Why NFT is taking over the Fashion World
Updated: Apr 27, 2021
Until now, the idea of spending real money on virtual clothes was something for video games, not the real world. On February 27, design studio Rtfkt and 18-year-old digital artist Fewocious released a trio of doodled over Air-Force One-esque virtual sneakers for around $3,000, $5,000, or even $10,000 a pop. Not even the coveted Air Dior sneaker retailed for that much, and those you could actually put on your feet. Still, 621 pairs of the digital shoes were purwhy-nft-is-taking-over-the-fashion-worldchased for a net sale of $3.1 million. That’s a profit margin high enough to interest even the most conservative of fashion’s old guard. The question now is this: what’s the most profitable way for brands to act on this newfound interest? Of course the answer can’t be confirmed until invoices hit bank accounts, but thus far the possibilities appear to be endless.
Here is a quick lesson in NFT's by the WSJ
The ability to turn the virtual into tangible profit is thanks to NFTs, otherwise known as "non-fungible tokens,” which are one of a kind digital assets authenticated and minted using blockchain technology. Integrated into the blockchain is a virtual archive that codifies an accessible record of individual transactions (like the purchase of a pair of Rtfkt and Fewocious sneakers). The record cannot later be modified, which means blockchain-backed transaction is also verifiable proof of the price, authenticity, and proprietorship of a good.
Steven Vasilev founded Rtfkt back in 2019 in the hopes of capitalizing off of collectable sneaker hype. Also the founder of custom sneaker brand Free Customs, Vasilev launched the virtual sneaker company with Chris Le, a gaming skins developer, and Benoit Pagotto, a brand director for the professional esports organisation Fnatic. Their initial business scheme was to sell custom sneakers anywhere from $300 to $3,000 that came with a digital copy. The big idea was that sneakerheads could flex their kicks on social media without having to take them out of the box, which would decrease their value. Sneaker resellers got continuous clout from their stock and still flip pairs for the highest bid on StockX. Scandanavian brand Carlings also began selling 3D renderings of their clothes back in 2018. The label put a 19-piece collection of virtual items up for sale for only $11 to $33. At the time, Carlings had over 200 stores across Scandinavia, all of which sold clothes for much higher profit margin than $11 to $33. The digital clothes were meant merely to promote environmental sustainability, and substitute the real clothes the brand might send to Instagram influencers for sponsored ads online. We can all relate to having that one (or more) item that rarely gets worn, but at one point made for a good #OOTD. Carlings proposal was to save materials and closet space by digitizing the semi-necessary purchases we tend (as overconsumers do) to make anyways.
Clever as they were, both Vasilev and Carlings’ prior business plans were flawed because their digital assets could be replicated. And in Carlings case, the digital assets were unaccompanied by physical counter parts. A sale of $11 to $34 may not seem like much compared to what NFT pieces are goig for now, but that was quite the investment for a 'fit pic back then.
NFTs cancel out copycat concerns, as well as increase the value of any physical products linked to NFT purchases. High fashion brands like Gucci, Louis Vuitton, or Prada looking to target a young, resale market obsessed audience, stand to gain a lot by approaching NFTs this way. That’s because the terms of reselling an NFT can be predetermined and encoded into the blockchain, requiring that brands receive royalties with each resale.
Differentiating counterfeit copies of luxury goods from the real thing would be no hassle at all (goodbye StockX authentication center wait times). Even more exciting: designers could profit in perpetuity. The digital artist by the name of Beeple, for example, is contracted to make 10 percent in royalties every time one of his NFTs sells on a secondary marketplace. The artist recently sold one of these NFTs for $69 million in an auction at Christie’s. If handbags, sneakers, and watches came with this sort of guarantee, designers could be rolling in cash.
Luxury labels may also consider NFTs as a way of marketing to wealthy gamer types. Popular digital realms like Fortnite, Pokémon Go, and Animal Crossing encourage players to go all in on their outfits, and the latter has already teamed up with designers like Marc Jacobs and Valentino. Gucci has been experimenting with this using a variety of in-house-made games on its own app. Earlier this year it even leaped into the world of Pokémon Go with its North Face collaboration, but the outfits couldn’t traverse other gaming-spheres. In real world speak, this would be akin to buying a Birkin bag in New York City, and never being able to take it off the island of Manhattan.
For non-gamers this might sound ludacris. Who in their right mind would spend thousands (tens of thousands even) on an outfit for a video game? And even if you were, whose to say gaming platforms will utilize the same NFT-enabling tech as their competitors? In all liklihood, it will take a while for games likes Fortnite and Animal Crossing to come to a mutally beneficial agreement. And truthfully, if you struggled to justify purchasing Kim Kardashian’s wedding dress to wear in her Kim Kardashian: Hollywood game, this niche just might not be your thing. You may reconsider however, if the item was, say, a virtual dress from the Hanfia Instagram Live show last May.
Designer Anifa Mvuemba of the curve-inclusive brand Hanifa debuted a collection of 3D rendered clothes in May 2020 that caught the fashion industry's full attention. The presentation was groundbreaking and seemed like a solution to keeping runway seasons alive amid the COVID-19 pandemic. However, the hype that followed Mvuemba’s show never manifested into the modeless VR runway season that could have been. That next New York Fashion Week was opened with an in-person runway by Jason Wu, with physical clothes, models, and even an IRL audience.
Thanks to NFTs though, Mvuemba’s virtual efforts last spring may not have been in vain. NFTs authenticate digital assets of any kind as though they are fine art. Hanifa’s digital garments represent an important moment in fashion history, and would be worth a lot to both fashion history buffs or fans of the brand. Fashion archivists, academic institutions, or museums may even consider this as a way of displaying a Hanifa look. The verifiable uniqueness of the NFT would deepen the commemoration of the runway show and designer.
NFTs also don’t have to be renderings. Singer and self-proclaimed crypto queen Grimes auctioned her WarNymph collection of 10 digital works using NFTs, and the pieces ranged from images to short music videos. Created in collaboration with her brother Mac Boucher, and sold on a platform named Nifty Gateway, Grimes made around $6 million from the 10 sales. The NBA’s digital products directive Top Shot also cashed in after collaborating with the blockchain company Dapper Labs. The pair sold virtual basketball cards, thus far resulting in over $230 million worth of transactions. Twitter founder Jack Dorsey recently auctioned an NFT of his first ever Tweet that sold for $2.9 million on Valuables, an NFT marketplace.
Will the NFT bubble burst or is this the start of a new digital revolution in the world of fashion collectibles? Time will only tell.
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