What are phygital NFTs?
July 24, 2023

A phygital NFT is a non-fungible token that has both a digital and physical component tied to its utility. Phygital NFTs exist across industries, from fashion to gaming, and are typically used to activate community members. 

What is an NFT?

An NFT is a unique digital item stored on a blockchain. All NFTs have these things in common: they are powered by smart contracts, they are immutable, and their digital record of ownership is permanent. 

What are phygital NFTs? 

Sometimes called “physical-linked” NFTs, phygital NFTs are a specific type of NFT with physical and digital elements. Brands in nearly every industry from fashion wearables to toys, and even luxury items, are experimenting with phygital NFTs  in order to better link the physical and digital worlds.

How to buy a phygital NFT

Someone can acquire a phygital NFT in two ways:

  • The first is to purchase an NFT, as one normally would, that would then be redeemable for a physical item.
  • The second way is to purchase an item in a physical store or buy into an in-person experience that would also come with an NFT when purchased. 

Phygital NFTs have become more popular because they can create an easy entry point into web3's digital world and NFTs for those who wouldn’t normally think of themselves as NFT owners. We dive into some of these examples below.

How are phygital NFTs different from redeemable NFTs? 

Redeemable NFTs and phygital NFTs have some overlap, but their differences are important to note. 

A phygital item includes both a digital NFT and physical item.  The NFTs for the phygital item can be purchased using an NFT marketplace like OpenSea, or the phygital NFT's physical item may be purchased in person at a physical store or obtained via a brand experience. So in some cases, you may first get the NFT and in other cases you may first get the physical item. Some phygital NFTs also grant holders immediate access to a digital and physical item without the need to “redeem” one for another. 

This is where the difference between redeemable NFTs and phygital NFTs is evident. All redeemable NFTs (NFTs that can be redeemed for either a physical or digital item) are purchased digitally. In addition, some redeemable NFTs grant holder access to a phygital, but not all do. Some redeemable NFTs are redeemed for another digital item and do not have a physical aspect.

What are the advantages of phygital NFTs? 

Phygital NFTs help bridge a gap between the physical and digital worlds. It is especially helpful in making the virtual world feel tangible for new adopters of the web3 world. 

Makes NFT tangible

New adopters of web3 may be more likely to understand the benefits of the digital world when they have a physical item or experience attached. Especially if the NFT they purchase from a physical store grants them access to both physical and digital experiences.

Ease of purchase

Unlike other NFTs, phygital NFTs can be purchased online or in the physical world, depending on how the NFT is constructed, which may improve customer experience.

Facilitates unique experiences

Many phygital NFTs are tied to brand activations, customer loyalty programs, or experiences. Phygital NFTs can therefore have the potential of becoming a reward or memento, linking the physical and digital experiences. 

Serves as a community and brand builder

Companies can use phygital NFTs to encourage community engagement or build brand awareness. For instance, Starbucks uses phygital NFTs to create a virtual experience where customers can gain badges in the digital world and in-person rewards as a result of moving through the digital experience.

Benefits from blockchain’s main advantages

Phygital NFTs create an indelible record of ownership on a blockchain, which makes it ideal for customers who want to prove provenance and ensure that they are buying a product or experience that is authentic and verifiable. 

Where are my NFTs stored?

The digital components of a phygital NFT are stored in a crypto wallet, just like all other NFTs that use this digital technology. 

A crypto wallet is a program that helps you buy, sell, and store your NFTs. Think of it as your address on the blockchain— you can send and receive digital items from it, it stores your digital items, and you want to keep it locked and safe.

Connecting the physical and digital worlds

Phygital NFTs are most commonly used to connect the physical and digital worlds in fun, engaging, and evolving ways. Phygital NFTs combine the physical and digital worlds by providing a tangible, physical representation that connects with the digital capabilities of blockchain technology. This convergence opens up new possibilities for creators, collectors, and enthusiasts to explore innovative ways of ownership and engagement in the digital age.

While some people may prefer the tangible nature of physical objects, others find the allure of digital items more compelling. Phygital NFTs bridge this gap, appealing to traditional collectors and tech-savvy enthusiasts. Collecting phygital NFTs allows holders to immerse themselves in a multi-dimensional collecting experience. They can showcase their physical items in their homes, galleries, or exhibitions while simultaneously enjoying them digitally in virtual galleries, interactive displays, or augmented reality experiences.

Phygital NFTs represent a powerful integration of the physical and digital worlds, offering novel opportunities for creators to innovate and collectors to engage.

Notable examples of phygital NFTs

Timex x Bored Ape Yacht Club Community Forge Pass

Phygital NFTs have helped brands create more exciting ways to connect with new and existing communities. For instance, in 2022, Timex (the watch company) partnered with Bored Ape and Mutant Ape to create a phygital activation that started at Art Basel in Miami and continued for a few weeks afterward. 

During Art Basel, at an invite-only launch party, partygoers could buy a phygital NFT that would allow them to create a custom physical Timex watch that would ship later with a corresponding NFT that served as the digital component. A week or so after the in-person event, Bored Ape and Mutant Ape’s existing community members were also given the unique opportunity to purchase the phygital NFT online. 

Timex x Bored Ape Yacht Club Community Forge Pass

RTFKT x Nike Air Force 1

The virtual sneaker company RTFKT has gained a reputation for hosting forging events (events where NFT holders are able to redeem both physical and virtual goods) around their latest phygital partnerships. This past spring, the event centered around the Nike Air Force 1 collection. 

The collection featured limited-edition designs by Japanese contemporary artist Takashi Murakami that launched on April 24th and ran until May 8th. By purchasing one of these phygital NFTs, users could participate in the forging event that would allow them to redeem the physical sneakers.

RTFKT x Nike Air Force 1

Pudgy Penguins, Pudgy Toys

Pudgy Penguins is a collection of 8,888 NFTs created in July 2021 with the intention of accelerating web3 innovation through IP utilization and community empowerment.

In May 2023, ‍Pudgy Penguins, a brand known for their phygital strategy that sells NFTs and stuffed penguins and figurines, released Pudgy Toys, a line of physical toys with accompanying NFTs, on Amazon. Pudgy Toys sold over 20,000 toys and made over $500,000 in sales through their Amazon storefront.

These toys include stuffed penguins and figurines, each accompanied by a QR code granting access to Pudgy World. Pudgy World is linked to a blockchain wallet, soulbound (or non-transferrable) NFT, and tradeable NFT, accessible through email registration. Pudgy Penguins used the physical toy as a “Trojan Horse” to seamlessly introduce NFTs to those buying the toys, thus turning it into a phygital product.

Pudgy Penguins, Pudgy Toys

Louis Vuitton Treasure Trunk NFTs

Louis Vuitton is one of the most noteworthy brands in the fashion world to take on phygital NFTs. On June 8th, the brand unveiled a set of digital Treasure Trunk NFTs that come with a physical replica. These physical-linked NFTs are limited to a few hundred items and are part of Louis Vuitton's new "Via" initiative.

The Treasure Trunks, priced at close to $40,000, grant owners access to future Louis Vuitton collections, some with physical elements, experiences, and a community of other holders. While holders will not be able to sell or transfer their soulbound (non-transferrable) Treasure Trunk NFT, they will be able to sell or transfer items they mint in the future through their ownership of it.

Owning a Via Treasure Trunk NFT grants owners access to digital and physical experiences, including the right to purchase digital keys gaining them access to future Louis Vuitton collections, including Pharrell Williams’ first collections as the Creative Director of the brand. 

Louis Vuitton Treasure Trunk NFTs

🧠 Q&A

What gas fees will I pay when buying a phygital NFT?

In web3, the term “gas fee” refers to the payment needed to execute transactions on the blockchain. OpenSea doesn’t control gas fees, set gas fees, or receive any of the gas fees incurred by users on the platform. Instead, they all go to network validators or miners. When you start the NFT purchase process using OpenSea, you’ll see the gas fee broken down by your wallet provider, so you can watch the fee refresh and complete the transaction when it’s low.

How are phygital NFTs connected to blockchain technology?

NFTs operate on the global distributed ledger known as blockchain technology, making it possible to verify their ownership and transfer them from one owner to the next. Ethereum, Solana, and Klaytn are three examples of blockchains that store NFTs. 

A blockchain is a digital ledger that records transactions and information across a decentralized network. Most blockchains are verified by many independent nodes (read: computers) as opposed to institutions, which is why you’ll hear them described as “decentralized.” Different blockchains may verify their transactions using different methods but ultimately operate similarly. 

Blockchain technology allows users to easily transfer, collect, and verify their phygital NFTs.

How do I properly vet a phygital NFT before buying it?

Web3 technology is still new and constantly evolving, so while no single action guarantees protection, there are best practices that can help. The best rule of thumb is that if something looks too good to be true, it probably is. Never share your wallet’s seed phrase, be careful when taking actions using your wallet, and make sure to thoroughly evaluate NFTs before buying. 

OpenSea also has an icon visible via a blue checkmark badge on a collection or account. A blue checkmark badge on an account means that the account has been verified for authenticity by OpenSea. A blue checkmark badge on a collection means the collection belongs to a verified account and has significant interest or sales. (OpenSea does not endorse verified accounts or badged collections, and OpenSea makes no representations regarding the NFTs in a verified account or badged collection.)

OpenSea makes no representations or guarantees regarding the collections highlighted in this article.  Users must do their own research and use their own judgment before buying any NFT, including those included in the collections highlighted in this article.  The descriptions of the collections highlighted in this article were adapted from descriptions provided by the NFT creators, not OpenSea.