Non-fungible tokens (NFTs) offer new ways for consumers to collect, wear and trade fashion online, and now that most fashion shows have scaled back or gone virtual, they may become an important tool for the industry.
Because some of the most profitable NFTs are produced by celebrities with teams, it makes sense that music corporations, fashion brands and designers are venturing into the NFT market as well. Just this month, sneaker brand RTFKT Studios garnered $3.1 million in seven minutes by selling crypto collectibles. In December 2020, NFT startup Enjin partnered with Netherlands-based fashion house The Fabricant on a virtual collection. Real-life fashion brands use NFTs for marketing in virtual worlds like Minecraft, plus several Atari and Microsoft video games.
“Brands are coming up with some creative solutions because the pandemic is persistent, and fashion is something that is so close to our identities,” said Bryana Kortendick, Enjin’s VP of operations and communications. “You can snap a photo of yourself wearing your Atari-branded NFTs. You’ll also be able to wear them in video games.”
Breakout NFT star Beeple said he imagines a future where fashion NFTs could be redeemed for specific items in physical stores, especially at luxury retailers like his former client Louis Vuitton.
“You can relate NFTs to clothing in new and interesting ways,” he said. “This will be seen as the next chapter of digital art history. This is a continuation of digital art history that started decades ago, by that I mean art made on a computer and distributed through the internet.”
Fashion designers like Schirin Negahbani are already creating NFTs that represent actual clothing. Precisely because multimillion-dollar NFT sales are breaking records, spectators have been prompted to question the role speculative trading plays in this trend.
Textile designer Amber J. Dickinson says fashionable NFTs shouldn’t primarily be viewed as speculative trading opportunities. “The way I think fashion translates to the digital world is to view an NFT as a collectible piece of the garment for history,” said Dickinson, known for hand-made silk scarves and her work with Alexander McQueen. “I would only buy art as a piece that I liked. Whether digital or in the real world, I don’t take an investor’s point of view.”
There are many fashion fans who disagree with Dickinson, preferring to invest through assets like Birkin bags. They may have a different approach to NFTs. The DIGITALAX crypto fashion platform, for example, is being built with a plethora of trading features. As for Dickinson, she said she is still looking for her tribe of crypto-savvy artists on Twitter.
“There’s too much fast fashion and consumers are not encouraged to hold a particular item or style,” Dickinson said. “I hope NFTs will bring back that mentality of treasuring a piece of fashion. Some people already collect shoes, don’t they?”
Dickinson aims to make her first NFTs in 2021, fundraising to manufacture her collection of printed silk scarves. It’s a slow process, she said, because she feels intimidated by the technology and isn’t sure which platform is the best way to find collectors, not traders. Because she wants to avoid the NFT hype, she says she’s not in a rush.
“I only came back onto Twitter because of this NFT movement,” Dickinson said. “It’s nice to have direct access to a community of artists. It’s about trying to find the right audience.”
Crossing over to the video game community
Brands like Gucci are already exploring ways to find new audiences through video games like Roblox and Animal Crossing. Blockade Games CTO Ben Heidorn says NFTs will be the next step in that evolution.
“We would like to do a fashion line that has a digital analog; it could be displayed during times like New York Fashion Week,” Heidorn said. “We’re going to have an expansion set that feels like Magic the Gathering — expansion sets every few months. There will be missions and campaigns, all the nerdy fun stuff.”
Blockade Games CEO Marguerite deCourcelle is a crypto influencer with a uniquely stylish flair. As such, Heidorn said the startup is exploring options for real clothes that gamers can wear, just like they do in the video game. He added the startup has garnered more than $252,000 since 2019 by selling NFTs for Neon District, a role-playing adventure game designed by the studio.
The reason some gamers might prefer an NFT over a nonblockchain asset is the option to secure custody of the item for use in other games or mobile apps. That’s the fundamental value NFTs offer to bridge virtual fashion items with video games.
“The game is free to play. The only time you would want to pay is to get assets faster. We can also take a small cut from secondary sales, which is standard for trading NFTs,” Heidorn said.
Namely, many NFT companies give a small percentage of peer-to-peer sales on their platform to the original creator. So if someone purchases a video game character with cool clothes then later trades it with another player for $25, a few cents of that transaction automatically go to Blockade Games.
“This is fundamentally changing the economy of gaming,” Heidorn said. “You have to build it in a different way so that people who come in without a lot of money, or any money, can still play and have fun.”
Gas prices and the technical challenges of NFTs
But there’s still a technical challenge “crippling” the NFT economy, Kortendick said. It’s Ethereum’s sky-high transaction fees, due to the fact that decentralized blockchain networks are almost impossible to scale.
NFT artists like Vector Meldrew spend up to 10% of their monthly income on Ethereum “gas” fees, he said. “I consider transaction fees a business expense, and unless it’s an emergency, I wait until the gas fees are low,” Meldrew said.
For now, NFT companies like Enjin and the video game studio Blockade Games offer in-house solutions so that users can choose whether they want to rely on the cumbersome Ethereum blockchain layer.
Heidorn said users can use custodial Matic Network solutions to play games like Neon District for free despite Ethereum’s slow and expensive blockchain. As for Enjin, Kortendick said the company’s private JumpNet solution gives users the choice to transact freely with the company’s tools or pay Ethereum transaction fees for on-chain transactions.
“Developers can mint everything for free. Users can transact and trade,” she explained. “If they want to move it back over to Ethereum, they can, and then there would be a transaction fee.”
Those fees are a hurdle for creators like Dickinson, who are already low on startup capital and unsure which platforms are the best way to connect with her stylish audience. After all, a garment that NFT fans can wear in a variety of public spaces, from concerts to virtual worlds, is more valuable than an asset restricted to one platform.
“With all the gas fees, the different platforms have different charges,” Dickinson said, adding that she sees NFTs as a crowdfunding mechanism that can also complement tangible garments. “It’s a little bit difficult to wrap my head around it.”
That’s why Enjin is focused on in-house solutions for interoperability: so that users will eventually have access to a variety of blockchains and gaming platforms. Then NFTs will be able to “unlock real-world utility,” she said, serving as digital vouchers for event tickets and IRL garments. Kyiv-based fashion designer Anna Karenina already offers fashion show audiences the chance to buy her crowdfunding tokens, so it’s not a stretch to imagine NFT fashion show tickets as well.
“Physical access and real membership,” Kortendick said. “That’s the future of these tokens.”
The NFT market is just getting started, but where is it headed?
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