Of course the fashion world is interested in NFTs: In an industry obsessed with authenticity and exclusivity, a token that guarantees precisely those qualities makes perfect sense.
Just how much sense you find in the digital clothes authenticated by those non-fungible tokens, meanwhile, probably depends on how you feel about the metaverse.
New York-based communications consultant Josh Ong has already spent $500 on a pair of silver NFT sneakers and probably won’t stop there.
“For instance, when I’m hanging out at the Atari Zed Run race track or at the Bored Ape Yacht Club when they open, I might want some more items to go with my avatars,” the 37-year-old said, referring to spaces where activities include virtual horse-racing and creating digital graffiti.
Online spaces where users can interact with each other and participate in a virtual economy have their origins in gaming. But competing is far from the only thing happening there. Real-world musicians are performing for audiences of millions, hard-earned cash is getting spent on virtual land and Big Fashion is making inroads into a global community with 2.7 billion members.
A digital version of Gucci’s Dionysus bag sold on Roblox Corp.’s platform for about $4,115. That’s more than the price of the physical item. Kering SA stablemate Balenciaga presented its Fall 2021 collection within a playable video game. All the way back in 2019, LVMH Moët Hennessy Louis Vuitton SE released a capsule collection for Riot Games Inc.’s League of Legends.
The virtual economy is “one of the greatest economic opportunities of our generation,” John Egan, CEO of L’Atelier BNP Paribas, said in an email interview.
“It represents a huge opportunity for companies in any sector. Sports, tourism, entertainment and especially finance. New financial products, designed for digital lives, are only a couple of years away,” he said.
These worlds might be virtual, but the money backing them is very real. In April, Epic announced a $1 billion funding round to support its “long-term vision for the metaverse,” while L’Atelier BNP Paribas expects in-game spending on items like digital clothes and character upgrades to grow to $129 billion in 2021 from $109 billion in 2019.
Paying for purely cosmetic digital items isn’t a new idea. Gamers have been purchasing add-ons such as stickers or character armour since at least the mid-2000s. And looking good online is something more and more of us are invested in, after months of pandemic-induced virtual meetings (and a decade and a half of social media). You may well already know someone who has spent a three-digit sum on a selection pack of Zoom backgrounds, or a ring light to better illuminate their face on-screen. Think of virtual fashion as a step further down that digital path.
NFTs transform digital garments from a sophisticated form of marketing into tradable design objects. By recording ownership of an asset on the blockchain, they ensure ownership, authenticity and scarcity.
They also attract a new clientele. Brands “not only are able to reach their existing customers, but also to tap on a new group of investors who are not big fans of luxury companies but are more interested in the blockchain space,” said Dr. Angel Zhong, a senior lecturer in finance at RMIT University in Melbourne.
“It’s only a matter of time” before major fashion houses get into NFTs, Gucci told Vogue Business back in March. The company recently auctioned a four-minute NFT video at Christie’s for $25,000.
Smaller brands are already going much further. RTFKT Inc.—pronounced “artifact,” and considered NFT fashion’s frontrunner—sold about 600 pairs of digital sneakers for $3.1 million in seven minutes in February.
The company, founded by Chris Le, Benoit Pagotto and Steven Vasilev, recently raised $8 million in a funding round led by Andreessen Horowitz. It has collaborated with Atari Inc. and Electronic Arts Inc., as well as heiress and early NFT adopter Paris Hilton.
Unusually, the company’s NFTs entitle the holder to a pair of physical shoes as well as a digital item, adding to the appeal for would-be collectors. RTFKT also has a partnership with Snapchat that allows customers to “wear” their digital sneakers via the app’s filters.
“I believe in a future where augmented reality will be a huge part of society,” Le said in an interview. “You’re going to be walking out on the street and seeing NFT clothing on people.”
For some designers, digital fashion is an opportunity to disappear down imaginative rabbit holes beyond the reach of real-world design. In the metaverse, there’s nothing to stop you from creating—and selling—permanently burning shoes or a jacket with a levitating collar.
“It’s about exploring parts of your identity and maybe expressing parts of yourself that you wouldn’t normally within your physical world,” said Michaela Larosse, head of content and strategy at The Fabricant, a digital fashion house that sold a shimmering blockchain dress for $9,500 in 2019.
Neuno is a fashion-specific NFT marketplace that hopes to displace generalist rivals like Valuables (where Twitter Inc. co-founder Jack Dorsey recently auctioned his first tweet) by working directly with designers and allowing customers to pay with credit cards as well as cryptocurrencies. DressX—a site that mostly sells non-NFT digital clothing—currently has 70 designers on its platform, and says sales have doubled every month since October 2020.
While digital garments can push the boundaries of expression and business, their utility is limited. Even online.
Owners can interact with a NFT outfit through augmented reality on their smartphone or with an avatar in some games. But the metaverse isn’t a joined-up place. A Fortnite-compatible garment can’t be used in Decentraland, or vice versa.
A true, immersive metaverse will slowly emerge over time, according to Matthew Ball, managing partner at communications firm Epyllion Co., requiring “countless new technologies, protocols, companies, innovations, and discoveries.”
Whether the myriad online worlds that exist today can merge into one consistent space—particularly given the very different Chinese and American approaches to the internet—remains to be seen.
“People are increasingly valuing virtual goods just as they value real-world goods, so NFTs can almost emulate that form of traditional ownership,” L’Atelier’s Egan said.
“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.”
(Corrects to clarify the digital version of Gucci's Dionysus bag was sold on the Roblox Corp.’s marketplace platform, not by Gucci itself in sixth paragraph.)