Physical notes for just holding doesn't really make sense, because there are better ways for cold storage. The main purpose of a physical note is to enable bitcoin to be used as a medium of exchange. It's easy to exchange with instant finality, it protects privacy, and it works in offline settings.

I skimmed through the patent, but I'm still confused how it works. It is a multi-sig wallet which can be re-keyd with just one key, but can't be spent without cutting it. How does it exactly work?