Last week’s guest article from Andy Rosen about protecting your IP before you sell a Non-Fungible Token (NFT) provoked considerable interest, with many readers asking for us to once again look at the fast-evolving NFT sector.
What do we mean by NFTs? ‘Non-fungible’ means that the object is unique and cannot be replaced with something else. For example, a £ or a $ or a € is fungible i.e., it can be traded/swapped for another £ or $ or €. If you were to trade a ‘one-of-a-kind’ asset e.g., a non-fungible asset such as a video, Tweet or picture for a different asset, you would have something completely different. The token part of an NFT signifies that the asset as a digital representation on a Blockchain; initially Ethereum was used but, increasingly, we are seeing more Blockchains offering their own version of NFTs, with the huge advantage that other Blockchains can be used at a fraction of the cost of using Ethereum.
Undeniably, the fashion industry is obsessed with authenticity and exclusivity. After all, this is how it is able to justify such high prices, and an NFT able to prove authenticity and exclusivity was ultimately always going to appeal to the global fashion houses. The fact that an NFT can be used in the real world (as well as the virtual world of gaming) offers a whole new market for the fashion industry to monetise its brands accordingly. An Accenture report estimates that the global gaming industry exceeds $300billion and now NFTs can be sold and traded in the gaming industry by fashion brands.
Gucci’s ‘Queen Bee Dionysus’ bag, was originally priced at $5.50, but with clever digital marketing and promotion by being available for just an hour day on two days, its price rocketed to $4,115. It is not simply bags though, as Gucci recently auctioned a four-minute NFT video at Christie’s for $25,000, demonstrating that global fashion brands are undoubtedly beginning to pay attention to NFTs! NFTS have encouraged new fashion-dedicated NFT platforms, such as Neuno, to be established for designers and allow customers to pay with credit cards and cryptocurrencies. As the magazine Vogue mentioned in a recent article, DressX is another NFT marketplace for the fashion industry.
DressX – The Atari Classic Robe
Interesting to note is that John Egan, CEO of L’Atelier BNP Paribas, predicts: “Spending on items like digital clothes and character upgrades to grow to $129 billion in 2021 from $109 billion in 2019. Because NFTs can act as a ‘digital twin’ of a real-life garment—proving authenticity and provenance—brands like Louis Vuitton and Nike are now actively investing in blockchain technology.”
Furthermore, as the publication nssmag.com has commented, there are four reasons why NFTs are attracting the global fashion brands:
• “An NFT can make virtual fashion items as unequivocally ‘signed’ and unique as tangible products, solving the problem of absolute reproducibility of digital clothes.
• With NFTs, the field of products that can be sold as unique is widened. A fashion brand could sell the video of its show or individual backstage photos as NFTs: there may be digital copies on YouTube, for example, but the NFT makes it possible to track down the original piece, which could therefore be purchased by a collector as an original work of art.
• They could be used to extend the value of physical products. They could therefore act as certificates of authenticity in the form of digital artwork to reinforce the uniqueness /scarcity of a product but also as a digital copy “associated” with the physical product and therefore usable online for the avatars of a video game.
• NFT as certified could have an impact on the world of resell, not only by keeping an accurate map of the changes of ownership of a certain object but also, for example, by providing brands with a percentage of royalties every time their product is sold in the secondary luxury market.”
Whilst sales of NFTs have fallen recently from the $2billion we witnessed in Q1 of 2021, we are equally seeing more global brands entering this sector and new NFT platforms being launched – such as WENEW, founded by Beeples, who sold his NFT for $69million. WENEW is an NFT marketplace for the sports industry, history and pop culture and, to coincide with Wimbledon fortnight, it is launching NFTs around the tennis player Andy Murray.
Interestingly, also of note is that while the Chinese have recently been clamping down on cryptos such as Bitcoin (by closing mining operations in China), according to Reuters they would appear to be encouraging NFTs – calling them Digital Art. Alipay, which is owned by the Chinese company, Ant Group, sold 16,000 NFTs at $1.52 each within hours. The NFT buyers of the image will appear whenever they use Alipay. If NFTs remain outside the scope of the crypto crackdown in China this ought to fuel the prices of NFTs globally only further. In June 2021, the BBC reported that there was a growing trend for the Chinese to be less conspicuous with their consumption and buying of luxury fashion brands. One wonders therefore, will Chinese buyers of physical luxury goods turn their buying power to digital goods such as NFTs?