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Physical-Backed NFTs: Everything You Need to Know

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Ben Plomion

Here’s how people are taking physical assets into the digital world

The idea of a "physical-backed NFT" may sound like a contradiction in terms. NFTs often refer to digital things you can truly own, so what does it mean to have a physical-backed NFT?

It’s a good question, and one that brands and creators are exploring more every day. Sometimes an NFT might be a piece of art by itself, but everyone from big companies to small studios are exploring the idea of a physical-backed NFT as digital representations of, and even an improvement upon, a physical asset. Here's what you should know about physical-backed NFTs, what they are, why they're worthwhile, and the best way to go about minting your own physical-backed NFT.

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What is a physical-backed NFT?

How are physical-backed NFTs being used right now?

Who to watch in the physical-backed NFT space

Real estate sellers

Energy providers

Collectible markets

What is a physical-backed NFT?

A physical-backed NFT is a digital representation of an asset, such as a car, a piece of clothing, or a piece of traditional artwork. Some of the earliest applications of NFT technology were used for securing and trading digital art assets through the blockchain. The technology gained prominence for its use in art-related fields, but it's also common to mint and issue tokens that indicate ownership of anything from a virtual pet to a video game object to a real-life pair of sneakers.

Physical-backed NFTs are more than a digital twin. One of the benefits that NFTs offer is the ability to to store information that relates to the provenance of an item, as well as the unique story behind it. For example, it is now possible to create a NFT of a vinyl that was signed by John Lennon. The NFT can include detailed information that relates to the location and date of John’s Lenon’s autograph.

The possibilities of minting and selling any kind of physical NFT token are staggering; however, the complexities of bringing real-life life objects to the blockchain in a secure and profitable way are substantial as both technology and laws take shape around this new medium.

Thankfully, you don’t have to do it all on your own. Partnering with Dibbs means benefitting from the technology behind the only real-time 24-7 fractional collectible market, as well as the peace of mind that comes from knowing you have the methods and expertise of an established tokenization company at your back. To learn even more about the safest way to enter the physical-backed NFT space, get in touch with Dibbs today, or sign up to receive updates on our products and services using the form below.

How are physical-backed NFTs being used right now?

Companies like Flipkick and EulerBeats are revisiting the artistic roots of NFTs with their physical-backed NFTs, which are keyed to real-world works of art. The artist is the original owner of the NFT and is permanently registered as such via the blockchain ledger, while the NFT certifies its holder as the current owner of the physical artwork. Whenever that piece of art changes hands, the original artist collects a royalty fee — with no need to chase down who has the rights to what and where.

Other companies have made a similar link to entitle an NFT's holder to free merch or exclusive items. The sneaker company RTFKT uses physical-backed NFT drops 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. Meanwhile, The Gap gamified the process by letting users enter a GAP logo design contest for an NFT and matching hoodie.

Who to watch in the physical-backed NFT space

More and more companies are expanding their usage of NFTs beyond ownership of purely digital products to ownership of real-life items, experiences, and more. Here are a few of the most exciting examples.

Real estate sellers

A lot goes into real estate sales, both financially and legally. However, enterprising blockchain advocates are already bringing new possibilities to this market. See the example of TechCrunch founder Michael Arrington, who last year sold his Kiev apartment as the first-ever real estate NFT. Since legislation is still catching up to the possibilities of blockchain transactions, the trick here was to create a legal trust, with the signature of the new owner requiring all future transfers of the property to be done via NFT.

Energy providers

The physical-backed NFT space goes beyond the kind of goods you can hold in your hands. The My Power platform from Riddle & Code is tokenizing both energy production and consumption, aiming to make energy markets operate more efficiently and investing in those markets more accessible to consumers everywhere. By using tokens to raise awareness and distributed ownership of local energy grids, My Power serves as an exciting new answer to the question of “how to make a physical-backed NFT.”

Collectible markets

Building a collection is a satisfying pursuit, but buying, selling, and even simply storing those collectibles requires a delicate touch. Each type of collectible — from rockstar guitars to precious trading cards and beyond — requires its own special handling and care, with risks of damage (and significantly decreased value) every time it’s transported between former and new owner.

Fortunately, the blockchain presents a new option for building collections without any of those risks. It’s also what allowed us to create the Dibbs marketplace. We put together a streamlined system to take in physical items, store them safely, and drop the rights to their ownership onto the marketplace. We’re excited to put the same technology and practical experience to work for brands that want to bring their own assets and creations onto the blockchain as physical-backed NFTs. Reach out to us today and find out more about how we can help.


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