Breaking Down the NFT Craze: Linking the Digital to the Physical

Veracity Protocol
4 min readMay 18, 2021

The adoption of cryptocurrency has exploded over the past year as the pandemic shook up the world as we knew it and drastically increased the value of digital payment systems. One side effect of this “crypto-rush” was a tangential rise of interest in NFTs, or non-fungible tokens. Headlines of crazy transactions, such as the “Nyan Cat” meme being sold for $531,000 and Jack Dorsey’s first tweet going at the price of $2,900,000, baffled investors and sparked global interest.

What are NFTs?

NFTs are pieces of digital content that are linked to the blockchain system. Unlike coins (think Bitcoin and Dogecoin which are fungible, meaning that they can be replaced with an identical one of the same value), NFTs are non-fungible, meaning that they are truly unique and not mutually exchangeable. Essentially, NFTs allow people to commoditize digital assets and trade them as if they were physical assets, with authentication on the blockchain to track all transactions.

The most expensive NFT was sold for $69.3M. The artwork is named ‘’Everydays: the first 5000 days’’ a compilation of 5000 digital images.

This technology has allowed online artwork, memes, GIFs, tweets, sports highlights clips, and countless other forms of digital assets to be monetized and traded as if they were physical and tangible items.

NFTs can be used to represent items such as photos, videos, audio, and other types of digital files. Source: Mundissima /

Essentially, NFTs utilize blockchain technology to establish uniqueness and authenticity for digital assets, something that has never been done before. Just like how physical collectibles (trading cards, shoes, artwork, etc.) retain their value due to the exclusiveness of the objects, NFTs allow creators to apply that exclusivity to digital assets.

Linking NFTs back to the physical

Although NFT technology applies to digital assets, the rapid adoption of this phenomenon has also impacted the traditional physical collectibles space as well. The NFT craze is a demonstration of the fact that authenticity and exclusivity are the backbone value providers of the collectibles industry. People are willing to pay high prices for objects (even if they’re not physically tangible) as long as they know that it is unique and original.

A non-fungible token is a unique, irreplaceable digital asset verified using blockchain technology. It cannot be replicated and is used to certify authenticity and ownership.

That said, in many cases, an NFT can be tied to a physical object though it is not the object itself. Traditionally, QR codes and NFC tags served as that link or bridge — however, as has become apparent, they are not foolproof.

CryptoPunks and CryptoKitties were some of the first NFTs. Today, the most expensive CryptoKitties token sells for $100,000+ and CryptoPunks for $1M+. Source: Rokas Tenys /

When it comes to physical objects, there has always been a widespread presence of counterfeits in the market. Because physical objects can easily be manipulated, investors become less confident that they are purchasing the “original” piece instead of a fake. In addition, it is very difficult to track the past transactions of physical collectibles, as there is no digital record that is directly connected to the object.

To solve this problem, the physical collectibles industry must take notes from the NFT market and find a way to create a link between physical objects and their digital representation. Companies such as Nike, have already made moves to establish this connection, as shown by their launch of the CryptoKicks program which offers buyers of shoes a digital asset attached to a unique identifier of that shoe.

How Veracity Protocol can help

Fortunately for companies in the collectibles space, there is already an existing solution that can help players link physical objects to the digital — without the need for external or embedded security elements. Veracity Protocol’s computer vision technology is able to capture an object’s material structure as a unique identifier to create a digital record. This ensures that the digital record would only be connected to the original physical object and that counterfeits or duplicates would be detected 100% of the time.

Veracity Protocol enables any camera to create a tamper-proof Physical Code™ based on an item’s material structure. This secures its authenticity, identity, and security — without special hardware, embedded tags, chips, or markers.

Veracity Protocol’s technology is being used in various use cases throughout the collectibles industry from trading cards to coins. Because the technology works through smartphone cameras, physical objects can be authenticated and verified by individual traders and buyers as well, providing a sense of real-time trust and security in collectible marketplaces.

Our Physical Code™ is a non-invasive and tamper-proof solution to represent an item’s unique material structure.

If the NFT craze has taught us anything, it is that the link between the physical and the digital is becoming more valuable than ever. Veracity Protocol’s solution allows companies to seamlessly integrate this link and provide a sense of immutable trust to their products, brands, and end customers.

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Veracity Protocol is an award-winning startup that builds a Vision AI Standard to protect people and products in the digital world. The standard guarantees the highest level of trust and security for verifying the identity, authenticity, and integrity of physical objects using a smartphone.

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