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Phygital NFTs: The Ultimate Guide
Phygital NFTs have been a hot topic this year as more brands begin to mix the digital with the physical. From long-standing IRL traditions that enter the metaverse (like the Macy’s Thanksgiving Parade!) to token-gated clothing, we’re embracing digital technology more and more. Now we combine our physical objects and experiences with digital assets, creating the “phygital”. As the web3 and NFT space continues to grow, more digital brands are bringing physical aspects to their product.
We have seen many examples of phygital NFTs this year. From Damien Hirst’s ‘The Currency’ to Azuki’s Golden Skateboard, there is a rise in physical offerings alongside NFTs. This guide will unpack the meaning of phygital and phygital NFT, provide examples of phygital NFT offerings and discuss what the future of phygital technology looks like.
What is the meaning of Phygital?
The word “phygital” is a marketing term used to describe the blending of physical and digital experiences, with the word itself a combination of the two words “physical” and “digital”. Chairman of Momentum Worldwide, Chris Weil, coined the term in 2007. The term was primarily used to describe the digital experiences that enhance physical experiences for consumer retail.
What is a phygital experience?
The idea of a phygital experience may sound complex, but it is actually something many of us experience every day. To clarify, an example of is a customer ordering an item on their phone (digitally) to pick up in store (physically). Therefore, if you’ve ever ordered a meal on the phone or through a touchscreen kiosk, used online shopping or scanned a QR code to find out more information about a product, then you’ve had a phygital experience.
Until now, phygital experiences have traditionally been created by adding a digital item to an existing physical product. But with the explosive growth of NFTs and digital assets, many more of us are buying digital products that have no physical component. Now there is a growing trend of NFT brands bringing a physical aspect to their digital product. Enter the world of phygital NFTs.
What is phygital NFT?
First, let’s summarize what NFTs are. NFTs, or non-fungible tokens, are digital items that contain identifying information in the smart contract. It is the identifying information that makes each NFT completely unique, and unable to be exchanged like-for-like (hence non-fungible). NFTs have many uses, from a way to prove ownership, to in-game use, or simply as a way to own authenticated artwork. So the key message here is that NFTs are digital. Therefore, if you own NFT artwork, you own a digital artwork, not a physical one.
So what is phygital NFT? Simply put, phygital NFT is a way for us to combine our physical world with our digital assets. From AR technology to display our NFT artwork IRL, to physical products that can be redeemed via burning our NFTs, there are a whole range of uses for this technology. Phygital NFT is simply a term to cover an experience, product or service, which is either represented by or associated with an NFT.
Examples of phygital NFT
With so many ways to create a phygital NFT experience, there are many examples to choose from. Therefore, we have divided this into different categories to showcase the use of phygital NFTs.
Food and drink
Blockbar offers phygital NFTs with corresponding physical bottles. The company stores the bottles in its warehouse and ensures 100% authenticity until the buyer of the NFT redeems it for the physical counterparty.
“The Whiskey Barrel”, Scotland’s revered online whiskey platform, launched a single cask Scotch whiskey along with its own Digital Provenance Certificate (NFT). While applying blockchain technology to a single cask of peated Scotch, collectors can reduce the risk of buying counterfeit whiskey. Each of the bottles has a QR code linked to the corresponding digital certificate of origin. This token provides digital proof of ownership and the origin of each bottle.
Phygital fashion
Sotheby’s NY “Art as Jewelry as Art” sale was the first auction to include a phygital ring, by designer Francine Ballard of Metagolden. The buyer of this gold and emerald ring owns it in both the physical world and the metaverse. The one-of-a-kind NFT sold during the auction is paired with a physical “Ethereum Expedition” ring.
Italian fashion brand Diesel dropped its “phygital” NFT wearable in a collection titled D:Verse. The NFTs give holders access to the Diesel NFT community. This gives them the opportunity to experience first-hand the next fashion show thanks to invitations or VIP access. In addition, holders have limited edition garments and metaverse-ready wearables.
Givenchy, the iconic French fashion label, created a physical capsule collection with accompanying limited edition NFTs in collaboration with streetwear brand (b).STROY. The unique collection included t-shirts, hoodies, jeans, varsity jackets, statement bags and footwear. Web3 artist collective Felt Zine created unique NFTs to accompany Givenchy x (b).STROY physical objects that represent the objects in digital form.
Phygital artwork
NFT artist FVCKRENDER teamed up with creative marketplace Avant Arte to release two phygital sculptures. The sculptures – FEEL// and TOUCHED// – are physical works of art with associated NFTs.
Renowned British creative Damien Hirst minted a 10,000 strong series of non-fungible tokens. The artist put phygital to the test with his famous “dot paintings”, stored in a secure vault. Initially, buyers received the NFT version of the purchase. They then had to decide what they valued most – NFT or the physical. Whichever the buyer chose to keep, the other was burned. This experiment – known as ‘The Currency’ – lasted 365 days. Surprisingly, out of the 10 thousand NFTs, 4851, almost half of the holders decided to keep their NFTs. 5,149 NFT holders exchanged their Damien Hirst NFT for a physical Damien Hirst artwork.
PBT technology
PBT, or physically backed token, is slightly different than phygital. Compared to typical phygital offerings, the key difference here is that the former usually separates the physical and digital items by embossing. With PBT, users can own physical assets to unlock digital benefits and experiences.
Blue-chip project Azuki introduced PBT. Their limited edition 24K Golden Skateboard NFTs were Azuki’s first PBT implementation. The skateboards went up for auction on October 21, 2022. Each board is fully functional and features an exquisitely detailed golden dragon – along with one of nine unique emblems from the Azuki universe. Azuki has embedded each skateboard with a PBT-based BEAN chip, a cryptographic chip that connects the physical item to its digital token. Furthermore, all holders received an exclusive Dragon banner display in their collector profile. In addition, the holders also became a permanent part of the Azuki mythology as they will be enshrined in Ruin’s world drop. The auction winners can redeem and burn NFT to receive the physical skateboards.
The future of physical and digital NFT technology
The interaction between our digital and physical worlds continues to grow, and phygital NFT usage grows with it. We can expect to see phygital technology grow because of the unparalleled benefits it provides. For example, one of the main arguments for NFTs is their authenticity. While we can copy and counterfeit physical objects, digital assets are authenticated on the blockchain. This is what drives their scarcity and value. With phygital NFT technology, we can apply this scarcity to real-world objects. Imagine buying an antique and having a complete NFT book for each previous owner, along with the exact dates and prices when it was bought and sold. NFTs can build trust between buyers and collectors of scarce goods due to the tamper-proof smart contracts.
Finally, phygital NFTs exist to enhance our IRL experiences. For example, NFT tickets grant exclusive access to IRL events. Also, token-gated clothing shows that you are part of a certain digital community. So whether you want to flex your digital assets in a physical way or authenticate your physical product on the blockchain, phygital NFTs are the answer. As the use of NFTs as a legitimate form of business grows, the need for phygital NFTs will increase.
