Fashion NFTs: Into the Metaverse
By Katherine Loose
Consider the following scenario: You enter the Gucci store on Rodeo Drive. You drained your bank account on last weekend’s concert at the Shrine, so you have zero intention of actually making a purchase. Still, you bring the jacket that caught your eye in the window into the dressing room. You slip it on and snap a couple of mirror selfies, post the best one to your Instagram story, and then you take it off and leave the store. That photo of you wearing the Gucci jacket now exists permanently in the virtual world, despite the fact that you don’t actually own it.
This scenario, designer Jeff Staple would argue, is not wildly different from purchasing a Gucci NFT. NFT stands for non-fungible token, a digital asset – for example, a photograph or video – exchanged on a blockchain. A blockchain is a decentralized online network that stores information as immutable records, offering users an added level of fidelity and security. A Gucci NFT, for example, might be a digital rendering of a Gucci handbag. Although it may seem absurd that someone would want to purchase this digital handbag, our dressing room example suggests that sometimes the value of physical goods lies in our ability to show them off online rather than flaunt them in the real world.
Sure enough, NFTs are a jackpot for the fashion industry. Gucci’s NFT debut, a four-minute video clip accompanying the 2021 “Aria” collection, sold for a whopping $25,000 this past summer. Following this success, a number of other household names jumped on the trend. In September, Dolce & Gabbana sold a nine-piece collection – four NFTs and five physical items – for $5.7 million. In December, designer Mason Rothschild sold one hundred digital renderings of the famous Birkin bag, which he named “MetaBirkins,” for $42,000. In February, Nike – along with recently acquired digital sneaker brand RTFKT – sold six hundred pairs of NFT sneakers for $3.1 million.
As more brands enter the metaverse, more functions of NFTs are being developed at an unprecedented rate. For example, gaming platforms have become an integral part of the fashion NFT market, with brands such as Burberry, Louis Vuitton, and Balenciaga designing “skins” for digital avatars across various platforms. Burberry’s chief marketing officer stated, “We are able to unlock genuine value for the gaming community by encouraging players to interact with our brand in an environment that celebrates art, design and exploration.” Although there is not yet a centralized virtual universe that allows NFT owners to display their cross-platform assets, we may see one developed in the near future.
Of course, fashion NFTs are not contained to the gaming world. These NFTs are infiltrating the physical realm as more and more companies develop ways to incorporate them into existing products. One popular “real world” function of NFTs is to use them as screensavers for iPhones and Apple Watches. Some jewelers have started to design diamond necklaces with embedded screens boasting NFTs. Brands like Hypebrother and Stekkel are now selling accessories – from fanny packs to handbags – with built-in screens or iPad compartments for the same purpose. And if that’s not complex enough, a brand called Overpriced recently released a collection of hoodies that reveal their owners’ NFTs when scanned.
The NFT market has developed a reputation for elitism. Not only are most NFT collectors at the top of the socioeconomic ladder, but the market also thrives off of exclusivity. Many NFT drops require buyers to be members of exclusive online communities of established NFT collectors, which means that the average person may have a hard time getting their foot in the door. That said, we are rapidly progressing towards a society where the virtual and physical worlds are fundamentally intertwined. When that happens, mainstream fashion brands may soon join luxury brands under the enormous pressure to enter virtual marketplaces. Companies that resist that pressure might find themselves soon left behind.
Despite its elitist reputation, the metaverse holds immense opportunity for the fashion industry. Interacting with customers in virtual spaces can increase brand recognition, promote product drops, and personalize the customer experience. NFTs allow brands to think outside of the box in terms of what they can offer customers. Everything is on the table: digital artwork, exclusive backstage footage, collaborative art projects, and more. Virtual spaces also allow designers to experiment with artistic expression without producing unnecessary waste. Standardizing a design process in which trial and error take place virtually would be a major step towards a more sustainable fashion industry.
Arguably the most positive implication of NFTs for the fashion industry is that the blockchain is a democratized and decentralized space in which startup brands and household names alike can share their work. The exchange of an NFT is a peer-to-peer transaction that does not require an intermediary, which means that designers have significantly more autonomy over the distribution and monetization of their work. The blockchain levels the playing field, offering independent designers fair compensation for their work and the opportunity to compete with major corporations.
Recent trends in the fashion industry have proven that NFTs are here to stay. Still in their early stages of development, they have the potential to push the limits of artistic expression and brand awareness in ways we can’t anticipate.
This scenario, designer Jeff Staple would argue, is not wildly different from purchasing a Gucci NFT. NFT stands for non-fungible token, a digital asset – for example, a photograph or video – exchanged on a blockchain. A blockchain is a decentralized online network that stores information as immutable records, offering users an added level of fidelity and security. A Gucci NFT, for example, might be a digital rendering of a Gucci handbag. Although it may seem absurd that someone would want to purchase this digital handbag, our dressing room example suggests that sometimes the value of physical goods lies in our ability to show them off online rather than flaunt them in the real world.
Sure enough, NFTs are a jackpot for the fashion industry. Gucci’s NFT debut, a four-minute video clip accompanying the 2021 “Aria” collection, sold for a whopping $25,000 this past summer. Following this success, a number of other household names jumped on the trend. In September, Dolce & Gabbana sold a nine-piece collection – four NFTs and five physical items – for $5.7 million. In December, designer Mason Rothschild sold one hundred digital renderings of the famous Birkin bag, which he named “MetaBirkins,” for $42,000. In February, Nike – along with recently acquired digital sneaker brand RTFKT – sold six hundred pairs of NFT sneakers for $3.1 million.
As more brands enter the metaverse, more functions of NFTs are being developed at an unprecedented rate. For example, gaming platforms have become an integral part of the fashion NFT market, with brands such as Burberry, Louis Vuitton, and Balenciaga designing “skins” for digital avatars across various platforms. Burberry’s chief marketing officer stated, “We are able to unlock genuine value for the gaming community by encouraging players to interact with our brand in an environment that celebrates art, design and exploration.” Although there is not yet a centralized virtual universe that allows NFT owners to display their cross-platform assets, we may see one developed in the near future.
Of course, fashion NFTs are not contained to the gaming world. These NFTs are infiltrating the physical realm as more and more companies develop ways to incorporate them into existing products. One popular “real world” function of NFTs is to use them as screensavers for iPhones and Apple Watches. Some jewelers have started to design diamond necklaces with embedded screens boasting NFTs. Brands like Hypebrother and Stekkel are now selling accessories – from fanny packs to handbags – with built-in screens or iPad compartments for the same purpose. And if that’s not complex enough, a brand called Overpriced recently released a collection of hoodies that reveal their owners’ NFTs when scanned.
The NFT market has developed a reputation for elitism. Not only are most NFT collectors at the top of the socioeconomic ladder, but the market also thrives off of exclusivity. Many NFT drops require buyers to be members of exclusive online communities of established NFT collectors, which means that the average person may have a hard time getting their foot in the door. That said, we are rapidly progressing towards a society where the virtual and physical worlds are fundamentally intertwined. When that happens, mainstream fashion brands may soon join luxury brands under the enormous pressure to enter virtual marketplaces. Companies that resist that pressure might find themselves soon left behind.
Despite its elitist reputation, the metaverse holds immense opportunity for the fashion industry. Interacting with customers in virtual spaces can increase brand recognition, promote product drops, and personalize the customer experience. NFTs allow brands to think outside of the box in terms of what they can offer customers. Everything is on the table: digital artwork, exclusive backstage footage, collaborative art projects, and more. Virtual spaces also allow designers to experiment with artistic expression without producing unnecessary waste. Standardizing a design process in which trial and error take place virtually would be a major step towards a more sustainable fashion industry.
Arguably the most positive implication of NFTs for the fashion industry is that the blockchain is a democratized and decentralized space in which startup brands and household names alike can share their work. The exchange of an NFT is a peer-to-peer transaction that does not require an intermediary, which means that designers have significantly more autonomy over the distribution and monetization of their work. The blockchain levels the playing field, offering independent designers fair compensation for their work and the opportunity to compete with major corporations.
Recent trends in the fashion industry have proven that NFTs are here to stay. Still in their early stages of development, they have the potential to push the limits of artistic expression and brand awareness in ways we can’t anticipate.