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Here is everything you need to know about the newly introduced Physical Backed Tokens (PBTs) that will solve the common challenge caused by fake and doctored ownership documents in the physical world.
Blockchain technology has proven to be full of endless exploration. Early exploration featured blockchain innovations like cryptocurrency, non-fungible tokens (NFTs), decentralized finance (DeFi), etc. These innovations have constantly evolved to provide users with a better experience. No one would have thought this digital interface would someday interact directly with physical items. Recently, the European Union even planned to use the blockchain to manage the supply chain and perform data storage tasks. Apart from this international body, other major countries plan to use the blockchain in different business sectors.
The experimental use of blockchain technology has brought about a new dimension in this space. This innovation seems to be a chip off the block of NFTs. However, it has a unique feature that unlocks authenticity and rightful property ownership. The newly introduced Physical Backed Tokens (PBTs) will solve the common challenge caused by fake and doctored ownership documents in the physical world. What are PBTs? How do they work? Are they any different from NFTs? This guide answers all questions wandering through your mind regarding PBTs.
Physical Backed Token (PBT) is an open-source token standard built on the Ethereum (ETH) blockchain that connects a physical item to a digital token. Hence, the name is Physical Backed Tokens. Chiru Labs developed the Physical Backed Token following the tracks of NFTs. Unlike NFT physical items like artwork that are represented on the chain, PBT attaches physical items to a digital token via a physical chip. PBT presents a new perspective for brands and creatures to record their experiences. And its use allows for more effortless authentication and tracking throughout an asset’s lifespan.
Interestingly, these digital tokens do not require centralized servers. There is no need for a trusted body to verify an asset’s authenticity once PBT is involved. It can work independently on-chain. Prior to its creation, many institutions have tried or even created some similar to PBT. However, it is the first innovation to offer trustless authentication.
The design of PBTs allows anyone to create, authenticate, and validate experiences because it is open-source and available at no cost.
To better understand the operational mechanism of the Physical Backed Tokens, we need to carefully examine the problem it solves. A quick examination of previously created models shows that the representation of physical items using digital tokens caused problems. These issues result from the separation of the digital asset and token after minting. The previous model caused two major issues. First, these NFTs could not function as a direct substitute for the physical asset. Secondly, there was also a need for separate digital tokens and physical assets verification. NFT attached to a physical item could be swapped on a public marketplace without the physical asset.
Considering these challenges from other models, PBTs differ in using on-chain tracking of NFT ownership and decentralized authentication for a physical asset. It makes it impossible for the token to be separated from the physical asset. It easily achieves this through the BEAN chip, usually embedded in the physical asset. The BEAN chip is a cryptographic chip that stands for Blockchain-Enabled Authentication Network. Items could be exchanged using the scan-to-own feature of the blockchain, and individuals who purchase a physical asset gain PBTs by scanning the BEAN chip. New owners can mint and transfer PBTs to their desired wallets, granting them rightful ownership.
Every physical chip must be able to generate and store asymmetrical key pairs, sign messages using the private key, expose the public key, and keep the private key confidential. No NFT can be minted without being linked to a specific chip. Physical Backed Token uses a special function called “TransferTokenWithChip” that ensures the combination of the physical item and the digital token.
Some of the benefits of Physical Backed Tokens (PBTs) have been discussed in previous sections. Nevertheless, there are many more benefits yet to be discovered. As stated earlier, PBTs will help authenticate physical assets on the digital network, mitigating challenges posed by counterfeiting. It also provides a platform where the ownership details of assets can be publicly displayed, sidelining all forms of third-party individuals and companies.
Physical Backed Tokens will help blockchain startups specialized in supply chain management to track and authenticate good ownerships. Top blockchain startups in the supply chain industry include Blockverify, Everledger, Openport, Origintrail, Provenance, and so forth.
Azuki is the first blockchain studio to introduce Physical Backed Tokens (PBTs) as a trustless and decentralized concept. The studio’s goal was to generate a digital experience from physical items. In order to achieve this, Azuki launched a limited edition of nine golden skateboards on October 21, 2022. These 24-carat gold skateboards represented valuable physical items attached to a Physical Backed Token. At the launch, the team auctioned eight skateboards for a whooping sum of $2.5M, setting a record for the most expensive skateboard in history. The Physical Backed Tokens allow users to create digital tokens and physical items, exchange authenticated goods, and participate in quests.
The Azuki project is an NFT project containing 10,000 special anime-styled samurai and skateboard characters. The project is owned by a group of four artists officially known as Chiru Labs. After introducing PBTs, the price of Azuki’s NFT increased significantly, making it the number one most traded NFT on OpenSea. Unfortunately, the announcement of previous project failures by Zagabond, the team leader of Chiru Labs, caused a sudden fall in price.
Introducing Physical Backed Tokens will ease the authentication of physical goods. With PBTs, companies can track and verify the supply chain of products and original ownership, ditching the need for papers. This discovery is just one of the many upcoming developments in the blockchain industry. Interestingly, anyone can use the innovative PBTs model without prior permission from the original developers.
Hopefully, PBTs become widely accepted and improved, giving rise to more utility. PBT currently involves several physical collectibles like watches, bags, trading cards, toys, books, etc. Future utilities could include physical items like consumable foods, buildings, and so forth. The exploration of PBT is at the budding stage, and there are many more to be unveiled.
A Physical Backed Token is an open-source digital token connected to a physical asset built on the Ethereum network. It allows for the authentication and verification of physical assets. PBTs eliminate the need for a centralized third-party organization in verifying asset ownership. A Physical Backed Token is an upgrade to non-fungible tokens. In layman’s terms, Physical Backed Tokens are non-fungible tokens (NFTs) that depend on a physical item to function or serve its purpose.
PBT works on an interactive mechanism between a digital token and an external physical chip usually attached to material items. The external chip is a Blockchain-Enabled Authentication Network (BEAN) chip and can only function on the Ethereum blockchain. Users must scan the attached chip using their mobile device to claim ownership of the physical item. It is pertinent to note that every transaction must involve a PBT and a BEAN chip.
Azuki is a metaverse branding project that features an Ethereum NFT collection of 10,000 unique, hand-drawn samurai and skateboard characters. The creators styled these characters like figures in popular Japanese anime. Azuki was developed by Chiru Lab, a Los Angeles-based studio. There are four super-talented artists and technologists at Chiru Labs, including Zagabond, 2pm.flow, location tba, and HoshiBoy. Azuki NFTs are listed on Open Sea with a floor price of 10.3 ETH.
Azuki Physical Backed Token is a limited edition of nine golden skateboards attached to a digital token. Each of these 24-carat gold skateboards contains a physical BEAN chip. Owners must scan this chip to claim ownership of the skateboard. Azuki launched its Physical Backed Token on October 21, 2022, after which the price of Azuki NFT skyrocketed. Following the action, the team released a guide video explaining the concept of PBTs.
There are many benefits attached to PBTs. PBTs settle the scores of the problem encountered using the previous authentication model. Notably, this preceding model entails the representation of physical items as NFT with no linkage. PBTs eliminate the need for two separate authentications for physical items and digital tokens. This innovation will aid the sprouting of many other startups envisaging the use of such concepts. Previously existing blockchain companies, especially specialists in supply chain management, can tap into this free and open-source innovation.