Once considered niche and reserved for those in the gaming world, NFTs (non-fungible tokens) have now become coveted items in art, music and fashion. The most significant event to date that proves that NFTs have broken through into the fashion mainstream occurred on 27 February 2021 when design studio Rtfkt and 18-year-old digital artist Fewocious released three versions of customised Air-Force One virtual sneakers as NFTs. The virtual sneakers ranged from $3,000 to $10,000 each. Directly compared to Air Dior, Nike’s most coveted shoe of recent years, the cost of the virtual sneakers exceeded the price commanded by the Air Dior on both the primary and secondary market. In total, Rtfkt and Fewocious collaboration sold 621 of the virtual sneakers, generating $3.1 million in sales in just 7 minutes.
Established brands and fashion houses are now realising that there is a market to be capitalised on and they are embracing it. Companies from Gucci to LVMH to Champion have all either released NFTs or expressed plans to release them in the future. The common thread amongst these companies is that they see these NFT revenue streams as being adjacent to their ‘real-world’ collections. Furthermore, since the terms in respect of reselling an NFT can be predetermined and encoded into the blockchain, brands can receive royalties with each resale. This is the first time these companies have had the ability to participate in the extremely lucrative re-sale/secondary markets where limited edition ‘drops’ sell for many multiples of their retail value.
The fashion NFTs market is still in a stage of relative infancy, and the NFTs being sold by the brands and fashion houses are generally seen as ‘art’ and not necessarily fashion as a utility. However, even this paradigm is starting to shift. The fashion NFTs on a virtual game called ”Decentraland”, a virtual reality platform built on the Ethereum blockchain, allows for players to inhabit their avatars and buy fashion NFTs on the Decentraland wearable marketplace. And whilst many of the fashion items presently available are more akin to traditional gamer skins, branded with Atari or the names of popular cryptocurrency exchanges like Kraken and Binance, it is only a matter of time before more fashion-forward users will be able to dress their avatars in the latest high fashion.
Despite the positive new verticals that fashion NFTs create, both for consumers and creatives alike, there is a considerable environmental impact. At first blush, fashion NFTs reduce the need for physical material and resources required to produce coveted fashion items. However, the mining of assets on blockchain requires vast amounts of energy. For context, Bitcoin mining requires more electricity in one year than the entire country of Argentina. Although it should be noted that most NFTs operate on the Ethereum blockchain, rather than the Bitcoin blockchain, which is currently migrating its system over to a more eco-friendly proof-of-stake consensus to verify transactions.
The fashion industry is ready to fully embrace NFTs, whether as a novelty, a way to integrate and merge the real and the digital, or as assets; NFTs are expected to be a mainstay of the fashion industry.