Physical NFTs bridge the gap between tangible items and digital assets. Here’s a step-by-step breakdown of how they typically work:
- Creation: A creator or seller decides to tokenize a physical item. This could be art, collectibles, jewelry, or any tangible product.
- Tokenization: A digital token (NFT) is minted on a blockchain, representing the physical item. This process ensures the item’s authenticity, provenance, and ownership can be tracked transparently.
- Listing: The Physical NFT is then listed on a marketplace for sale, much like any other NFT.
- Purchase: A buyer purchases the Physical NFT using cryptocurrency or any accepted form of payment on the platform.
- Redemption: Depending on the platform and the terms of the sale, the buyer can choose to redeem the physical item. Upon doing so, the associated NFT may be retained as a certificate of authenticity, burned, or marked as redeemed.
- Delivery: Once redeemed, the physical item is shipped or handed over to the buyer, while the NFT’s status reflects the redemption on the blockchain.
