Physical-Backed NFTs: Everything You Need to Know

Physical-backed NFTs are increasingly capturing the attention of investors and businesses, offering a novel approach to ownership that merges the tangible world with the digital.

As these assets begin to redefine traditional concepts of investment and consumer engagement, they stand at the forefront of a significant shift in the digital asset landscape.

In this article, we’ll look at what physical-backed NFTs are, why they’re beneficial, and how different industries are making use of physical-backed NFTs.

What are physically backed NFTs?

Physical-backed NFTs are digital tokens that represent ownership or a claim to a physical asset. Unlike traditional NFTs, which are often purely digital, these tokens bridge the gap between tangible assets and the digital blockchain world. From artwork and real estate to collectibles and luxury goods, physical-backed NFTs are redefining asset tokenization.

For starters, these NFTs serve as a digital certificate of authenticity and ownership for a physical item, recorded and verifiable on the blockchain. For instance, a physical painting by a renowned artist can have a corresponding NFT, ensuring its provenance and ownership history are immutable and transparent. This not only simplifies the process of buying and selling physical assets but also adds a layer of security against counterfeiting and fraud.

Moreover, physical-backed NFTs enhance the value and experience of ownership of an asset. For example, owning an NFT linked to exclusive jewelry could grant the owner certain digital privileges, such as exclusive access to events or virtual representations of the asset in digital spaces like metaverses.

How are Physical-Backed NFTs Being Used?

Here’s how various sectors are using physical-backed NFTs today.

Art and Collectibles

In the art and collectibles industry, physical-backed NFTs are used to confirm the authenticity of physical artworks and collectibles. Each physical item is associated with a unique NFT on the blockchain which acts as a digital proof of its origin and ownership history.

This gives buyers and collectors a reliable way to verify the legitimacy of their physical possessions and bolsters trust in the authenticity of art and collectibles. Additionally, it streamlines the buying and selling process and makes transactions more efficient by eliminating the need for extensive paperwork and verification processes.

Real Estate

Physical-backed NFTs are transforming the real estate industry by replacing traditional paper deeds with tamper-resistant and easily verifiable records. They also have the capability to enable fractional ownership, which allows multiple investors to collectively own a portion of a property by purchasing fractions of the associated NFT.

This opens up new investment opportunities, particularly for high-value properties that may be financially out of reach for individual investors.

Furthermore, they automate various aspects of property transactions, thanks to smart contracts, which are self-executing codes with predefined rules and conditions.

For instance, a smart contract can be programmed to execute the transfer of property ownership to the buyer automatically once certain conditions are met, such as the completion of the purchase price payment and the successful transfer of the NFT representing the property.

This automation not only reduces the need for intermediaries like escrow agents but also minimizes the paperwork involved in real estate transactions, making the process more efficient and cost-effective while enhancing security and transparency.

Retail and Consumer Goods

Retail brands are increasingly leveraging NFTs to offer customers unique and exclusive experiences tied to their physical products. By linking products to blockchain-based NFTs, brands are creating a novel digital-physical synergy that goes beyond mere ownership.

For instance, a customer purchasing a high-end fashion item may receive an NFT that unlocks access to a virtual fashion show, a behind-the-scenes look at the design process, or even a meet-and-greet with the designer. These experiences not only deepen the connection between the brand and the customer but also incentivize loyalty and repeat purchases due to the exclusivity associated with them.

Manufacturing

Manufacturers are employing NFTs to track and authenticate the journey of materials and products from their origin to the end consumer. This protects the supply chain against counterfeiting and significantly improves transparency and traceability.

For instance, by attaching NFTs to each batch of raw materials or individual products, companies can maintain a clear and auditable record throughout the production process.

In the near future, NFTs can also emerge as a vital tool in safeguarding the intellectual property rights of Original Equipment Manufacturers (OEMs).

Tokenize Physical Assets Easily with Dibbs

The rise of physical-backed NFTs is reshaping the digital and physical realms and unlocking new possibilities when it comes to asset ownership, consumer experiences, and authenticity verification.

Amidst this shifting dynamic, Dibbs emerges as the ideal solution for brands and businesses venturing into physical-backed NFTs. We provide a secure and efficient way to mint your physical assets into tokens on the blockchain and secure your assets until delivery. So, if you’re looking to get started with tokenizing your assets, schedule a demo with us.