While the idea of an entire online existence in the metaverse is exciting, NFTs also have major opportunities to provide utility and augment the physical world. Brands have already started integrating NFT technology into physical products as a new and innovative way to set themselves apart from the competition and attract new customers.
This article will examine “phygital” use cases and offer advice for excelling at this multi-channel strategy.
Phygital products or physical asset-based NFTs are physical assets with digital qualities that have been embedded in digital files, metadata, and smart contracts encoded into an NFT. Such products are exclusively identifiable objects whose ownership, identity, and transferability are written as smart contracts on the blockchain.
Such products could be linked to their digital twin assets as an image or a 3D model, thereby making them up-and-coming tools that can be integrated into the emerging Metaverse’s real and virtual reality worlds. As the NFT and Metaverse worlds evolve, businesses will do well to get ahead and take full advantage of the benefits associated with phygital assets.
The following are five examples of how companies can integrate NFTs into physical products or processes:
Currently, NFTs are primarily used for capturing and claiming ownership of digital assets such as collectibles, tweets, artwork, songs, and videos. Since NFTs contain codes carrying a unique set of information, companies can use them to tokenize documents like licenses, academic certificates such as degrees and medical records, or birth and death certificates. Real estate firms are already debating having NFTs verify physical assets.
Using NFTs to digitally protect and store education, medical and personal details will give institutions more control over the data and prevent identity theft. Concerned institutions can offer the certification and identity over the blockchain as NFTs, meaning they can be traced back to the original owner. The same concept could be applied to passports, driver’s licenses, and visas to avoid forgeries.
This is one the most common use of blockchain technology – to augment enterprises’ marketing and advertising e The explosion of digitization resulting from the proliferation of NFTs brought the idea of ownership of digital items, with the most intriguing part being the idea of recurring royalties.
It’s now possible for companies to explore the concept of licensed physical goods to hold value in their digital and physical forms and for companies to balance their focus on implementing strategies that bring revenue and royalties to both. Since virtual products are currently getting all the hype, companies can create exclusive physical products that give customers the internal satisfaction caused by owning select digital products so they can always come back for more.
Companies can have buyers buy a physical product and its NFT version, the same way Nike does with its Cryptokicks. Customers are given an NFT version of the sneakers they buy. The smart contract mechanism associated with NFTs can allow creators to benefit from future sales or claim a percentage of any future sales.
While it’s still in its early stages, Decentralized Finance (DeFi) has harnessed the power of blockchain technology to disrupt the way people think about money. As DeFi connects lenders and borrowers directly and eliminates banks as intermediaries, the interconnection with NFTs as a suitable instrument for facilitating DeFi is now a reality.
Experts are already working to overcome inherent challenges to streamline the way Fintech companies can associate with DeFi. DeFi companies can offer NFT owners opportunities to use their digital land, art pieces, or tokenized real estate as collateral for borrowing money.
Fintech companies can also employ NFTs for other complex financial products like bonds, insurance, etc., such as having insurance contracts represented as NFTs that can be traded on a secondary market. Companies can explore the concept of DeFi-NFT combination to facilitate fractional ownership, so investors can own portions of NFTs and employ them in DeFi pursuits.
NFTs enable manufacturers to give their products a unique digital identity via a form of serialization. The concept works similarly to any other form of serialization, save that the information is stored in the blockchain, the world’s safest database so far.
NFTs are already being used as keys to online gated communities giving members a wide array of virtual experiences and privileges. With fake goods being the bane of all businesses, manufacturers of high-end luxury goods and highly sought-after items can use NFTs to register their products’ serial numbers to retain their brands’ success and reputation. Tokenized serial numbers for manufactured goods can bring endless new opportunities by eliminating the possibility of counterfeiting luxury products and creating a new level of connection between consumers and products.
The manufacture of limited edition products is a strategy many companies use to develop a sense of urgency and exclusivity among their audience. Customers who trust the manufacturer will rush to buy them because they fear the products will run out and have the potential to sell them more expensively in the secondary market. Companies can release limited edition products as physical NFTs to benefit themselves and their customers. The potential for a high-resale value helps the customer and the manufacturer in terms of royalty value every time the product exchanges hands. The scarcity of the limited-time product becomes the guarantee for more future resale.
Binding physical products or processes with NFTs gives them a new power of purpose. Apart from multiplying the value of the NFT, they can help a company attract a diverse audience and more revenue streams and build its brand presence.