This unique application has been a key agent in driving the NFT space into what’s now a 50 billion-dollar industry. It’s provided a way for people to truthfully verify their assets and to express their identity online, in the same way that someone would through consumer fashion or luxury goods.

But what if the concept of authenticity and immutable ledgers for digital assets could extend to physical items?

Imagine you wanted to buy a pair a new pair of AirPods. As of now, you have three options, with only one that guarantees authentic and verified ownership.

1. ✅ You buy an authentic pair of AirPods directly from the Apple store

2. ❓ You buy AirPods from a 3rd party seller on Amazon (with the chance they are real or fake)

3. ❓ You buy AirPods from a secondary market like OfferUp (could also be real or fake) ❓

Sure you could technically purchase from high-rated sellers, but still, buyers have no transparency into where their product is coming from.

In a different scenario, let’s assume these AirPods inherited the properties of a digital asset. If they were sold on the blockchain, the process of verifying authenticity becomes close to obsolete. You would log onto a marketplace, find the cheapest pair of new AirPods, and could verify the contract address belongs to Apple.

This may seem impossible to do in the real world, but by adding in an intermediary, you can actually manufacture physical goods that inherit the unique properties of our digital assets.

Digitally Backed Goods

Near Field Communication systems or NFCs are IMO the missing link that makes the idea of shared properties between digital and physical goods both viable and secure. NFCs allow for swift and easy communication between two devices over a small distance (usually 1-4 inches), normally used for wireless and digital card payments (i.e. Apple Pay, Google Pay).

What if though we embedded our physical items with NFCs at the point of manufacturing so that they could communicate the origin of that item via blockchain. If anyone wanted to authenticate an item, they could simply hold their phone up to the NFC chip and see the product’s entire transaction history and origin. With this, NFCs paired with NFTs allow for fully encrypted, non-reproducible, and trusted assets - with the key being physical ownership is tagged to a digital identity (or wallet) via the digital NFT.

In the current domain of generative NFT prints, artists show proof of authenticity via QR codes or in some cases signed prints. Sure, the QR code shows that the asset is on-chain, but in regard to the print’s authenticity, they do nothing. Instead, what would make sense is if an artist embedded a paired NFC in the print and backed it to the digital asset on-chain. For more notable works like Fidenzas or Ringers, this would make physical prints just as valuable as their digital versions - bridging the gap between both physical and digital buyers.

The key to building the software out is creating a secure client/smart contract and connecting digital mints to physical manufacturing systems - where key attributes like digital hashes and token_ids are stored inherently on the complementary physical NFC chips. By doing this, you can both view the asset on chain and verify that the print itself is authentic.

Another way to think about digital backing is as an immutable receipt that also controls the ownership of your item - acting almost like a 2FA for goods. On marketplaces, sellers would connect their digital wallets to prove digital (and physical) ownership, and when a buyer then purchases an item they then receive the digital copy of the NFT in their wallet, along with the physical item in the mail. If the product doesn’t come with its NFT or if the NFC chip doesn’t scan to the verified address, then you know trustlessly that the seller is violating the Terms Of Agreement. Additionally, if the authentic item is stolen, then the seller at most has the physical version without proof of ownership and won’t be able to legally sell their item.

Another great use case aside from art is in the entertainment industry, specifically concerts, festivals, and sporting events. Coachella, one of the world’s largest and most popular music festivals uniquely uses RFID, a less secure version of NFC, to scan festival wristbands for entrance. Yet even with RFID, thousands of scammers manage to sell fake wristbands. Using a digitally backed NFT and NFC verification system, you completely replace the complexity of secondary sales. Sellers would be able to connect their wallet to a marketplace and prove their ownership through the digitally backed NFTs. Using the idea of 2FA above, if you wanted to enter the venue you could provide both your wristband and proof of ownership via your digital wallet. Additionally, this also allows artists to connect further with their audiences digitally by airdropping in-person attendants’ exclusive content to their digital wallet - regardless of whether or not they bought the tickets on the initial sale date or after on a secondary market.

More on Digital Backing

After doing some initial research I realized that Nike actually patented something similar to digitally backed assets in their 2019 “System and method for providing cryptographically secured digital assets (2019)”. Interestingly, the patent only addressed sneakers and apparel. Additionally, the paper was extremely vague in addressing how digitally backed assets would be stored on the blockchain and mentioned nothing related to wireless authentification via NFCs.

Even though Nike envisioned the application in regard to sneakers, its use case can pretty much be applied in almost every domain of eCommerce: luxury goods, exclusive memberships, entertainment, even everyday items listed on Amazon. Depending on the manufacturer, NFCs Chips cost an average of $0.25. So as long as your margins aren’t completely destroyed by a quarter then embedding them somewhere on your item (or its box) could change the demand for authenticity. Counterfeit at this point becomes close to impossible.

Conclusion

In end, the pairing of both NFTs and NFCs extends the advantages of our digital ledgers to the physical world, acting as a means for verified and authentic ownership throughout the entire life cycle of a product. It provides a new way for buyers and sellers to have trusted channels for commerce and additionally extends new use cases to physical ownership over an item.

More on NFCs:

https://emiliaiwu.medium.com/how-does-tap-to-pay-work-and-how-do-i-use-it-b994c15b82d1