You may have come across the portmanteau term phygital, which describes a crossover and blending of physical and digital products and experiences. This term is particularly relevant to crypto, NFTs and web3, and, if crypto/web3 adoption gathers pace in the coming years, phygital packages may become commonplace.
There have been several recent crypto examples of the digital and the physical coming together, in various ways. Some of these fit into the phygital box, while others relate more generally to crypto being used in real-world cases, but all demonstrate that digital ledgers are not abstract virtual notions distinct from the real world.
Roofstock and USDC Homes
This month, a house sale was completed through the transfer of an NFT on the Roofstock onChain platform, which facilitates real estate trades through a specialized NFT marketplace. What’s more, the purchase was funded using a crypto lending service called USDC Homes, which offers crypto-collateralized financing options.
The buyer of the home, in South Carolina, United States, commented in particular on the ease of the process, in comparison with the time-consuming complications involved when buying and selling real estate the traditional way.
This observation contradicts an often cited criticism of crypto, which is that it’s difficult to onboard new users and go mainstream because of the amount of friction involved when getting started. This usually refers to the process of converting fiat to crypto, setting up wallets and negotiating the multitude of blockchains.
However, it’s inaccurate to assume that traditional transaction methods are always smooth and without complication, and in this case, a real estate purchase, it appears that the cryptocurrency alternative was the easier option.
It may be the case that, for certain types of purchases, at least, the narrative that crypto is complex and difficult to use starts to fall away, as it is demonstrated that crypto can sometimes provide a more straightforward means of trading and financing.
Azuki Physical Backed Token
One of the top tier NFT collections, slotting in just behind CryptoPunks and Bored Ape Yacht Club, is Azuki. Launched at the beginning of 2022, it is anime-themed and has become an established part of the NFT landscape, with its 10,000 assets trading from a minimum of around 11 ETH, at the time of writing.
Now, the project is introducing something called the Physical Backed Token, or PBT, and a procedure called scan-to-own. The system will use something called a BEAN Chip (azuki means a kind of bean in Japanese), which can be located in a physical product and is scanned to create the PBT, which records ownership (utilizing the Ethereum blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term), and can be traded in a fully decentralized manner.
How this will be utilized and what directions brands and developers might take with it remains to be seen, but it enables a fusing of physical and digital collectibles and allows physical ownership histories to be written on-chain.
It’s also notable that this innovation comes from an NFT collection focused on art and storytelling, indicating how, in the cluttered and chaotic world of NFTs, new ideas may emerge from unexpected directions.
Fashion and NFTs
An industry besides the art world that has been particularly receptive to NFTs, meaning, by extension, receptive to cryptocurrency, is the fashion sector. This is an area that lends itself naturally to a blending of the physical and the digital, and in which collectability and exclusivity are prioritized, so the NFT connection makes sense.
Established brands including the likes of Balmain, Dolce and Gabbana, and Louis Vuitton, among many others, are all exploring NFTs, and sneaker and streetwear culture are represented most clearly through Adidas, which collaborated with the Bored Ape Yacht Club NFT collection and Nike, which last year acquired the RTFKT digital wearables studio.
Those who are skeptical might point out that fashion is fickle, meaning we should not read too much into tie-ups between fashion brands and crypto creators.
However, the fact that NFTs and altcoins
Altcoins
Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception there have been countless cryptos launched. Many of these have met varying levels of success, though several have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There presently exist over 5,000 altcoins and this number seemingly grows constantly. The paramount altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins can be different from the Bitcoin network in any number of ways. This is often the primary reason for the existence of altcoins themselves.Why Do So Many Altcoins Exist?While Bitcoin is both innovative and massively influential, it does possess some problems that developers are trying to fix with their own products. Over time there have been developed altcoins that makes faster transactions, while also altcoins that are less volatile, or altcoins that are more private, etc.Altcoins also can have different economic models and their methods of distribution can be different. Moreover, their programming languages can be different, and they can support the development of different kinds of applications. While many altcoins have been built with amazing technology and have amazing potential to change the world, many of them have been created as methods of grabbing quick cash, or even as jokes.However, some of the joke altcoins have still managed to gather a significant number of users and followers. The most prominent example of this trend is DogeCoin, a cryptocurrency inspired by the Doge meme. Additionally, other joke altcoins have also experienced large market cap, such as JesusCoin.
Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception there have been countless cryptos launched. Many of these have met varying levels of success, though several have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There presently exist over 5,000 altcoins and this number seemingly grows constantly. The paramount altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins can be different from the Bitcoin network in any number of ways. This is often the primary reason for the existence of altcoins themselves.Why Do So Many Altcoins Exist?While Bitcoin is both innovative and massively influential, it does possess some problems that developers are trying to fix with their own products. Over time there have been developed altcoins that makes faster transactions, while also altcoins that are less volatile, or altcoins that are more private, etc.Altcoins also can have different economic models and their methods of distribution can be different. Moreover, their programming languages can be different, and they can support the development of different kinds of applications. While many altcoins have been built with amazing technology and have amazing potential to change the world, many of them have been created as methods of grabbing quick cash, or even as jokes.However, some of the joke altcoins have still managed to gather a significant number of users and followers. The most prominent example of this trend is DogeCoin, a cryptocurrency inspired by the Doge meme. Additionally, other joke altcoins have also experienced large market cap, such as JesusCoin. Read this Term are making strong connections with the mainstream fashion world is notable, as it represents a significant departure from the finance and tech niches that crypto has primarily occupied up to now.
Distinguishing True Innovation
When assessing the crossover between the digital and the physical it’s important to distinguish between genuinely original, innovative applications and what can amount to little more than gimmicks.
The former is looking to utilize cryptocurrencies and blockchain technology to transact and create in ways not previously possible. The latter may appear interesting or generate hype but does not embody substantial change.
There is no shortage of NFT collections offering physical merchandise, and some of them are high quality and well executed. However, while this may drive interest in crypto, which is valuable for the entire sector, it would be a stretch to argue that such models are utilizing crypto in groundbreaking ways.
On the other hand, there are a few projects which appear to be exploring the edges, and are implementing blockchain technology in novel manners that can bring unique benefits. Roofstock, USDC Homes, Azuki and parts of the art and fashion world fall into this category, and might now be establishing paths along which others can follow.
You may have come across the portmanteau term phygital, which describes a crossover and blending of physical and digital products and experiences. This term is particularly relevant to crypto, NFTs and web3, and, if crypto/web3 adoption gathers pace in the coming years, phygital packages may become commonplace.
There have been several recent crypto examples of the digital and the physical coming together, in various ways. Some of these fit into the phygital box, while others relate more generally to crypto being used in real-world cases, but all demonstrate that digital ledgers are not abstract virtual notions distinct from the real world.
Roofstock and USDC Homes
This month, a house sale was completed through the transfer of an NFT on the Roofstock onChain platform, which facilitates real estate trades through a specialized NFT marketplace. What’s more, the purchase was funded using a crypto lending service called USDC Homes, which offers crypto-collateralized financing options.
The buyer of the home, in South Carolina, United States, commented in particular on the ease of the process, in comparison with the time-consuming complications involved when buying and selling real estate the traditional way.
This observation contradicts an often cited criticism of crypto, which is that it’s difficult to onboard new users and go mainstream because of the amount of friction involved when getting started. This usually refers to the process of converting fiat to crypto, setting up wallets and negotiating the multitude of blockchains.
However, it’s inaccurate to assume that traditional transaction methods are always smooth and without complication, and in this case, a real estate purchase, it appears that the cryptocurrency alternative was the easier option.
It may be the case that, for certain types of purchases, at least, the narrative that crypto is complex and difficult to use starts to fall away, as it is demonstrated that crypto can sometimes provide a more straightforward means of trading and financing.
Azuki Physical Backed Token
One of the top tier NFT collections, slotting in just behind CryptoPunks and Bored Ape Yacht Club, is Azuki. Launched at the beginning of 2022, it is anime-themed and has become an established part of the NFT landscape, with its 10,000 assets trading from a minimum of around 11 ETH, at the time of writing.
Now, the project is introducing something called the Physical Backed Token, or PBT, and a procedure called scan-to-own. The system will use something called a BEAN Chip (azuki means a kind of bean in Japanese), which can be located in a physical product and is scanned to create the PBT, which records ownership (utilizing the Ethereum blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others.
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term), and can be traded in a fully decentralized manner.
How this will be utilized and what directions brands and developers might take with it remains to be seen, but it enables a fusing of physical and digital collectibles and allows physical ownership histories to be written on-chain.
It’s also notable that this innovation comes from an NFT collection focused on art and storytelling, indicating how, in the cluttered and chaotic world of NFTs, new ideas may emerge from unexpected directions.
Fashion and NFTs
An industry besides the art world that has been particularly receptive to NFTs, meaning, by extension, receptive to cryptocurrency, is the fashion sector. This is an area that lends itself naturally to a blending of the physical and the digital, and in which collectability and exclusivity are prioritized, so the NFT connection makes sense.
Established brands including the likes of Balmain, Dolce and Gabbana, and Louis Vuitton, among many others, are all exploring NFTs, and sneaker and streetwear culture are represented most clearly through Adidas, which collaborated with the Bored Ape Yacht Club NFT collection and Nike, which last year acquired the RTFKT digital wearables studio.
Those who are skeptical might point out that fashion is fickle, meaning we should not read too much into tie-ups between fashion brands and crypto creators.
However, the fact that NFTs and altcoins
Altcoins
Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception there have been countless cryptos launched. Many of these have met varying levels of success, though several have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There presently exist over 5,000 altcoins and this number seemingly grows constantly. The paramount altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins can be different from the Bitcoin network in any number of ways. This is often the primary reason for the existence of altcoins themselves.Why Do So Many Altcoins Exist?While Bitcoin is both innovative and massively influential, it does possess some problems that developers are trying to fix with their own products. Over time there have been developed altcoins that makes faster transactions, while also altcoins that are less volatile, or altcoins that are more private, etc.Altcoins also can have different economic models and their methods of distribution can be different. Moreover, their programming languages can be different, and they can support the development of different kinds of applications. While many altcoins have been built with amazing technology and have amazing potential to change the world, many of them have been created as methods of grabbing quick cash, or even as jokes.However, some of the joke altcoins have still managed to gather a significant number of users and followers. The most prominent example of this trend is DogeCoin, a cryptocurrency inspired by the Doge meme. Additionally, other joke altcoins have also experienced large market cap, such as JesusCoin.
Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception there have been countless cryptos launched. Many of these have met varying levels of success, though several have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There presently exist over 5,000 altcoins and this number seemingly grows constantly. The paramount altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins can be different from the Bitcoin network in any number of ways. This is often the primary reason for the existence of altcoins themselves.Why Do So Many Altcoins Exist?While Bitcoin is both innovative and massively influential, it does possess some problems that developers are trying to fix with their own products. Over time there have been developed altcoins that makes faster transactions, while also altcoins that are less volatile, or altcoins that are more private, etc.Altcoins also can have different economic models and their methods of distribution can be different. Moreover, their programming languages can be different, and they can support the development of different kinds of applications. While many altcoins have been built with amazing technology and have amazing potential to change the world, many of them have been created as methods of grabbing quick cash, or even as jokes.However, some of the joke altcoins have still managed to gather a significant number of users and followers. The most prominent example of this trend is DogeCoin, a cryptocurrency inspired by the Doge meme. Additionally, other joke altcoins have also experienced large market cap, such as JesusCoin. Read this Term are making strong connections with the mainstream fashion world is notable, as it represents a significant departure from the finance and tech niches that crypto has primarily occupied up to now.
Distinguishing True Innovation
When assessing the crossover between the digital and the physical it’s important to distinguish between genuinely original, innovative applications and what can amount to little more than gimmicks.
The former is looking to utilize cryptocurrencies and blockchain technology to transact and create in ways not previously possible. The latter may appear interesting or generate hype but does not embody substantial change.
There is no shortage of NFT collections offering physical merchandise, and some of them are high quality and well executed. However, while this may drive interest in crypto, which is valuable for the entire sector, it would be a stretch to argue that such models are utilizing crypto in groundbreaking ways.
On the other hand, there are a few projects which appear to be exploring the edges, and are implementing blockchain technology in novel manners that can bring unique benefits. Roofstock, USDC Homes, Azuki and parts of the art and fashion world fall into this category, and might now be establishing paths along which others can follow.
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