NFTs, perhaps those very letters make you quake with nerves! Not that many people seem to really know what they mean and yet they’re becoming so important. Barely a week goes by without them appearing somewhere in the news and those in the know are talking about them non-stop. The thing is, NFTs and blockchain are here to stay. They’ve already exploded in a very short space of time. and they are only going to become more relevant to every industry, but they are becoming particularly prominent in fashion.
For designer and luxury brands, they are likely to become essential because certain NFTs have traceability which brings a wealth of opportunity for the circular and resale economy.
Before we move on to find out how NFTs and blockchain will be used to drive the circular and resale economy, it’s worthwhile to provide you with a quick overview of what NFTs are.
Understanding NFTs (Non-Fungible Tokens)
Don’t understand NFTs? You’re not alone but actually, they’re relatively easy to get to grips with if you have some technical knowledge!
Essentially, NFTs are monetized graphics, so images, cartoons, video clips or others that are sold for money and then used by the buyer online, but also offline with the launch of Real Item NFTs (more on these later).
The Birth of NFTs
The very first NFT appeared only a few years ago in Spring 2014 and was created by two digital artists (Kevin McCoy and Anil Dash). Their NFT was named “Quantum” and featured a brief video clip of Kevin McCoy’s wife Jennifer. The clip was then added to the Namecoin blockchain and sold to Anil Dash for a mere $4. Roll forwards a few years to June 2021 and Quantum was sold on to a man called Alex Amsel for $1.47 million! Christies sold its very first NFT digital piece of art in early 2021, for a huge $69 million. The buyer received a digital file of a collage of 5,000 images for the privilege of owning this NFT.
Blockchain is the term for online transactions that are made using bitcoin or cryptocurrency. So when you hear about blockchain, it is an online financial term. Blockchain is the technology behind NFTs, and it provides proof of NFT ownership.
Non-fungible means that the image (or other, e.g. video clip) is completely unique. It cannot be replicated; it cannot be changed, and it cannot be replaced. A fungible item example is a bitcoin because you can sell it for another bitcoin, and you get the same thing back. Therefore it’s not unique.
A unique NFT isn’t fungible (non-fungible) because if you traded it for another NFT or something else, you get something that’s different.
So NFTs are blockchain tokens that represent ownership of a digital asset. Hopefully that explains it!
Resale Royalties and Loans
The digital world is exploding with NFTs, and many have genuine value. NFTs can be avatars, designer brands, artwork, pretty much anything at all! NFTs have another role too, they’re used to claim resale royalties. In fact, such is their power, they can even be used to leverage loans.
Luxury Brands Using NFTs
Luxury brands and big fashion houses are using NFTs already. In August 2021, Burberry launched wearable NFTs (a jetpack, armband and pool shoes) for a crypto video game called Blankos Block Party.
Gucci partnered with the technical gaming giants Superplastic and at the beginning of 2022, Gucci created its own NFT collection called SuperGucci, taking characters from Superplastic and adorning them in Gucci’s classic prints. You could own your very own SuperGucci NFT (if they’re still for sale, there were a few available at the time of writing this piece) for a price of course.
Louis Vuitton is partnered with Beeple, a digital art company and created their first NFT game called Louis which was released last April 2021. With 30 NFTs you can collect them, but you can’t resell them. The game is available on Google Play or the Apple App store.
Another good example is Prada which released 100 NFTs in May this year, to run alongside its latest Time Capsule clothing launch (it wasn’t the first time Prada dipped its toe in the water with NFTs, they’d already partnered with Adidas earlier in 2022).
Prada leveraged its NFT project by giving its Time Capsule buyers a free, air-dropped NFT to use alongside wearing their physical products. The NFTs correspond to certain pieces of the collection and feature a serial number. Prada uses the Aura Blockchain Consortium, a non-profit blockchain solution owned by Richemont that services luxury brands. The aim of the consortium is to promote one, single, global blockchain solution for all luxury brands, giving customers transparency and traceability. This is very important for proof of NFT authenticity.
Other high end luxury brands were also hot to follow in Louis Vuitton, Burberry, Gucci and Prada’s footsteps, with Givenchy, Bulgari, D&G, RTFKT, Ferragamo, Tag Heuer and Jimmy Choo (amongst others) also launching their own NFTs. In fact, owning a designer NFT is set to become as luxurious as owning a physical designer piece, but what about when digital NFTs combine with physical products? Read on to find out about Real Item NFTs and how they’re revolutionising fashion and the circular economy.
Real Item NFTs and Phygitals
As far as the circular economy, there’s a sustainable angle thanks to Real Item NFTs. It’s heartening to see some companies are using NFTs to support their own sustainable efforts. Real Items pair NFTs with real, physical products. The objective here is to change the throwaway nature of the world, into one with less waste and more resources circulated. So what Real Items do is they turn products into Smart products otherwise known as Phygitals.
Real Item NFTs Will Help Drive the Circular and Resale Economy
These Phygitals integrate with NFTs. They can include lots of important information, such as behind-the-scenes images, information on product sourcing, customised videos and even gaming. They also feature traceable data. This is useful for businesses that want to be part of a circular economy. In fact, these Real Item NFTs will help drive the circular and resale economy and here's why...
The Consumer Can See a Product’s Story
Every product that’s brand new, recycled, reused or upcycled has a story to tell and a Real Item NFT allows the consumer to learn about the story. Perhaps where the item was first designed and why, where it was made, when it was made and by whom. The story could include what the production process was, how the product was packaged, transported, shipped and so on. This information area also gives manufacturers the opportunity to talk about using recyclable materials and other sustainable initiatives related to the original product.
Changing the Consumer’s Mindset
For fashion businesses and luxury brands that are driven by eco-friendly initiatives, it gives them a chance to really consider the types of materials and packaging they use. By providing more information on the design process, consumers can also see how their item could stay in circulation, maybe be recycled, upcycled or sold on so it doesn’t end up on landfill. Those purchasing a recycled or preloved item can also trace the story. The goal is to change consumers’ mindsets even more, to be open to new materials and technology so waste is ultimately reduced.
Preloved Items and Recycled Items are Viewed as Products of Value
By using Real Item NFTs, consumers gain even more focus on recycled and preloved items. There’s less chance of disposal of products and more chance of consumers selling on their items to others and giving them a second, or third, or even fourth life.
Items in the linear economy don’t display information alongside them, the production process isn’t visible, there’s no knowledge of why certain materials are used and there’s no backstory available. Using Real Item NFTs, consumers can quickly and easily view the entire end-to-end process, and feel good about buying their product, whether new, preloved or recycled.
There’s More Traceability
Phygitals are traceable, as already mentioned. This helps consumers to take better care of the products that they buy. The unique content associated with each Real Item NFT can also be changed. Consumers will be able to add their own “memories” or any other information they want to their product. So, when the original product moves on and enters the circular economy, the next person gets an item that tells a whole story (and they can add to it), with a beginning, a middle and perhaps the end is further away than ever before, reducing waste. Items become treasured items because of their back stories!
Real Item NFTs Help Business Source and Produce More Sustainably
Businesses rely on spreadsheets and analysis to understand supply and demand. Real Item NFTs also provide necessary information for business owners that gives them even more insight into their customers and their products. When an individual product is scanned, the physical product’s verifiable data is displayed. So, business owners can quickly and easily see how many products they have left, they can also decide how to sell on or dispose overstocks in a more sustainable, eco-friendly way to reduce waste, therefore supporting the circular economy.
Real Item NFTs Enable Business Owners to Listen to Consumers
As well as Real Item NFTs providing an inordinate amount of information on products, the technology is so advanced that it allows consumers to communicate with businesses direct.
This could be to just give feedback on a product, or it could be to share a relevant idea, perhaps to engage in a collaboration. The aim here is for everyone to have the opportunity to be involved in innovating products, maybe through suggesting different, more sustainable materials, design or inventing concepts to transform products! As this exchange of information is fast, it means that businesses can make efficient changes and improve sustainability thus boosting the circular economy.
Real Item NFTs Tackle Counterfeits
The nature of Real Item NFTs means that eventually, they could wipe out counterfeits as no counterfeit would have the associated technology to prove their authenticity. This revolutionises the counterfeit problem. The future could mean that every luxury item (indeed every item) will eventually have its own Real Item NFT, so it becomes completely traceable, with an authenticity guarantee that’s passed on as the product moves from purchase through to resale and onwards. This builds a luxury world where being genuine is never in question because Real Item NFTs are verifiable.
NFTs – Is There an Ecological Impact?
Of course, you may have heard that there’s controversy over NFTs ecological impact. We hear that NFTs are partly responsible for creating CO2 emissions that are created by the blockchain cryptocurrencies used to trade them. This is a real problem, but the thought process is that going forward, big investors in NFTs will plough money back into renewable energy, conservation projects or technology that reduces emissions. However, the technology is still evolving, and does need fine-tuning to ensure that it is an eco-friendly service. Nevertheless, with traceability and dramatically improved authentication, Real Item NFTs are definitely a technology that will help drive the circular and resale economy to new heights.
Written by Emma Crossick