Understanding Phygital NFTs – NFT Plazas

by James · December 22, 2022

The Non-Fungible Token (NFT) has etched its name among the most successful projects backed by blockchain technology. Its success can largely be credited to the relentless content creators who stop at nothing to quench their thirst for notable NFTs. Since the introduction of NFT, several upgrades and modifications have been introduced by these creators to add value to the NFT landscape. One of these new concepts comes in the form of the much acclaimed Phygital.

Table of Contents

What is Phygital?

Phygital refers to physical or real objects backed by digital tokens (NFTs) or NFTs backed by real or physical assets. “Phygital” is a compound word derived from “physical and digital” to reflect and establish a synergy between the physical world and the decentralized space. Furthermore, Phygital NFTs or Phygital assets contain dual features to define a new level of NFT uniqueness.

Fygital concepts can be used in various capacities, but in the decentralized space it paves the way for a revolutionized NFT infrastructure. The tokenization of a physical commodity acts as a backup for a proof of ownership recorded on an immutable public ledger (blockchain). In addition, Phygital aims to bring decentralized experiences to the physical world, so that NFTs can now be backed with real-world assets, adding to their rarity points, which define their uniqueness and values.

How Phygital NFT works

As explained earlier, a Phygital NFT is double-sided. In the digital space, it has a digital format imprinted on a blockchain network via a smart contract. While in the physical world, it has a corresponding physical resource. Both elements of the heterogeneous realms are connected by a unique identifier, such as a QR code code or embedded microchip.

For example, a creator can create a wristwatch NFT on a blockchain network and have a corresponding physical watch connected to the NFT. In such a case, the barcode or QR code of the physical item can be included in the properties of the NFT to bridge the two assets. Quite a few reputable brands have NFTs backed by real assets or tools, including VeeFriends, AzukiFranck Muller, RTFKT, GAP, Adidas and more.

Types of phygital NFTs

Phygital NFTs can exist in various forms, including art, collectibles, designer gear, fashion accessories, and clothing, with the latter being the most popular. More examples of Phygital NFTs in the fashion sector include:

Wrist watch

Just as an elegant movement will beautify the wearer’s wrist in the physical world, it will also function as a fashion accessory in the decentralized space. This has led to renowned brands such as Rolex, Franck Muller, Bulgari, The WatchBox, Breitling and more making their debut in this ecosystem. At the moment, Rolex is still in the research phase, while Frank Muller, Bulgari and The WatchBox have all made significant strides in this exciting new trend. For most people, buying an NFT watch comes with a physical watch, but WatchBox works a little differently.

As such, WatchBox has equivalent physical watches for its NFTs, but the physical items remain held in a high-security vault. Meanwhile, for Breitling, owning any of their watches produced after 2013 will qualify holders for a retrospective multi-tool NFT. Essentially, the accompanying NFT will also serve as a decentralized proof of ownership of each part.

Furthermore, Italian watchmaker Panerai also debuted into the landscape of wristwatch Phygital NFTs with its “Radiomir Eilean Experience Edition.” Resulting in a collection of 50 glamorous wristwatches in collaboration with a respective NFT. These NFTs then include additional utilities, including a special Mediterranean cruise along Italy’s Amalfi Coast in June 2022.

Clothes

Another Phygital NFT in the decentralized space comes in the form of apparel that includes caps, hoodies, sweatshirts, T-shirts, and more.

In December 2021, Adidas Originals debuted in the Metaverse with 30,000 NFTs, which sold out within minutes of the public auction. Holders of these NFTs are entitled to 4 Adidas physical products, which holders can claim by burning their NFTs.
GAP also partnered with Brandon Sines (designer of the Frank Ape NFT) to launch its flagship GAP Hoodie NFT on the Tezos blockchain. Each of these limited 100 NFTs comes with a physical GAP hoodie.

Sneakers

The humble sneaker represents another wearable Phygital NFT trend in the decentralized space. With Nike owned RTFKT representing a major brand making a mark in Phygital sneakers NFTs. Each “open edition” NFT is paired with a pair of physical sneakers for all holders who purchased the RTFKT NFTs within 6 weeks of launch.

Art Collectible Phygital

Damien Hirst, a British artist, debuted in this landscape with his 10,000 “dot” paintings called “The Currency” which he originally painted in 2016. All of these paintings have corresponding NFTs, which then debuted on the blockchain in 2021. Each the buyer of these NFTs had one year to decide whether to redeem the physical drawing and burn the NFT. Or abandon the physical painting to be destroyed by Damien while buyers hold onto the digital counterpart. When the dust settled, only 5,149 buyers had redeemed their physical paintings.

His second issue of Phygital NFT began on February 12, 2022, with a limited 7000+ collection called “The Empresses”. These NFTs also come with physical paintings that can last up to 3 years for buyers to redeem or stick with the digital piece.

Benefits of Phygital NFTs

Phygital NFTs can mitigate the threat of counterfeit items

Counterfeiters will stop at nothing to imitate reputable brands’ products. The arrival of Phygital NFTs will solve this imbalance since every item can be verified on the blockchain network. For example, it would be difficult for someone to sell a fake GAP hoodie as an NFT or a physical hoodie since it would have a counterparty that remains fully verifiable on a blockchain network. It will also reduce theft of physical collectibles backed by NFTs since criminals will find it difficult to resell them without a legitimate claim.

Phygital NFTs will expand the brand’s customer base

The advent of Phygital NFTs allows more brands to reach more potential customers, especially in the decentralized space. Brands that adopt this concept will gain more customers and reach a wider target group.

Phygital NFTs add more tools to both digital and physical assets.
It also opens up Phygital goods for collaboration with other heterogeneous brands or goods.
Physical assets add more rarity points to the corresponding NFTs.

Conclusion

Phygital NFTs paved the way for additional NFT use cases by extending their usefulness to the physical world. The concept of backing NFTs with physical assets is not limited to the elements highlighted above; it can be expanded to various capacities as brands see fit. Furthermore, brands can also reward their loyal customers with NFTs by embossing corresponding NFTs into their physical products, as done by Givenchy. Givenchy is rewarding its customers with NFTs that will act as a ticket to a membership program in 2023, along with other yet-to-be-revealed tools.

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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.