Same World, Better Products: “Phygital Assets” and the NFT Revolution

September 14, 2022



We’ve entered the age of “Web3'', and much like the blockchain technology that drives it, we’re pushing the boundaries of what is possible.

The idea of NFTs (Non-Fungible Tokens) was first introduced by blockchain pioneer, Nick Szabo back in 1996 while he worked on BitGold; one of the earliest attempts at creating a decentralized virtual currency. In recent times, the idea of NFT’s have exploded as it became culturally popular to make money through seemingly thriving cryptocurrencies; the lockdown has been partially attributed to this frenzy. As they have expanded beyond crypto transactions, NFT’s are now being used to create a unique asset class that can offer a new way to conceptualize ownership.

Illustration of an NFT deed

NFT as a digital deed

Before unpacking the idea of a "phygital assets", and how they will change the way we interact with the products around us, let us explore some early markers that led to this simmering boom. It should help better illustrate the behavior people now have in relation to digital ownership and the downstream effects of this shift in mindset.

Fortnite, the incredibly successful game that created an exciting online culture, has a thriving in-game currency called V-bucks. This allows purchase of the latest in-game outfits, wraps, emotes, and other digitally exclusive items that showcase gamer customization during gameplay. This very popular feature, over time, translated into an initial kindling of excitement around owning a digital collectible in the form of what we now know as an NFT. 

Games like Fortnite and Roblox showed us early signs of digital ownership, this allowed this idea to render itself in the real world through the authenticating feature that NFTs have in being digitally unique and virtually impossible to be tampered with. Using specialized NFC (Near Field Communication) chips, we can cryptographically connect this to physical items, leading to the emergence of upgraded, NFT-enabled products. Although the fomo of owning a Bored Ape is real, there is no real-world application to what NFT’s can provide at scale, yet. A transition of human behavior towards NFT’s has evolved to a new asset class that uses both software and hardware encryption to connect the digital to the physical.

NFTs are NOT the images, content and visuals you see, they are THE key digital deed or certificate of ownership to those assets. 

Digital deeds that link the physical and digital world together, as opposed to solely existing in separate spaces, are now a possibility.

Instead of purchasing digital collectibles with in-game currency, real life purchases of physical items that are linked to an NFT can be the new standard of providing secure verification and authenticity to show ownership. This is what we have accomplished in creating a permanent 1:1 coupling between an NFT and a special NFC. 

[Read: 6 Ways NFT-Enabled Products Improve the Buying and Selling Experience]

Illustration of phygital assets: Phygital assets are physical assets that carry a digital footprint. Phygital assets can be created by linking physical assets with NFTs via NFC tags.

NFCs power a Phygital now

A growing list of companies are diving into the possibilities of what a blockchain-powered internet will look like, but we are still quite a ways from mass adoption. What’s now possible is the expanding utility for NFTs outside of the popular generative collections and its connection with the physical world, as opposed being locked away in a digital domain.

This is where the concept of Phygital assets comes in. A phygital asset is defined as a physical item that has a digital counterpart, with the added feature of blockchain-enabled provenance we have a created an incredibly secure and irremovable connection.

Phygital assets create a more immersive, personalized, and valuable experience for customers. It also introduces new concepts around proof of authentication, proof of ownership, proof of possession and proof of certification. Because of the underlying blockchain technology, an immutable ledger allows for anyone to easily verify information on a transaction or an asset in both the digital and physical. The bridge that allows for this connection between a product and its accompanying NFT is a known technology which is Near Field Communication technology or NFC. We use a specialized NFC that serves as an encrypted bridge between and NFT on the blockchain and a physical item.

Our solution is chain-agnostic, this means our solution is not bound to a single blockchain (otherwise known as multi-chain compatible), so we do not rely on any issuing special tokens. With these in mind, imagine the house you're buying has its digital deed embedded into the property itself? Also imagine purchasing a car and instead of signing your name on the title to prove you’re its owner, the rights are integrated with the car and ownership can be simply transferred over to you in the form of an NFT.

[Read: New Life For NFC: How A Resurgence Created A Path For NFT-Enabled Products]

Dugital authentication of a physical asset
App-less & Anti-counterfeit

Anything that needs to be verified today virtually always needs a third-party authenticator. This typically means that in order to determine if an object is real, an app could need to be downloaded, you then proceed to have a sign-up account, and then take actions to prove verification. Not only is your data stored in that third-party app, the overall experience is a bit tedious. 

Now when you tap your phone on any NFT-enabled product, you receive a notification to open up your browser, see embedded information enable brand trust, and a link to verify the product’s authenticity on the blockchain. 

NFTs are at a nascent level with capabilities beyond what they are currently popular for and with the little-recognized technology of NFCs. It extends the uniqueness and utility of a NFT to the physical, introducing far more engaging marketing campaigns, business models, forms of authentication and post-sale-customer interaction data. With this technology, everyone along a value-chain with a modern smartphone, mostly which now come with built-in NFC readers, simply need a functioning web browser to authenticate or interact with an item.

[Read: How Collectible Sub-Economies Will Drive the Future of Consumer Commerce]

Collectibles as a Sub-economy 

With a streamlined verification process, a major renovation in the billion-dollar collectibles industry is approaching. By mostly eliminating (or integrating with) third-party authenticators and relying on the trustless security of the blockchain, various forms of peer-to-peer trading of collectibles will introduce new market dynamics. This will lead to a more liquid secondary market, ultimately giving the end customer the ability to quickly list their item to, potentially, any marketplace of their choice.

To NFT-NFC & Beyond

This is an exciting time for brands, consumers, and communities alike. We’re getting closer to the realization of integrating products with NFTs on an encrypted internet that empowers users and gives them more control over their digital assets that can now be extended into the physical. The rise of NFT-NFC solutions, like our SmartSeal Smart Tags, have already sparked innovation in retail, sports, luxury accessories, gaming and other industries, but there are many other applications for this technology beyond digital collectibles that can modernize the way we relate to our products.

Notature is a SmartSeal Product. To enable your physical products, contact us here.

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