Digital product passport (DPP) is a seemingly complicated word you will hear mentioned more and more often.
The reason why we are so confident about this is the great added value derived from a technological solution like this.
Transparency will be a great added value for brands, which are incentivized to follow the line dictated by the ESG criteria and “the environmental agenda” for 2030.
From a legislative perspective, it has conducted studies on how digitization, through the product passport tool, can improve transparency and the availability of information on the characteristics of products sold in the EU, in particular to consumers, and facilitate the transition to a more resource-efficient single market.
Furthermore, the digital product passport initiative is part of the proposed regulation on the eco-design of sustainable products and is one of the key actions of the Circular Economy Action Plan (CEAP). This initiative aims to lay the foundation for the gradual introduction of a digital product passport in at least three key markets by 2024: textiles, construction, and industrial and electric vehicle batteries.
The story of NFTs is different; they can only exist thanks to blockchain technology and have gained popularity due to speculation about their application as “digital collectibles”.
The possibilities provided by this technology are endless, and when combined with the digital passport, they can be a real game changer.
Digital product passport in a few words
Digital product passports (DPPs) aim to gather data on a product and its supply chain and share it across entire value chains so all actors, including consumers, have a better understanding of the materials and products they use and their embodied environmental impact.
The implementation of digital product passports in these value chains is designed to support:
- Sustainable product production: enable the transition to the circular economy and boost material and energy efficiency, extend product lifetimes, and optimize product use.
- Businesses to create value through circular business models: thanks to the improved access to data with digital product passports, more businesses can implement service and repair-based business models.
- Consumers make more informed purchasing decisions: once they are provided with information on the total impact of their buying behaviors.
- Verify compliance with legal obligations: the digital product passport will also act as a record of the standards a product complies with and provides auditors with data to evaluate this.
Who needs it the most?
Battery passports have established a precedent for digital product passports, but as other rules in this field take effect, such as the proposed Ecodesign for Sustainable Products Regulation, more demands will be placed on digital product passports. Based on certain product categories that support the EU Circular Economy Action Plan, will be implemented.
Pressure and initiatives to adopt more sustainable business practices are being felt across many industries, including textiles, construction, electronic waste, plastics, chemicals, and the automobile industry. As part of the growing push for digitization, networked data sets, and evaluation of environmental effects across product life cycles, legislation is set to connect these many product categories.
Digital product passports are therefore not a stand-alone concept; several other legislation also includes traceability, chain of custody, and data sharing requirements. These are a component of the Digital Transition and Data Spaces programs of the European Union, which aim to harmonize and standardize access to data.
Non-fungible Token in a few words
Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.
This technology has the potential for several use cases. For example, they are an ideal vehicle to represent physical assets like real estate and artwork digitally. Because they are built on blockchains, NFTs can also work to remove intermediaries and connect artists with audiences or for identity management.
NFTs shift the crypto paradigm by making each token unique and irreplaceable, making it impossible for one non-fungible token to be equal to another. They are digital representations of assets and have been likened to digital passports because each token contains a unique, non-transferable identity to distinguish it from other tokens. They are also extensible, meaning you can combine one NFT with another to “breed” a third, unique NFT.
How Brand can get advantages from NFTs?
1 — Address Licencing Issues
Changing the licensing process is one of the most talked-about uses of NFTs. One straightforward illustration is the chance for artists and creators to sell their work without having to discuss the reward rate with license companies. Using contemporary technology, creators can quickly list their original works of art on an NFT marketplace. Because the transaction is carried out by the provisions of a smart contract, they can set their terms and are free from scams.
2 — Enterprises can use advanced NFTs for advanced licensing opportunities like:
- Their assets are easily under their control
- Keeping track of royalties for less money than with traditional licensing
- Payment terms are becoming standardized across numerous territories.
3 — Authenticate The Product
The blockchain is increasing its potential application for tracking things and establishing product legitimacy by connecting NFTs to actual physical objects. As a result, NFTs can serve as blockchain-based digital certifications of authenticity. A token, as opposed to a traditional paper certificate, can also display the whole production and sale history of the item.
4 — NFTs Can be Used to:
- Represent a product’s ownership
- Asset tracking is done via CRM systems.
- Verify the legitimacy of the goods.
- Right to ownership of music
5 — Using NFT for Marketing
Make membership in the private brand community available. NFT holders can benefit from an exclusive experience by using NFTs as access rights to private communities. NFTs may offer free or reduced-price access to some of your services and goods. Additionally, they can be utilized to deliver branded material that is exclusive, such as webinars, video conferences, behind-the-scenes images, and blog articles.
6 — Making Digital Collectibles Available
Selling and giving away artifacts like toys and baseball cards is a frequent activity. NFTs can’t be replaced, swapped out, or divided, therefore they’ve also become valuable collectibles. The NBA has already seized this chance by launching Top Shot, a website where supporters can purchase NFT bundles that include random notable events from NBA history.
7 — Improving Cybersecurity
The creation of NFT digital signatures to validate transactions and the use of NFTs for authentication to access sensitive data are two further cybersecurity uses for NFTs. These tokens can be used to secure digital assets by utilizing NFT capabilities for validation and smart encryption.
How does the technological ecosystem combine DPP and NFTs?
We are encouraged to consider all forms of value as potentially digital, transferable, and interoperable assets as a result of the development of the tokenization economy, the adoption of digital assets, and NFTs (Non-Fungible Tokens). A digital twin of a physical asset is a DPP that is connected to the asset’s digital representation.
This implies that information reflecting any development or change to a product will be stored in the cloud. Additionally, a DPP could offer rewards for a product-related action, such as issuing a token when the product is recycled, in the case of a tokenization notion.
An NFT can be generated as a digital twin of a product that contains the product’s history (for example, a user memory, location history, an image from an event, past owners, or previous recycling) that can be accessed digitally. This approach motivates consumers to recycle the product and continue its story. Not only does this closely bridge the creator economy and the consumer market, but it brings us closer to a new environment in which all data about a product is saved in DPP, where the product’s pathways compile a tangible story about its life cycle, all digitally available as an NFT.
In this perspective, the NFT becomes part of something much bigger, the digital passport, and can also be used to collect and, above all, community engagement.
Our idea of NFT applied to the world of the Digital Passport is to create a system in which the NFT 1:1 with the physical asset can also be scrolled and sold separately because we believe that it has both economic and financial value.
A brand can create many initiatives and privileges linked to the possession of the NFT, and thus it only creates more demand for both the asset and the NFT on the secondary market.
The benefits associated with NFT are those that give it an intrinsic value and therefore do not generate a purely speculative value that may, in the event of a stock market crisis, may have no attractiveness.
What awaits us in the future?
The idea that an expert-composed company like MyLime has about the future of technology is that a combined digital passport solution will be the future in every sector.
We also believe that as a truly decentralized industry must do, it will be the end users who will start to demand such a solution, as the 21st-century consumer wants transparency and a sense of belonging.
