Tiffany & Co Has Joined The NFT Wave: Does A Sparkling Future Await?
The past two years have seen fashion brands sell physical products in NFT form in a bid to innovate their revenue models. In August last year, the NFT collectible “Coca-Cola Friendship Box”, jointly launched by Coca-Cola and 3D virtual avatar application platform Tafi, was auctioned on the OpenSea platform and fetched an impressive price of about US$540,000.
End last year, sports brand Adidas entered the metaverse and designed a total of 30,000 NFTs, all of which were sold out within minutes of release. Other designer brands have also joined the NFT hype — just a week ago, jeweler Tiffany & Co announced that its first NFT collection, “NFTiffs”, will launch on August 5.
According to a recent report from Huobi Research Institute, 17% of the brands in the Vogue Business Index are exploring various strategies to utilize NFTs in their business. Such a trend is clearly changing the way brands and their customers interact with each other.
What exactly is an NFT, and why does this novel commodity attract the attention of fashion brands? How do NFTs differ from regular cryptocurrencies? Are NFTs merely a hype, or are they a signal of a major technology wave?
NFT is an acronym for non-fungible token. In order to understand what a non-fungible token is, we need to first recognize how a fungible token is defined. Fungible tokens are common tokens such as Bitcoin and Ethereum, which can be both divided and exchanged with one another.
For example, my Bitcoins are identical to yours, and it would not matter if I exchanged mine with yours, so long as the quantity remains the same. One Bitcoin can also be continuously divided into 0.5, 0.2, 0.1 Bitcoin or even less. On the other hand, an NFT is unique and cannot be divided.
NFTs are unique data units on the blockchain that can be linked to digital and physical objects to provide immutable proof of ownership. The data contained in NFTs can be associated with digital images, songs, videos, avatars, and more. However, they can also be used to give NFT owners access to exclusive merchandise, tickets to live or digital events, or linked to physical assets such as cars and yachts. In this regard, NFTs allow individuals to create, buy and sell items in an easily verifiable manner using blockchain technology.
NFTs have been touted as one solution for solving ownership issues surrounding digital assets. A tangible, physical asset, such a bar of gold, can be sold at any time to anyone. However, in the case of digital assets, such as a domain name, a prop in a game, or even a skin, there traditionally existed no ways of dealing with the sale of such assets in the same arbitrary manner. The blockchain-based NFT solves this problem by providing a protocol layer for digital assets. This protocol layer allows users to own the digital asset and possess more management rights.
Unlike regular cryptocurrencies, an NFT cannot be divided into many smaller NFTs, nor can it be replaced by an exact copy of itself, because each NFT is a unique unit of data. When it comes to NFTs, uniqueness and scarcity add to their appeal and desirability. Like all rare items, this scarcity allows individuals to sell their NFTs at high prices in accordance with market demand.
🔹Does “Proof Of Ownership” Mean Anything?
NFTs can empower artists. Artists and musicians can independently mint and sell their works using NFT, retaining IP and control of creativity. Therefore, middlemen such as publishers and auction houses will not be able to force artists to agree to terms that are not in their interests. In addition, NFTs allow artists to earn royalties from secondary sales of their work, an accomplishment previously regarded as challenging at best in more conventional spheres.
NFT ownership also has social benefits, as many creators have built vibrant communities through their NFT projects. The African NFT Community is a group of African creators and advocates that promotes diversity and equity across the NFT space by providing educational resources, advice and support, as well as unique onboarding strategies for individual artists.
🔹The Future of NFT
Among the numerous crypto assets available today, NFT, with its characteristics of digital scarcity, uniqueness, and verifiability, provides confirmation of digital ownership and plays a pivotal role as we enter the Web3 era. NFTs undertake the value transfer of real and virtual assets, enabling users to participate in both offline and online virtual events.
To seize opportunities offered by this emerging field, many cryptocurrency exchanges have taken action by investing in NFT assets and building marketplaces. As one of the leading cryptocurrency exchanges, Huobi Global is focused on building a cohesive NFT platform and community, enabling more creative developers, artists, and users to participate in and mutually enjoy the benefits offered by this exciting new technology. Huobi Global has listed numerous high-quality crypto assets hailing from a variety of NFT segments, including MATIC, SAND, FLOW, MANA and THETA.
According to the report titled An Overview of Fashion NFT- How Will NFTs Change the Fashion Industry from Huobi Research Institute, the future of NFT trading will center around Compatibility, Flexibility and Liquidity.
As more NFT marketplaces emerge, the need for market aggregators to consolidate all listings across marketplaces into a single interface will become more crucial than ever, the report states.
The NFT trading space currently lacks flexibility, the report notes, with most marketplaces only accepting ETH as payment. However, this looks set to change — marketplace aggregator Gem is already accepting all ERC-20 tokens as payment. The report also cites liquidity as a major problem for NFTs, because each listed NFT requires a unique buyer in order to be bought off a marketplace.
Due to the short development history of NFT, there is as yet insufficient data for empirical analysis. The hype surrounding NFT commodities may be a mere bubble, but its underlying technology is definitely a signal of the future. Will the NFT community disrupt the art market, and will NFTs cement their position as tangible investments and collectibles? We can only wait and see.