to experiment their products with.
The best way to explain what phygital NFTs mean is, these types of collectibles are divided into two components. First, the digital component in which the asset is stored on metadata with a unique tokenID using non-fungible technology and smart contracts. The second is the physical component which the owner can hold on to and store in person.
Use case: Nike’s CryptoKick iRL
Nike’s acquired creator studio RTFKT brought the trend of phygital NFTs in with its metaverse shoes. The first collection was RTFKT x Nike Dunk Genesis CryptoKicks in which owners could dress virtual shoes to avatars in the metaverse and also own a pair in the real world. Recently, CryptoKicks iRL was launched on December 9, 2022, where users minted the limited edition of 19,000 NFTs and got physical counterparts delivered by the creator studio through “forging.” These shoes sold out as soon as they were launched, accumulating
The sneakers are produced in four colors: “Blackout,” “Stone,” “Ice,” and “Space Matter”. It combines blockchain technology with “auto-lacing, enhanced lighting, haptic feedback, walk detection, and artificial intelligence algorithms” as mentioned on the website.
4 Reasons why Phygital NFTs are the new trend in 2023
When it comes to predicting whether these collectibles will be successful in 2023, Then, the answer would definitely be yes! Phygital NFTs are the perfect way to achieve mass adoption. Here are the possible reasons why these types of collectibles will succeed in the market this year:
Upgrade Real-world authenticity
On phygital NFTs, the ownership of physical products is recorded on blockchain where it is impossible to manipulate or forge information. This ensures that whatever products the buyer is purchasing are authentic and real.
For example, if someone wants to buy a rare artwork, which has all its information and transaction history stored on the blockchain, they can simply view it, see who owns it, and whether it is the original piece or not.
Enhance in-person experiences
Non-fungible tokens merge the physical and digital worlds together to enhance people’s experiences. The access to Meetings, conferences, concerts, or any other event can be sold as NFTs with individual identities stored on the blockchain forever.
For example, if someone mints a Coachella ticket, they get the original physical print and also have their counterpart NFTs stored on the digital crypto wallet.
Addition to AR technology
When it comes to bridging physical with virtual, Augmented Reality is most likely to adopt Phygital NFTs because of its wide range of utilities. Although many platforms or brands already equip AR in their model, the NFTs will become a new addition.
For example, if a fashion brand is selling clothes, they can simply try out using AR technology and then own the physical product along with the collectible. Many experts are still experimenting in this sector but it is most likely to emerge this year as more companies adopt blockchain technology and non-fungible tokens for their services or products.
Tokenization of assets
Phygital NFTs can store information about the physical product and clearly define the right to ownership to the holder. For example, real estate land files and ownership proofs can be stored using smart contracts and individuals can buy them via cryptocurrency or even fiat currency, then the ownership is legally transferred as NFT along with the IRL land to the buyer.
Conclusion
Following the trends, Prada dropped a Capsule collection featuring physical products with virtual parts, giving their loyal buyers a chance to explore Web3 in simple terms.
Experts believe that in the future, NFTs won’t stand out as they do now, instead, they will be integrated with the existing technologies, Phygital collectibles being the biggest practical example of this.
In 2023, these types of NFTs will definitely rise in popularity, especially in the retail and fashion industry for not only promotional purposes but also for the metaverse.
Read more about Phygital NFTs and collectibles in detailed blog here
