Can I use an NFT To trade/sell physical items?

An NFT can represent anything, and this includes physical items. This means that authenticity and provenance can easily be tracked.

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The NFT representing the item can offer access to the physical good, either via tokengated sales platforms (where you must hold an NFT to complete a transaction to receive a good), or via another redemption platform.

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The smart contract will have a function to track whether the item has been claimed (i.e. has passed from the location where it is being stored, for example a bonded warehouse, bank vault etc., to the redeemer). This will usually be done via tracking the claim event in the smart contract, and will translate to an attribute of the NFT itself.