From Digital to Physical: How Physical-backed NFT Development is Blurring the Lines of Art Ownership?

Physical-backed NFTs are a type of digital asset that is linked to a specific, real-life physical object. This means that the NFT serves as a digital certificate of ownership for the physical object it is linked to. The physical object can be anything from a bottle of rare cognac to a piece of high-end fashion, to a gold-plated skateboard, to a real estate property. NFT is a digital proof of authenticity, ownership and rarity of the physical object it’s associated with.

Traditional NFTs, on the other hand, are digital assets that exist solely in the digital realm. They are typically used to represent digital artwork, music, videos, and other forms of digital content. They do not have a physical counterpart and their value is based on their uniqueness, rarity, and the perceived value of the digital content they represent.

Physical-backed NFT development involves the creation of a unique digital token that represents ownership of a physical asset. The process involves mapping the physical asset to the blockchain and verifying its authenticity. This allows for secure and transparent transfer of ownership, as well as the ability to trade the asset in a decentralized manner. Physical-backed NFTs are used for a variety of assets such as artwork, collectibles, and more. The development process requires a thorough understanding of blockchain technology and the use of specialized tools and platforms.

Why brands are adapting to physical-backed NFTs?

One of the main reasons physical-backed NFTs are becoming more popular is that they offer a new way for brands to monetize their products. Brands can create a limited number of physical-backed NFTs for their collectible items and earn royalties from the sale of the NFTs on the secondary market. This provides a new revenue stream for brands and also makes the NFTs more valuable and desirable to collectors.

Another reason physical-backed NFTs are becoming more popular is that they offer a new way for fans to engage with their favorite brands and show off their collections. Fans can redeem the NFT for the physical collectible or resell the NFT on the secondary market. This creates a sense of exclusivity and rarity that appeals to collectors.

Physical-backed NFTs also provide a new way for brands to connect with their fans and build a stronger community. By offering a limited number of physical-backed NFTs, brands can create a sense of exclusivity that appeals to collectors and drives up the value of the NFT.

Popular physical-backed NFTs

Collectors’ passion extends to collectible physical-backed NFTs. Some of the most valuable physical-backed NFTs of all time include:

Hennessy 8 Cognac ($226,450)

Hennessy, owned by LVMH, partnered with Block Bar to mint an NFT of their historic Hennessy 8 Cognac, with only 250 bottles in existence. The NFT owner can redeem their token for a physical bottle, complete with a wooden locking case and a full tasting set.

FEWOCiOUS Collection from RTFKT ($3.1 million)

RTFKT, a digital fashion studio recently acquired by Nike, paired up with the rising digital artist FEWOCiOUS to create three pairs of collectible NFT sneakers. It sold out in 7 minutes for $3.1 million in sales.

Dolce & Gabbana’s “Collezione Genesi” ($5.7 million)

The fashion maison paired up with UNXD to mint NFTs for a bespoke nine-piece collection, reportedly designed by Domenico Dolce and Stefano Gabbana themselves. The collection sold out, netting a total of 1,885 ETH (or about $5.7 million).

Tiffany’s CryptoPunk Pendants ($12.5 million)

Tiffany & Co. minted NFTs called “NFTiffs” of jewel-encrusted CryptoPunk pendants at $50,000 each. The campaign raised a total of $12.5 million, proving that legacy brands have a hand to play in the digital market.

Creating a physical-backed NFT typically involves the following steps

1. Identify the physical object: The first step in creating a physical-backed NFT is to identify the physical object that will be associated with the NFT. This can be anything from a bottle of rare cognac to a piece of high-end fashion, to a gold-plated skateboard, to a real estate property.
2. Verify authenticity: Once the physical object is identified, it is important to verify its authenticity. This can be done by using a variety of methods such as serial numbers, RFID tags, or tamper-evident seals.
3. Mint the NFT: The next step is to mint the NFT. This involves creating a digital token that represents the physical object and linking it to the verified object. This can be done using various blockchain platforms such as Ethereum, Binance Smart Chain, or others.
4. Secure storage: After minting the NFT, it is important to ensure the physical object is stored securely. This can be done by using secure storage facilities such as a warehouse, a safe, or a deposit box.
5. Listing on a marketplace: Once the NFT is minted and the physical object is stored securely, it can be listed on a marketplace for buyers to purchase.

Physical-backed NFT Marketplace Concept

Creating an NFT marketplace for physical-backed NFTs involves developing a platform that allows users to buy, sell, and trade physical-backed NFTs. This type of marketplace requires a secure and reliable infrastructure to handle the digitization and verification of physical assets, as well as a user-friendly interface for buying, selling, and trading NFTs.

The process of creating a NFT marketplace for physical-backed NFTs involves deciding on the features and functionalities required, customizing the platform to match the brand’s requirements, integrating a payment gateway for transactions, and deploying the platform on a suitable hosting environment.

The technology stack typically includes blockchain, smart contract development tools, and frontend and backend technologies. A white label NFT marketplace solution can simplify the process of creating a marketplace for physical-backed NFTs.

Different methods for creating physical-backed NFTs

• Direct minting: the NFT is minted directly on the blockchain and linked to the physical object.
• Indirect minting: the NFT is minted off-chain and linked to the physical object using a unique ID.

Tools and technology used to create physical-backed NFTs

• Blockchain platforms: Ethereum, Binance Smart Chain, and others
• Minting platforms: OpenSea, Rarible, and others
• Secure storage facilities: warehouses, safes, deposit boxes
• RFID tags, tamper-evident seals, and serial numbers for authentication
• marketplace for NFTs such as OpenSea, Rarible, and others

Physical-backed NFTs offer a number of advantages over traditional, digital NFTs

One of the main advantages of physical-backed NFTs is that they increase the value and rarity of the physical object. By linking a digital token to a physical object, the value of the object is increased and the rarity of the object is emphasized. This makes the physical object more desirable to collectors and investors.

Another advantage of physical-backed NFTs is that they increase the security and authenticity of the physical object. By using methods such as RFID tags, tamper-evident seals, and serial numbers, the authenticity of the physical object can be verified and the security of the object can be increased. This makes the physical object more valuable and trustworthy.

Physical-backed NFTs also open up the potential for new business models and revenue streams. By creating a digital token that represents a physical object, brands can earn royalties from the sale of the NFTs on the secondary market. This provides a new revenue stream for brands and also makes the NFTs more valuable and desirable to collectors. Additionally, by creating a limited number of physical-backed NFTs, brands can create a sense of exclusivity and rarity that appeals to collectors, which can drive up the value of the NFT.

Wide range of physical-backed NFTs potential use cases

Art and collectibles: Physical-backed NFTs can be used to certify the ownership and authenticity of various types of art and collectibles, such as fine art, sculptures, and rare books. By linking a digital token to a physical object, the value of the object is increased and the rarity of the object is emphasized. This makes the physical object more desirable to collectors and investors.

Real estate: Physical-backed NFTs can be used to represent ownership of real-world properties such as land, buildings, and homes. This allows for a more efficient and secure way of buying and selling real estate. It also allows for fractional ownership and enables liquidity in real-estate investments, which weren’t possible before.

Gaming and virtual worlds: Physical-backed NFTs can be used to represent in-game items such as weapons, armor, and vehicles. This allows for more secure and verifiable ownership of virtual items and creates a new revenue stream for game developers. It also allows for the creation of virtual economies, where players can buy, sell, and trade virtual items just like in the real world.

Other potential use cases

• Luxury goods: Physical-backed NFTs can be used to represent ownership of luxury goods such as watches, jewelry, and cars.
• Sports and entertainment: Physical-backed NFTs can be used to represent ownership of sports memorabilia and entertainment items such as concert tickets, backstage passes, and autographed items.
• Supply chainand logistics: Physical-backed NFTs can be used to track and verify the authenticity of goods throughout the supply chain. This can be used to ensure that goods are not counterfeit, that they are ethically sourced, and that they are transported in an environmentally friendly manner.
• Identity and authentication: Physical-backed NFTs can be used to represent identities and authenticate individuals. This can be used in a variety of industries such as healthcare, finance, and government.
• Charity and Philanthropy: Physical-backed NFTs can be used to represent ownership of charitable donations, such as a donation of a piece of land, a building, or a piece of artwork. This allows for transparency and traceability of the donation, making it more trustworthy for donors.

Also Physical-backed NFTs are being used in a variety of ways across different industries. Companies like FlipKick and EulerBeats are revisiting the artistic roots of NFTs by linking them to real-world works of art. This allows the artist to be the original owner of the NFT, while the NFT holder is the current owner of the physical artwork. The artist earns a royalty fee whenever the piece of art changes hands, making it an efficient way to monetize art and protect artist’s rights.

Other companies like RTFKT and The Gap are using physical-backed NFTs to offer exclusive items or free merch to NFT holders. RTFKT uses physical-backed NFTs as a sort of design warehouse, where buyers of exclusive sneaker-themed NFTs are also entitled to a real pair of shoes with the same design. The Gap gamified the process by letting users enter a logo design contest for an NFT and matching hoodie.

Focused Areas for Physical-backed NFTs

Real estate sellers are also utilizing physical-backed NFTs to make real estate transactions more efficient and secure. TechCrunch founder Michael Arrington sold his Kiev apartment as the first-ever real estate NFT, using a legal trust to ensure all future transfers of the property are done via NFT.

Energy providers like My Power are also using physical-backed NFTs to tokenize both energy production and consumption, making energy markets more efficient and accessible to consumers.

Collectible markets are also benefiting from physical-backed NFTs. Dibbs marketplace is using blockchain technology and practical experience to store and secure physical items, then drop the rights to their ownership onto the marketplace. This allows brands to bring their own assets and creations onto the blockchain as physical-backed NFTs without any risks of damage or decreased value.

To conclude, physical-backed NFTs are being used in various ways to make traditional industries more efficient, secure and accessible. As the technology and legislation catch up with the possibilities of blockchain transactions, we can expect to see more physical-backed NFTs in the near future.

Appdupe creates white label NFT marketplace solutions for businesses looking to launch their own NFT marketplace. Their solutions are customizable, pre-integrated with all necessary features, and built using cutting-edge technology. The white label solutions make it easy for businesses to launch a successful NFT marketplace, as they provide a ready-made platform that can be customized to match the brand’s requirements and preferences.