The fashion world is interested in non-fungible tokens. In an industry obsessed with authenticity and exclusivity, a token that guarantees precisely those qualities makes perfect sense.
However, how much sense you find in the digital clothes authenticated by those NFTs probably depends on how you feel about the metaverse.
New York-based communications consultant Josh Ong, 37, has already spent $500 on a pair of silver NFT trainers and probably will not stop there.
“For instance, when I am hanging out at the Atari Zed Run racetrack or at the Bored Ape Yacht Club when they open, I might want some more items to go with my avatars,” he said, referring to spaces where activities include online horse racing and creating digital graffiti.
Online spaces where users can interact with each other and participate in a digital 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 being spent on online 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’s platform for about $4,115. That is more than the price of the physical item. Balenciaga presented its Fall 2021 collection within a playable video game. In 2019, LVMH Moet Hennessy Louis Vuitton released a capsule collection for Riot Games’ League of Legends.
The digital economy is “one of the greatest economic opportunities of our generation”, said John Egan, chief executive of L’Atelier BNP Paribas.
“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 online 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 such as digital clothes and character upgrades to grow to $129bn in 2021, from $109bn in 2019.
Paying for purely cosmetic digital items is not 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 coronavirus-induced online 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 online 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 tap a new group of investors who are not big fans of luxury companies but are more interested in the blockchain space”, said Angel Zhong, a senior lecturer in finance at RMIT University in Melbourne.
“It is only a matter of time” before major fashion houses embrace 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, pronounced “artefact” and considered NFT fashion’s front-runner, sold about 600 pairs of digital trainers for $3.1 million in seven minutes in February.
The company, founded by Chris Le, Benoit Pagotto and Steven Vasilev, recently raised $8m in a funding round led by Andreessen Horowitz. It has collaborated with Atari and Electronic Arts, 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 trainers via the app’s filters.
“I believe in a future where augmented reality will be a huge part of society,” said Mr Le. “You are 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 is nothing to stop you from creating – and selling – permanently burning shoes or a jacket with a levitating collar.
“It is about exploring parts of your identity and maybe expressing parts of yourself that you would not 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.
For other players, digital clothing is about new business opportunities.
Neuno is a fashion-specific NFT marketplace that hopes to displace generalist rivals such as Valuables (where Twitter co-founder Jack Dorsey auctioned his first tweet) by working directly with designers and allowing customers to pay with credit cards and 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 an NFT outfit through augmented reality on their smartphone or with an avatar in some games. But the metaverse is not 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 company Epyllion, requiring “countless new technologies, protocols, companies, innovations and discoveries”.
Whether the myriad online worlds that exist today can merge to become one consistent space remains to be seen.
However, NFT buyers are unperturbed.
“People are increasingly valuing virtual goods just as they value real-world goods, so NFTs can almost emulate that form of traditional ownership,” said L’Atelier’s Mr Egan.
“Because NFTs can act as a ‘digital twin’ of a real-life garment – proving authenticity and provenance – brands such as Louis Vuitton and Nike are now actively investing in blockchain technology.”