Authors:
John Pistone, Kristen Chung, Manda Miller
Abstract:
When consumers purchase real world items that are unique, limited or luxury and numbered (such as high-end handbags or watches), an NFT (Non-Fungible Token) will be assigned to that item and the consumer is now the owner of that NFT. One aspect that is novel is the use of smart contracts to automatically transfer NFTs versions of physical products to owners at the Point of Sale. This requires that any physical high-end item, for example a Hermes Birkin Bag, to also have an associated NFT, and for the purchaser to have some sort of digital wallet to house NFTs, which is common now. Once the purchaser acquires the physical item, a smart contract will deliver the NFT at the Point of Sale.
The NFT will also enable the consumer to access this item in the virtual world - the Metaverse. For example, if a consumer buys a high-end handbag, those items will be assigned a unique NFT that allows the user to access a virtual version of the product on the Metaverse. If the product is resold in the real world to another consumer, the NFT is transferred to the purchasing consumer. Both the NFT and the physical item transfers in order for the transfer to be authenticated by the smart contract. The selling consumer will give up the rights to the product in the real world and in the Metaverse and the purchasing consumer will have access to that product in the real world and in the Metaverse.
Background:
One-of-a-kind items are available both at NFTs and real-world items, but authenticating the two together, and selling them as a pair, is not known to be easily possible in retail. Many luxury items are highly sought after and being to replicate this and show this in virtual worlds such as the Metaverse, will allow consumers to pull double duty with one-of-a-kind luxury items.
Consumers need a platform that will allow NFTs to be assigned to unique, limited and luxury physical products and provide not only proof of authenticity and ownership but access to those products by the purchaser in the digital world.
Repurchases will also require a transfer of the NFT to the new owner - example if I sell my Ferrari to another consumer, that consumer will get the physical Ferrari as well as the digital Ferrari. Both come as a package, and this helps with authenticity.
High-end items can sometimes be stolen, so embedded is the smart contract and in general, a trail of payments (via a wallet like PayPal that can house both physical and digital blockchain payments). So, the Birkin bag is a known item with an NFT that is registered in a digital ledger and physically tagged in some way to identify it as on digital ledger. Smart contracts are only executed when all criteria are met. If the High-end physical item is stolen, transfer of the NFT is hindered, as smart contract requirements wouldn’t be met, and the owner would be able to lay claim to the item if ever found. Conversely, it would somehow be tagged as having an NFT, so any purchaser would know that the item is stolen, because they would not be able to also get the NFT via the smart contract.
Description:
Virtual items can be one-of-a-kind and directly tied to a luxury, one-of-a-kind physical item, and smart contracts can be tied to point of sale purchase in a physical environment.
Physical items can be marked as NFT items and tied to smart contracts.
People have both the NFT and physical item to claim ownership, physical items would have a digital trail via a wallet.
Platform or marketplace where manufacturers place NFTs attached to real inventory, until that inventory is sold. The NFT will make the journey from manufacturer to distributor to retailer and finally to consumer. Consumer will have a digital wallet that can accept NFTs. This wallet is used at the Point of Sale when making a physical purchase.
The platform will reproduce the physical item into a digital twin. The consumer upon purchasing the physical item will receive the NFT that will allow them to access the rights and the digital version of the item via the marketplace.
If the consumer at a future point decides to sell the physical product, the NFT will at that point (via smart contract be reassigned to the new owner).
The duplication of physical items into digital at the point of purchase in the physical world is where we think there is differentiation. The point of sale is a main contributor to initiating the smart contract and NFC transfer.
One aspect that is novel is the use of smart contracts to automatically transfer NFTs versions of physical products to owners at the Point of Sale. This requires that any physical high-end item, for example a Hermes Birkin Bag, to also have an associated NFT, and for the purchaser to have some sort of digital wallet to house NFTs, which is common now. Once the purchaser acquires the physical item, a smart contract will deliver the NFT.
The other novel aspect is the automatic transfer of the NFT to the new owner even in resell and secondary markets. So if the owner above, decides to sell their physical Birkin bag, the NFT also transfers to the new owner via smart contract, which would have a set of rules that must be met for the proper transfer of both the physical and NFT item.
TGCS Reference 3087
