A few months ago, Scott Belsky wrote a great piece
on NFTs. Among other predictions, he imagined a not-so-distant future where every ‘real world purchase’, from a Gucci bag to a new Chevy, is accompanied by an NFT establishing you as the owner.
Turns out, Scott was on the money.
Brands are increasingly linking NFTs to luxury goods - and the implications, particularly in the sneaker industry, are pretty cool. Some examples, courtesy of The Fashion Law
a) CryptoKicks. In 2019, Nike filed a patent for blockchain-based sneakers. It works like this:
- Whenever a pair of sneakers is created by Nike, the company generates a corresponding cryptographic digital asset - i.e. a “CryptoKick” - which consists of a unique identifier (like a QR code) that confirms your ownership, and a digital version of the shoe.
Basically: buy a physical shoe, get a CryptoKick free.
Like Belsky imagined, CryptoKicks are a stamp of authenticity aimed at smothering the $450bn
counterfeit sneaker market. But Nike’s taking it one step further.
The patent lets customers “breed” their digital shoe with another digital shoe to create “shoe offspring” – which, depending on manufacturability, can be custom-made as a pair of real, tangible sneakers.
Nike’s end-game, beyond building a digital community, is to edge its way into the resale market. According to TFL, provisions of Nike’s NFT smart contracts mean it could pocket automatic royalties each time Nike shoes or “shoe offsprings” are re-sold.
b) Resale restrictions. Nike can also include provisions in its NFT smart contracts that restrict mass resales ouright. Unlike automatic royalites, this approach is a little fluffy:
- NFT smart contracts can trigger automatic royalties, but they can’t enforce restrictions on who a shoe is sold to.
A few observations:
Nike-specific: the resale market is predicted to be a $6 billion market that, historically, has only benefitted resellers. If Nike successfully rolls out a royalties regime through CryptoKicks, it could claim a stake in the market for the first time.
Nike-specific: this whole ‘collect and breed’ digital shoes thing sounds like a sneaker version of CryptoKitties.
General: luxury brands are jumping on the opportunity to ‘twin’ the digital and the physical, bridging the gap between fashion and virtual worlds.
This quote from TechCrunch
sums up my thoughts on fashion NFTs: “every once in a meme-ified blue moon, the wildly irrational cryptocurrency ecosystem gives birth to something that might outlive the hype.”
just sold for $26k.