NFTs, or non-fungible tokens, arrived with a bang and have strengthened their dominance over the crypto and decentralized ecosystem. All the NFTs represent unique goods, and you can buy them in cryptocurrency. Generally used for representing ownership of digital assets, NFTs have also found applications in representing physical assets. This is where the concerns regarding Phygital NFTs have been troubling many experts recently.
But, could NFTs help in bridging the gap between physical and digital? NFTs guarantee sole ownership of digital assets in the form of a token on a blockchain network. The value of the NFT can fluctuate gradually according to the supply and demand trends. Are Phygitals any different? The following discussion helps you learn about Phygital NFT and its value for the broader NFT ecosystem.
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Background of Phygital
You can find a better understanding of “What is a Phygital NFT?” by taking a look at their background. The revolutionary changes in consumer behavior have induced massive transformations in the way they shop for products and services. Gradual advancements in technology have enabled the digitalization of almost every activity, including grocery shopping, watching the cinema and collecting your favorite pieces of art.
The rapid growth of the digital age is an obvious highlight of the hype around Phygital NFT projects and their future. The term ‘Phygital’ is used quite frequently, albeit without a comprehensive understanding of the concept or its implications. From the perspective of an outsider to technology, Phygital appears as a combination of physical and digital experiences. If you look closely, that has been happening already. For example, the metaverse presents a vivid interpretation of how Phygital would be in the real world.
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Meaning of Phygital
The background of Phygital might offer a simple definition of the term. Phygital basically defines any product, service or experience which helps in the merger of digital technology with different physical elements. You can understand the value of a Phygital NFT marketplace for the future by reflecting on practical examples of the ‘Phygital’ phenomenon. Some of the examples include app-based grocery store pick-ups, QR code restaurant menus and targeted ads on Facebook. Pokemon Go is also another top example to showcase the effectiveness of ‘Phygital’ in the real world. In the game, players could search for Pokemon characters at different real locations through augmented reality. On the other hand, ‘Phygital’ is not restricted to these applications only.
Businesses can also serve another significant example of using “Phygital” to their advantage in the use of digital push notifications. Digital push notifications can help in promoting physical stores by using geolocation to invite customers with a coupon when they are in proximity to the store. Similarly, physical stores are not the only entities that rely on “Phygital” experiences. The physical and digital experiences started blending seamlessly in VR tours and art showcases in extended reality or XR.
What are Phygital NFTs?
The popularity of “Phygital” has been growing substantially in recent years and has taken up an exciting form with NFTs. The rising popularity of Phygital NFTs has become one of the hottest trends in the new decentralized technology landscape. Phygital NFT has come up as one of the most significant Phygital experiences for users. Such types of non-fungible tokens have come up with a broad range of use cases that can help collectors and investors find new approaches for gaining ownership of unique items. The Phygital NFT could also help investors and collectors expand their digital collectibles treasury or access new and engaging experiences.
You can define Phygital non-fungible tokens as Phygital assets, which have two distinct parts. One of the parts of a Phygital NFT refers to digital assets in the form of metadata, such as smart contracts embedded in an NFT. The other part of the Phygital NFT is the actual physical asset, such as the tickets, property or 3D models. The term Phygital serves as a credible boost for the growth of NFTs by expanding their representation and use cases in the real world. For example, property ownership disputes can find solutions through authentic proof of property ownership through NFTs.
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Importance of Phygital NFTs
The significance of Phygital NFT is an obvious highlight in any introduction to Phygital experiences. How can a Phygital NFT become an important digital asset in the future? You can find your answer in the following reasons to choose these new types of NFTs.
Proof of Ownership
The foremost highlight of NFTs refers to the digital scarcity they can create, unlike any other asset. Digital art has been going through a period of renaissance, particularly for the newly discovered scarcity in the field. However, the growth of a Phygital NFT marketplace in recent times has been driven more by authenticity rather than scarcity. For example, diamond is obviously a scarce resource. However, it is valuable only when it offers proof of authenticity, such as a certificate from professionals. On the other hand, you can look for better and more authentic proof, such as the diamond featured in a major motion picture.
You can notice viable prospects for the future of Phygital experiences in the domain of NFTs. First of all, you can notice that the authenticity of an asset determines the status conferred on its owner. With a deeper and interesting history, an asset could have an aura of authenticity and promising improvement in value. NFTs could provide the best proof of ownership, which can play a crucial role in adding value to physical objects.
One of the examples to showcase the uses of Phygital NFT projects for proving authenticity would refer to wine. Imagine storing the essential information about a wine’s ownership and provenance on a blockchain. As a result, you wouldn’t have to face the need for authentication alongside reducing the risk of fraud by considerable margins. Non-fungible tokens can enhance the sense of authenticity associated with the wine by offering better proof of its provenance. As a result, Phygital NFT could serve significant improvements in the perceived value of the wine. The example of wine showcases the potential of blockchain to exert a significant influence exceeding the mere modifications in source code. The Phygital NFT trend could change the conventional precedents in determining the value of real and tangible assets.
More Augmented Reality in NFTs
The second important highlight in Phygital non-fungible tokens would point to the possibilities for using AR technology. Augmented reality has paved the path for the unification of physical and digital experiences in various interesting new ways. The hunt for Pokemon in real-world locations was only the beginning. Non-fungible tokens and augmented reality can come together for some exclusive applications. NFTs can enable ownership of the revenue-generating virtual real estate and assets in different AR worlds and games. The example of AR billboards showcases the effective use of Phygital NFT for bridging the gap between physical and digital experiences. Virtual ad space sales and purchases in the form of NFTs would serve promising value in locations with maximum foot traffic.
However, the biggest benefit of a Phygital NFT marketplace with AR-powered NFTs would be visible in the gaming sector. The gaming industry has better chances of landing significant benefits with the blend of AR and NFTs. Some NFT games, such as ZED RUN, use augmented reality to enhance experiences for players. ZED RUN features an AR app through which users can summon racehorses that would be visible in front of them in augmented reality. On the other hand, another game titled Digi Dragons is modeled on a turn-based RPG-style game with players battling each other. The mobile AR app could provide a unique gaming experience to the players. You can also expect many other creative applications with Phygital NFTs in the future. For example, an NFT variant of Pokemon Go could be a possibility on the table for a new breed of NFTs.
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Better In-person Experiences
The introduction of Phygital NFT projects could ensure the proper balance between both worlds, thereby preventing the need for competition. In the case of an NFT, the core element, i.e., the tokenID, is digital in nature and stored on a blockchain. On the other hand, the value obtained for the NFT, i.e., royalty payments or transaction fees, is in the real world. The example of event ticketing can showcase the use of NFTs for bridging physical and digital experiences without any dominance. Non-fungible tickets can help in removing the problem of fraud and ticket scalping while also serving programmable benefits. For example, access to special merchandise of a rock band with NFT tickets to the band’s concert. Now, users can monetize or trade the benefits or perks they receive with an NFT ticket. As a result, the ticket booking industry can achieve overall improvements in efficiency.
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Phygital NFT Examples
The most important thing you need to understand about a Phygital NFT marketplace would refer to the examples. Where do you find the instances of Phygital experiences in the world of NFTs? Here are some of the notable examples of Phygital non-fungible token solutions.
Physical Versions of Digital Assets or Collectibles
The physical versions of digital assets and collectibles basically involve NFTs associated directly with the tangible objects open for purchase. One of the first sectors where such applications of a Phygital NFT can gain momentum is a fine art. The physical NFTs representing fine art could be traded just like the real artwork. On the other hand, NFT artwork can also be redeemed for obtaining physical art in the future. The effectiveness of Phygital NFT projects has helped many artists achieve success in selling their artwork through NFTs. Artists can get broader exposure for their work while also ensuring safeguards against counterfeiting, fraud or plagiarism. The association of physical artwork with NFTs can take away the intermediaries, and artists could interact directly with the buyers. Another important highlight in physical versions of NFTs or collectibles would refer to the generation of royalties with each NFT sale.
Metaverse Fashion and Merchandise
Another important example among Phygital non-fungible tokens would refer to metaverse fashion and merchandise. Many popular fashion brands, such as Prada, have entered the world of NFTs by emphasizing revised and improved customer experiences. For example, Nike has come up with their new virtual sneaker collection in the form of NFTs. At the same time, many brands are also experimenting with virtual fashion houses which can offer apparel for use in the metaverse.
The power of non-fungible tokens enables the conversion of almost any physical asset such as real estate, multimedia files, stocks and artwork into NFTs. You can think of NFTs as the unique proof of ownership for the physical asset in concern.
The overview of Phygital NFTs delivers a clear impression of how they have transformed the conventional notions regarding the blend of physical and digital experiences. No matter how advanced you may think of technology, you would still have to take out your mobile phone to make a digital payment. Imagine if you have an NFT, which you can access across different platforms and use to represent a plot of inherited land. Now, the NFT would store digital data about your physical property, thereby qualifying as a Phygital asset. Learn more about the possibilities of using Phygital in real-world use cases now.
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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!