Your next sweatshirt could be hardware for on-chain activities

Let’s just get the word out of the way. “Phygital.”

The buzzword emerged during the peak of the NFT craze alongside terms like “WAGMI” and “fren.” Much of this vocabulary became officially uncool when the likes of Meta and Pepsi posted cringe-inducing tweets celebrating their entry into the metaverse.

Now, we can all breathe a collective sigh of relief and move on. “Phygital” can finally be laid to rest.

Nichanan Kesonpat prefers the term “digiphysical.” The word intentionally places a little more emphasis on the physical good that is inextricably coupled with on-chain records and property rights.

In a recent blog, she writes, “this means that the physical and digital are no-longer distinct products, but two sides of the same coin.”

Kesonpat, a researcher at 1kx, spoke to Chase Chapman on the On the Other Side podcast (Spotify/Apple) about the evolution of the technology and its broadening capabilities.

“A digiphysical good is a physical item with a cryptographic linkage to some on-chain record,” she explains. “The physical and digital aspects become something that’s integrated and integral to being one product itself, rather than these two separate pieces.”

Chapman notes that the issue up until now with the technology is that “there isn’t something that’s forcing those two things to be tied.”

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“Ultimately, you have this weird disconnect.”

Chapman envisions how the concept might be taken a step further. A sweatshirt with a more sophisticated near-field communication chip, or NFC chip, would not only prove NFT ownership, but could hold private keys. “The sweatshirt itself is also the physical access point to the thing that is on-chain.”

This approach “starts to unlock new types of experiences,” she says. The physical good becomes a sort of “hardware” for the on-chain elements.

“With this new, specialized version of NFC chips,” Kesonpat says, “you now have physical products that have signing capabilities.”

In the past, Kesonpat explains, NFC chips embedded in physical goods would be scanned and would bring the user to a webpage, acting as little more than a proof-of-purchase.

“But with chips with signing abilities, now you can do things like have DAO merch,” she says. A user could “be a signer in a multisig and whoever has this DAO merch can get into event spaces and that can act as your ticket.”

Merch as hardware

She gives the example of a festival wristband for access to an event like Coachella.

“The value of the wristband is not just the physical thing that brings you convenience in the event,” she says. Brands could give loyalty points or perks throughout the event via the physical good, she explains.

“The ownership of the physical then becomes a new distribution channel for them.”

But in the case of an event like Coachella, the wristband’s digital record would be tied to centralized servers, Kesonpat says. “Access to that utility is in the hands of the centralized event organizers or whoever issued that product.”

An on-chain record would allow the physical product to instead act as a sort of application programming interface, or API, she explains, “for anyone to program utility on top of it permissionlessly.”

“With artists’ merch,” she explains, “you can basically distribute any physical item and build an API on top where people can assign utility and the users can derive ongoing utility out of it.”

“Today, as a consumer of products,” Chapman says she doesn’t think to herself, “this sweatshirt is going to potentially unlock X, Y and Z in the future.”

But there’s a world in which an NFC chip gives access to a broad range of on-chain possibilities, she says. The technology could change the way that consumers see a variety of products, she says, not only as physical objects, but for what they might enable.

Kesonpat adds, “There’s a world in which you could just call this all hardware. A sweatshirt is hardware.”

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