It’s Saturday and you find yourself scrolling on IG, what your favorite artist has posted lately. There is one you absolutely have to have. You click on the link and land on a marketplace the painting is sold as a physical NFTs. What are physical NFTs anyways and why should you care? Physical NFTs are unique and authentic products that integrate a blockchain-based technology that allows for the authentication of physical objects. In this blog post, we will explore why physical NFTs are the future in retail, specifically in B2C transactions and what this means for you as a consumer.
To understand what are physical NFTs, you need to have a basic idea of the what is fungible is and what isn’t. Let’s say you have a print of Van Gogh’s Starry Night in your living room. I could go to your house and replace your copy with another print of Van Gogh’s Starry Night and no one would be the wiser. That’s when a token is fungible. It’s has the same value, and looks exactly the same. However, if, by some miracle, I got my hands on an original Van Gogh and were to gift you with it, its value would be much greater.
When something is non-fungible, it is unique, a one-of-one, and cannot be swapped for anything else. A physical NFT is any unique good or asset such as artwork, a houses, a luxury bag, a hoodie, and even a pair of sneakers that has a digital “twin” or token that exists on digit lever distributed among nodes of a peer-to-peer network we call the blockchain.
Great, but how do physical NFTs work? Imagine you’re the owner of an authentic, limited edition Christian Dior tote bag that you want to sell as an NFT. The first step would be to create a digital twin. You can [use your phone](https://twitter.com/shoplith_/status/1629559631428325376?s=61&t=SbePIG0BKy4uh65Z5EaSxg) to do this. step can easily be done with your phone. Write a description of the item with all the particulars such as sizing, brand name, certificate of authenticity. to attach as metadata on a virtual file. You now have a digital token ready to list on a marketplace.
Some marketplaces, such as [Shop LITH](https://shoplith.com/), [provide tools and tutorials that help you create a virtual store or gallery](https://twitter.com/roordalitx/status/1630281391664664576?s=61&t=SbePIG0BKy4uh65Z5EaSxg). When a buyer makes you an acceptable offer you can create a smart contract that encodes the agreement between the buyer and yourself permanently on the blockchain. A smart contract is legal and binding, protecting both parties. A majority of tokens exist on an Ethereum blockchain, which makes it possible for you to create smart contracts. Once all the details are squared away, your tote bag is ready to mint, that is to exist on the you would link your bag to a. corresponding unique identifier such as a near-field communication (NFC) tag. These unique identifiers enable tracking of your object in real-time as it makes its way from point to point to its new owner. This is how physical NFTs work. The process is simple enough, but require some getting use to. So why go through at all? The benefits are endless, really, but let’s just look at a few.
Physical NFTs are gaining popularity with [many major brands investing in the technology](https://101blockchains.com/brands-investing-in-nft/). In fact, [Grand Review Research valued the global NFT market to be at $20.4 billion dollars in 2022, and this market is expected to reach $211.72 billion by 2030](https://www.grandviewresearch.com/industry-analysis/non-fungible-token-market-report). This is good news not only for big companies, but for regular folks like you and I.
Let’s break each down some of the benefits physical NFTs offer:
- Proof of authenticity and ownership are probably the best case for real-world tokens. As said above, once these items are minted a blockchain, they become immutable. You can guarantee where an item is from and who owned before you, essentially protecting you from [counterfeits](https://www.vice.com/en/article/88nb9z/inside-the-wild-dollar500-billion-world-of-counterfeit-goods).
- This proof of authenticity increases resale value of any item. Thanks to the blockchain, you tap into a lucrative market where collectors will be ready to pay top dollars for a unique, one of a kind item.
- You can track the provenance of the products,
- You can promote sustainability by confirming where the product is from.
- Smart contracts makes it possible to program royalty clauses that enables you to cash in each time is sold once more on the secondary market.
- NFC supports content which allows you to insert behind the scene content, and immersive mixed reality experiences,
Despite the benefits, physical NFTs present unique challenges that you should be aware of.
Physical NFTs offer so many advantages for the individual consumer as well as major brands such as [Nike](https://blog.cryptoflies.com/nike-rtfkt-duo-turns-nfts-into-physical-sneakers-some-designed-by-takashi-murakami/), [Gucci](https://www.gucci.com/us/en/st/capsule/vault-metaverse), and [Louis Vuitton](https://nftevening.com/luxury-fashion-brands-nft/). As stated above, these real-world tokens expand the ability to create immersive experiences as well as the possibilities to increase revenue streams. However, there is always a con to every pro. The counterfeit industry is worth over [$500 billion](https://www.vice.com/en/article/88nb9z/inside-the-wild-dollar500-billion-world-of-counterfeit-goods). Physical NFTs become really attractive to counterfeiters who will try to reproduce them. NFC chip spoofing can happen. How? They use devices to clone or divert data from the real chip to put it on a counterfeited item. Other tokens will use QR code that easy to replicate.
The solution to these challenges is to get as educated as much as you can. Learn how to spot fakes, demand authenticity, and look for tools and marketplaces that will the purchasing process secure.
Luckily, the NOANe protocol integrated into physical NFTs makes it difficult to reproduce them, as each product is uniquely identified on the blockchain.
The [NOANE](https://lithtoken.io/emerging-technologies-that-will-revolutionize-the-cosmetics-industry/) protocol uses a secondary private key to lock and unlock encrypted data stored in an NFC chip or other radio communication device. It’s important to highlight that physical NFTs are one-of-a-kind and real products that use blockchain tech to confirm they’re genuine.
The encryption and decryption process shows that both the physical and digital parts are real and that they are connected.
This makes it safe and dependable to prove that a physical NFT is real. It helps trust each other and reduces the chance of losing money. If you’re selling a physical NFT, the NOANE protocol can be customized to existing protocol. It can integrated to any marketplace in three easy steps.
In summary, the potential benefits of physical NFTs far outweigh the drawbacks, making them a promising avenue for early tech adopters, fashion-forward individuals, and micro-business owners. It represents a paradigm shift in retail, offering a new way to experience art, fashion, and other physical goods. Using blockchain technology, physical NFTs offer unique, valuable, and authentic products with proven ownership and traceability. They change the retail landscape by increasing resale value, promoting sustainability, creating revenue streams for creators, and providing immersive experiences. Early adopters, fashion-forward people, and micro-business owners can benefit from these innovative tokens, exploring new opportunities and unlocking the full potential of digital and physical worlds.
Overall, physical NFTs combine physical and digital worlds, offering one-of-a-kind products that are both tangible and digitally unique. Authentication of the physical object adds value and demand in the resell market, making it a lucrative opportunity for creators and collectors alike. Don’t hesitate to check out a physical NFT at a market and experience it for yourself.
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