Top Luxury Brands Are Betting on NFTs Despite Market Downturn

New technologies like NFTs are allowing luxury brands to take advantage of a host of new opportunities

Leading luxury companies are making a new push into NFTs, consummating the union between fashion and digital assets amid the bearish market.

Since reaching a record high in January of this year, trading volumes of nonfungible tokens, which are digital artwork and collectibles stored on blockchains, have fallen 97%.

Data from Dune Analytics shows they dropped from $17 billion at the beginning of 2022 to just $466 million in September.

The rapidly tightening monetary policy is depriving speculative assets of investment flows, contributing to the fading NFT frenzy and a larger $2 trillion wipeout in the cryptocurrency market.

However, in recent years, this area has expanded significantly beyond the boundaries of financial technology and is now present in a wide range of various industries.

Despite the difficulties that technologies like crypto assets, NFTs, and the metaverse present to a sector that’s particularly focused on preserving its heritage and protecting its image, a significant number of luxury brands are determined not to be left behind by the latest online developments.

Numerous businesses have discovered that web3 and blockchain technology may speed up and streamline this sector in a variety of ways. This covers marketing, sales, distribution, and even creation.

Dolce & Gabbana, an Italian luxury fashion label, successfully concluded nine NFT auctions in Q4 2021, raising the benchmark for fashion NFTs and earning a record 1,885 ETH.

These 1/1 pieces, which are a part of the “Collezione Genesi” collection, enable the collector to obtain the corresponding physically custom-fitted clothing within a one-to-two-year claim period.

The first NFT auction was titled “Dress from a Dream,” and the collection was motivated by Venetian aesthetic traditions (inspired by a dream from the designers Domenico Dolce and Stefano Gabbana). The collection’s items were put up for auction on the UNXD marketplace.

Gucci added Apecoin, a new cryptocurrency, to its list of accepted payment methods, while Tiffany will employ NFTs as a digital passport to create unique physical jewelry for crypto enthusiasts.

Tiffany, De Beers Confluence Between Luxury and Blockchain

Holders of CryptoPunks will be able to commission a custom Tiffany & Co. pendant with their NFT encrusted in gems and diamonds for 30 ETH. Tiffany & Co., which recently made news for selling out their NFT collection less than 30 minutes after its introduction, is one of the greatest names in jewelry to embrace blockchain.

Customers can purchase a unique NFT showing their jewelry in their crypto wallets after all of this. These NFT collections are known as NFTiffs, and each one costs a hefty 30 ETH.

De Beers is another significant player in the diamond industry investigating this area.

They unveiled Tracr, the first blockchain-based diamond source platform, this year. This distributed network was created to provide precise and unchangeable logistical data on the location of diamonds across the globe. The objective is to increase trade transparency and give customers more information.

Additionally, the usage of blockchain technology greatly aids authenticity because each diamond can be traced back to its original location thanks to this technology. This implies that the technology makes it impossible to deceive or mislead customers.

As companies fixated on authenticity and exclusivity start to recognize the possibilities this market holds, NFTs appear to be the next frontier for luxury goods. After just announcing the presale of its premier NFT collection, Gem Set, a digital collection, is currently laying the groundwork for the future of digital luxury.

Looking into the Metaverse and Gaming market

One of the ways luxury brands can appeal to the younger generations, who will be their most valuable clients in the coming decades, is by entering the gaming industry and updating their brands. A new environment for connecting with a target audience and fostering brand interaction, gaming can also be seen as a new touchpoint for luxury companies outside of the store.

To commemorate its 200th birthday, Louis Vuitton released an adventure-style game.

In the video game Louis the Game, players take on the role of Vivienne, who must collect 200 candles to celebrate Louis Vuitton’s birthday while navigating through six distinct realms.

Importantly, the metaverse allows players to transport their virtual goods between multiple metaverse platforms, unlike current video games, with ownership of these items represented by NFTs.

Burberry and Mythical Games have established a collaboration to develop an NFT line for the latter’s main open-world multiplayer game, Blankos Block Party.

Thanks to capsule collections that can be located first in a game and are subsequently sold in real life, partnerships between luxury goods companies and gaming companies give the chance to develop parallel streams of income.

Sharky B, a limited-edition Blanko (character) from Burberry, is an NFT that can be purchased, improved, and exchanged in the game’s market. In addition, the company is releasing its own line of NFT accessories that gamers may equip to whatever Blanko they possess, such as a jetpack, armbands, and pool shoes.

Putting competition aside via the Blockchain

Blockchain technology is helping luxury brands in less flashy but no less significant ways. For instance, to create the Aura Blockchain Consortium, LVMH collaborated with the Prada Group and Richemont subsidiary Cartier.

This extraordinary alliance of rivals has created the first global luxury blockchain, which its developers describe as “a single, innovative solution to shared difficulties of transmitting information on authenticity, responsible sourcing, and sustainability in a secure digital format.”

The Luxury of the Future

Luxury businesses have embraced NFTs and, overall, done an excellent job interacting with the technology and leveraging it to imaginatively engage with their loyal followings.

Even though other non-web3 industries might not be as open to adopting and using blockchain-based technology, it would be smart to seriously consider how companies like those we’ve described in this post are leveraging NFTs.

In essence, the fact that such a successful and sought-after sector is entering the blockchain arena is evidence that the technology has matured to a sufficient degree, which bodes well for the future.

This fusion of industries will undoubtedly offer the high-end consumer market a wide range of inventive and imaginative possibilities.

This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.

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