Non Fungible Tokens (NFTs) are making sensations in the financial industry. With their unique characteristics and numerous utilities, NFTs are creating a wide shift from traditional financial systems. Amidst the rising popularity of NFTs, another add-on to the system known as the Physical NFT is marking a new milestone in the NFT ecosystem. Widening the scope of utility from digital arts, the NFT concept now can be applied to physical assets as well.
Table of Content
- What is Physical NFT?
- Benefits of Physical NFTs
- How Does a Physical NFT Work?
- How to Link Physical Assets with NFTs?
What is Physical NFT?
Though NFTs are mostly associated with digital arts, they also open the opportunity to trade virtual representations of physical assets such as sports collectibles, antiques, and consumer products. These are represented as physical NFTs.
Physical NFTs are digital tokens linked to physical assets, that offer digital ownership status for physically owned assets. Similar to other NFTs, physical NFTs can be sold and redeemed against a physical asset.
Benefits of Physical NFT
Physical NFTs enhance the utility of Non-Fungible Tokens, from selling digital arts to consumer goods, antiques, and many other physical assets.
1. Enhances Personalized Experience
NFT users are given access to a variety of virtual experiences, exclusive information, and other unique privileges. Similarly, physical NFTs also provide access to online communities and virtual experiences, but their value is solely based on the real world. NFTs can be used for event ticketing, changing the in-person experience.
2. Improved Transparency
Buying a second-hand product may sometimes be challenging, as the information on the history and market value of the product will be less in most cases. Physical NFTs are devoid of these risks, users get every information associated with the product, including the first owner, current owner, market value, etc. A unique QR code is used to verify the physical object. In addition, Physical NFTs are linked to digital arts, adding a sense of legitimacy.
3. Prevent The Selling of Counterfeit Goods
Physical NFTs have the ability to prove their authenticity, preventing the chances of selling counterfeit goods. It offers an additional defense mechanism that stops consumers from buying fake products, a QR code, and NFC technology.
By utilizing the QR code available which is linked to the serial number of an NFT, users can track its price history, and verify the authenticity of the product. Since the price data and other history are stored in the blockchain, they can’t be altered or tampered with, the data can be trusted.
4. Revenue-Generating Asset
Physical NFTs can be used to generate revenue by monetizing customer engagement. They can create and sell these goods on the NFT platforms.
How Does a Physical NFT Work?
The physical NFT has two parts: the physical asset and the digital token. The physical assets are linked to a unique identifier, which can be a QR Code or an NFC Tag. The digital token is stored on the blockchain, comprising all the information of the assets including ownership details, price history, and other relevant information.
Whenever we purchase or sell a physical asset, their corresponding digital token will get modified, changing the ownership details and price, etc. This enables owners to track their assets easily. Physical NFTs also help to manage the supply chain. It acts as a bridge between the digital and physical realms.
How to Link Physical Assets with NFT?
Linking physical assets with NFT is safe and easy, many industry firms are using this technique to improve their business. The below steps explain how to convert your physical asset into a physical NFT.
Step 1: Choose a valuable and unique tangible product. A unique product gets more value when it is sold.
Step 2: Create a digital replica of the tangible product in the form of an image, 3D model, or video. This digital replica is the NFT.
Step 3: Mint the NFT on the blockchain. The NFTs can be minted on any exchanges such as Open Sea, Rarible, and Nifty Gateway.
Step 4: Add the metadata of the NFT to gain notice, including the title, image, and description of the product. The information is stored on the blockchain, helping the product to gain traction during a sale.
Step 5: Add ownership and authenticity certificate. It helps verify the product, whether it is genuine and related to the NFT, increasing the value of the physical asset.
Step 6: Publish the NFT for sale. The sale can be offered privately or in any marketplace. Provide information like the ownership, price history, verification details, and condition of the product.
Final Thoughts
Physical NFTs are creating a new landscape for decentralized finance platforms. By adopting Web3 and blockchain technology physical NFTs bridge the gap between physical and digital realms. The digital identity of the physical asset gives the asset a unique ownership and authenticity. With physical NFT the utility of NFT platforms widens, and more can be expected in the coming future.