December 2, 2023


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What are phygital NFTs, and how do they work?

3 min read

What does phygital NFT mean in crypto?

Phygital (NFTs) are a combination of physical and digital NFTs that offer an exciting new way for businesses to engage with their customers and build communities. These NFTs allow for the buying and selling of real-world products and experiences through digital collectibles, which can lead to an increase in customer retention for businesses. Phygital NFTs are not limited to specific blockchain communities and can be centered around the brand, offering a unique and memorable customer experience.

What industries will benefit from phygital NFTs?

Phygital NFTs have the potential to revolutionize the way brands interact with their customers, creating closely-knit communities through memorable experiences. These NFTs are not limited to any specific industry, with luxury, fashion, food and beverage, wearables, entertainment and even fast-moving consumer goods sectors embracing the trend. Brands like Starbucks Odyssey, Timex, The Whiskey Barrel, Bstroy x Givenchy, Cult and Rain are already using phygital NFTs to engage with their communities and build strong brand recognition. The use cases for phygital NFTs are only limited by imagination, making it an exciting time for companies to explore this new way of connecting with customers.

How do different brands use phygital NFTs?

Phygital NFTs are a new and exciting way for brands to engage with their customers, create a sense of community, and increase user retention. Brands are exploring multiple strategies to create phygital experiences, such as asking customers to  buy an NFT for access to physical goods or experiences, or providing an alternative NFT upon burning. In-store NFT activations and physical NFTs for gaming are also becoming popular. These phygital NFTs offer customers unique and inventive experiences, making them feel like they belong to a community. As technology develops, it’s likely that brands will come up with even more creative ways to use phygital NFTs in the future.

What are the advantages of phygital NFTs?

Phygital NFTs bring a new dimension of traceability to physical goods, in addition to their community experience benefits. The tamper-proof nature of NFTs allows for traceability of the history of goods from the first buyer, building authenticity and trust. This helps combat counterfeit products and offers artists a new way to monetize their work by collaborating with brands. For example, an artist can work with a brand to create content for their marketing campaigns, receiving compensation for their work and gaining visibility for their brand. Overall, phygital NFTs offer a new way of collaborating across creators, developers, brands and consumers through the use of Web3 principles.

Are phygital NFTs better than conventional NFTs?

Phygital NFTs, combining the physical and digital realms, are emerging as a new use case for nonfungible tokens. Although proof of physical presence (PFP) NFTs have been the most popular so far, phygital NFTs bring a different set of advantages and may find different use cases. The value of an NFT depends on a variety of factors, including demand and utility, and it’s hard to say which is better – traditional or phygital NFTs. However, phygital NFTs offer a unique connection between the digital and physical world and can bridge Web2 brands with Web3 design principles.

In summary, the future of commerce could involve phygital nonfungible tokens (NFTs). Brands can benefit from the buzz surrounding NFTs, however, their widespread adoption will depend on the development of practical and cost-effective solutions for tracking physical items represented by the NFTs. Additionally, the viability of phygital NFTs will need to be determined as they compete with conventional NFTs and their scalability and value for brands is evaluated. Clarity in legal and regulatory frameworks around phygital NFTs is also crucial for their potential to become a common household phenomenon.

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