How is blockchain indispensable to the phygital future?

Over the years, blockchain has brought solutions to many industries, such as finance, supply chain, gaming, and countless other social applications. But is blockchain necessary for the development of Phygital? Let’s find out with Kardiachain!

What is the phygital metaverse?

Phygital is a combination of ‘physical’ and ‘digital.’ It uses technology to connect the digital world and physical reality by providing users with an interactive and unique experience, otherwise known as digital transformation.

In other words, Phygital is both a gateway and a bridge between the real and metaverse worlds, creating a phygital metaverse — the metaverse can be linked to the physical world.

What if the phygital metaverse is built on web2?

The Metaverse industry involves anthology companies, including hardware, software, blockchain, and gaming, etc.

One obvious problem in these platforms is the near inability to interact with each other. Users cannot move or exchange a scarce item in Fortnite for an identical item in Minecraft. In addition, the assets players own do not belong to them in these games, which makes personalization & ownership not appreciated. And sometimes, just a few factors, such as laws or company policies, can disappear from the player’s account.

What we are familiar with Web 2 online platform experience is not the actual “real” digital/virtual counterpart of our reality. We have been logging into a centralized server and “borrowing” a digital avatar of ourselves onto an isolated centralized pocket dimension created by centralized organizations where people, or how they project themselves, cramp in to create a closed virtual community. Virtual reality or virtual platforms are essential in creating the metaverse, but the virtual alone cannot create a said experience. The digital world must be backed up by the real world, meaning the virtual realm should be like the physical world, consisting of objects and people and just digitized.

The Role of Blockchain in metaverse phygital development

All of the above problems can be solved with Blockchain technology:

Scalability: Current blockchains offer enormous scalability, especially for Blockchain with the Internet of Blockchain concepts like Avalanche, Polkadot, or Cosmos.

Interoperability: Assets on blockchains can completely move back and forth through cross-chain technology.

Ownership & Privacy: This is most evident through NFTs — unique tokens that cannot be substituted.

Security: Blockchain technology with high security will help your cyber assets avoid attacks from hackers.

In addition to the above features, Blockchain has initially created a simple economic system with the strong development of DeFi. DeFi is an intermediary bridge for these financial activities to be carried out quickly. For example:

- When there is a need to trade goods on the Metaverse, we already have a DEX or Marketplace that operates in a decentralized and trustless way.

- We already have cross-chain bridges if we need to move assets across different chains.

- The need for loans to conduct business on the Metaverse already has a Lending Protocol.

- Or with payment applications like Payment Dapps, we can quickly transfer assets from the real world into the digital assets market.

Thus, Blockchain technology is suitable for developing Metaverse — a parallel virtual world with unlimited scalability and creativity and promoting personalization and decentralization.

The Present of phygital metaverse

Although still in its infancy, the implications of the phygital metaverse are huge. In the future, we can expect highly interactive and personalized online consumer interactions that take full advantage of the range of technical features the metaverse offers.

With digital-first initiatives transforming global industries, the lines will continue to blur between physical and digital to create new exchanges that reimagine our relationship with technology. Morgan Stanley calculated that in 2021 the metaverse market represented $8 trillion. Consumers have an appetite for 3D eCommerce and increasingly immersive shopping experiences. Statistics from Shopify reveal that products sold online that use 3D and AR technology have a 94% higher conversion rate.

The data suggests that consumers crave more expansive online interactions, opening the door for new phygital exchanges that fully utilize available technologies.

Commercial Sector Use Cases

The metaverse takes consumer experiences to the next level by providing an immersive playground as a digital bridge between the physical and virtual worlds. In the metaverse, you can effortlessly interact with real-world objects, displays, and IoT devices that also exist virtually.

The commercial sector is one of the most prominent use cases for phygital metaverse experiences. Retail and eCommerce in the metaverse are set to accelerate dramatically in the next few years as consumers look for more convenient and interactive ways to shop. And as technology adoption increases, it will prompt even more experiences that merge online and offline shopping.

In this context, the metaverse will host businesses, brands, and creators in a virtual representation of the real world. Digital twins of brick-and-mortar stores can be hosted in the metaverse and used to create a virtual model of customers. These digital replicas can gather user data from online shopping habits, which enhances physical shopping experiences.

Imagine walking into your favorite clothing store and receiving personalized recommendations from virtual shopping assistants who know your measurements and preferences. With phygital technology, you can add in-store items to your virtual cart and then have them delivered to your home on the same day, so you’d don’t have to carry them around. All of the clothes you purchased are also now NFTs that your avatar can wear in the metaverse.

This shift represents a much fuller journey and completes the customer experience from end to end by providing consumers with valuable interactions at every level. As digital fashion expands beyond gaming and into the mainstream, retail stores and luxury brands can create unique virtual storefronts inside the metaverse that take full advantage of digital technologies.

The future when the phygital metaverse is widely adopted

Think of the metaverse as a digital playground that brands, businesses, and individuals can use to sell, trade, socialize, and communicate in a persistent virtual environment. Add phygital to the equation, and you have large-scale, interconnected spaces that disseminate information to both physical and virtual locations in real-time.

Let’s look at an example mentioned in the Kyokai White paper of a father taking his child to school routine and how to phygitalize it through the Kyokai solution overview design. The Kyokai portal can “break down” the world’s tangible components into 4 pillars, and identify which object/action belongs to which pillar. All the objects in the digital world are also interconnected via real-time tracking of one another through variable means to “mimic” the occurring real-life actions. In this example, the father and the child’s digital IDs on their smart device were tracked by a built-in beacon to have left the house and gotten into the car; the car’s changes in position and speed on the road can be recorded by the “Activity pillar,” and the school beacon will eventually be notified that the child ID has arrived at school. Thus, this creates the phygital experience where the physical and digital worlds move simultaneously.

The phygital shift gives rise to intelligent interactions connecting people, processes, data, and things with IoT devices. This networked connection, the Internet of Everything (IoE), has significant implications for our future. Gartner named IoE one of the most transformative innovations back in 2012, and now, the metaverse is primed to replace IoE and change the paradigm once again.

Digital twins, assets, objects, NFTs, and virtual agents will reside in a fully interoperable metaverse that could one day impact every aspect of your life. More ingenious IoT devices with real-time metaverse integration will give us much higher ease and comfort. In this context, the metaverse will be the motherboard connecting and uniting all of our devices, thus enhancing our overall virtual experience.

At scale, phygital technology combined with the power of the metaverse will revolutionize everything from agriculture to manufacturing. Imagine if businesses could record consumer purchases in real-time and feed that information back to suppliers to automate production lines and streamline efficiency.

For instance, businesses can use enhanced computer models to operate industrial digital twins to monitor real-world components, replicate processes, and collect data that predicts performance metrics. The applications for digital twin technology in a phygital context are huge. They include increased reliability of equipment and production lines, improved overall equipment effectiveness (OEE) through reduced downtime, enhanced productivity, and reduced risk in various areas, including product availability and marketplace reputation.

Enterprises and governments can build digital twins and virtual 3D replicas for systems we depend on, like power grids, server farms, and other critical infrastructure. Factories with digital twins in the metaverse can use augmented reality (AR) to engage with interactive engineering models and digital overlays on top of physical equipment. This allows them to use the most up-to-date and accurate information and ensures that maintenance and performance best practices are consistently upheld. Businesses can also apply phygital methods to industrial control systems (ICS), factory machines, and work cells.