We’re now close to two years since NFTs became a key component of every media, entertainment and sports executives' vocabulary.
We’ve seen some incredible innovation across that time, with various organisations using NFTs as a vehicle to create new revenue streams, communities and experiences. I fully expect to see far more sophisticated usage in the coming years (which I’ll touch on below).
The emergence of NFTs did however unearth two very distinct groups:
Those who are staunch advocates of owning digital assets and value them the same (or above) physical assets
Those who are vehemently against digital assets and do not believe they hold the same value as physical assets
Undoubtedly both arguments hold weight - most coming down to ‘intrinsic value’. Playing devil's advocate, what actually dictates whether something holds ‘intrinsic value’? I’d suggest the market decides what holds value, and what does not, and there are for sure many people who are placing value in digital assets…
In any case, what if it didn’t have to be so polarising?
What if you could have the best of both worlds?
The answer: Phygital.
I’m sure you can guess that physical + digital = phygital. Fairly self-explanatory (a rarity in a space that loves to complicate terminology!).
This is where I see there being so much opportunity in the coming months/years as I believe it’s a simple and incremental way to migrate someone to a web3 experience, whilst still delivering physical experiences.
Here’s a couple of different examples of how this could be made possible:
Everyday example: You purchase a branded t-shirt. Before blockchain, and being very cynical, you would just have to take the person’s word that the t-shirt is authentic. By attaching a digital NFT to the physical t-shirt (via a QR code or smart label), you would be able to attach content to the NFT (like manufacturing supply chain information, certificate of authenticity, etc) to be able to verify its authenticity.
Sports example: The best example I have seen of this so far is by the Australian Open. In essence, the NFT owned corresponded to a segment of the court, and as and when a match winning shot was hit on that segment, your NFT was updated with metadata related to the match. On top of this, the NFT gave you access to a virtual recreation of the Australian Open grounds in Decentraland (digital experiences in the metaverse are another exciting option, but that’s for another piece). From a physical perspective, the owners of the NFTs also got access to exclusive merchandise and wearables. Physical performance affecting digital assets is a very interesting concept.
This is a good example of an NFT having ‘utility’. Another great buzzword, but it just means it has a use. Most of the pushback from fans/consumers around NFTs has the complaint of it having no use (apart from to make money). This is where I believe phygital can remedy this and play a key role in education around the technology, its uses and benefits.
As it currently stands, physical experiences, like attending a match, are unrivalled and still hold the most value to the fan (that is unlikely to change); but by adding utility to digital assets, they can become part and parcel of the physical experience by enabling your fanbase/consumer to gain access to exclusive content, events, merchandise etc. This will accelerate the onboarding and acceptance of the technology.
As I mentioned earlier on, as the market matures, and organisations begin to understand the true power of merging physical with digital, we’ll see far more sophisticated use cases that will dwarf the ideas we’re currently seeing.
Remember, there’s no bad technology, just bad use cases…