Forget spring’s hot new colour or must-have accessory. This season, fashion brands are embracing non-fungible tokens – or NFTs – as if they’re the latest it-bag. The likes of Gucci and Louis Vuitton are eagerly testing out different approaches to selling digital wearables and triggering avalanches of jargon-heavy buzz with every step.
NFTs have a reputation for being confusing, and they are, in part because they are several things all at once. For starters, they are a method of establishing ownership, kind of a coat-check ticket representing an asset purchased with cryptocurrency. They are a component of “smart contracts,” meaning they can confer royalties to their creators when they’re resold, which may be attractive to artists and businesses looking for new revenue streams. They have also become a faddish, scam-riddled subculture that many consider exploitative and gimmicky. And they are a potentially important component of a speculative, decentralized future-internet called the “metaverse” that does not exist – yet.
Fashion NFTs represent branded clothing or novelties that only exist virtually, or are a digital twin of a physical item. Some have a practical use – for instance, they can be “skins” or outfits compatible with avatars on a specific gaming platform. But most often people just buy them as a form of internet-based conspicuous consumption, says Matt Klein, a cultural researcher studying online behaviour.
“It’s always been hard to signal status online,” he says. “NFTs are a solution as their prices are so high and they’re currently viewed as an investment opportunity – the expensive wristwatches or sports cars of the internet.”
With a global market value of US$25-billion in 2021, NFTs are “one of the key areas that most luxury brands are really interested in understanding and investing in,” says Babette Radclyffe-Thomas, a luxury fashion consultant. That’s partially because NFTs appeal to wealthy techies and younger, digitally native shoppers, and partially because, in the past, fashion brands have jumped on digital trends such as e-commerce and resale too late. There’s also a “why not” element to the trend; Radclyffe-Thomas points out that there’s nothing else really exciting happening in the luxury market. NFTs aren’t going to replace the experience of buying and wearing high fashion, but they’re a convenient way for brands to access younger consumers and create buzz as brick-and-mortar retail declines.
The record for the highest-grossing fashion NFT sale as of early 2022 belongs to Dolce & Gabbana, which auctioned a collection of nine NFT runway looks for almost US$6-million in ethereum cryptocurrency last October. In March, the brand participated in the first Metaverse Fashion Week, a free-to-attend, NFT-based shoppable event hosted by the platform Decentraland, which also featured Paco Rabanne, Hugo Boss and Etro.
However, the concept of a metaverse fashion week – or a metaverse anything, really – is misleading. Metaverses are speculative digital platforms that could one day succeed the internet as we know it, in which users may be embodied by avatars of our real selves, who will need something to wear. Yet fully fledged metaverses don’t currently exist. Instead, there are immersive, virtual reality-compatible, world-building gaming platforms such as VRChat, Decentraland, the Sandbox and Roblox, which people have started calling metaverses either for simplicity’s sake or so they sound more revolutionary than they actually are.
Some of these platforms, such as Decentraland, which has 300,000 monthly active users, are organized around cryptocurrency commerce. They’re platforms designed for people who are interested in NFTs and are ideal locations to stage things such as NFT fashion shows. Brands can also enter these platforms and peddle their goods as they would in the real world. The can buy metaverse real estate for a virtual store and even purchase metaverse insurance for it. But because these platforms are competitors, items bought in one won’t usually be compatible with the others.
It’s the platforms that prioritize gaming, and may not enable NFT use at all, that Tim Jackson, the director of the British School of Fashion, says are providing larger audiences and the opportunity for fashion brands to create recognition and fidelity.
“Let’s be honest, it’s really skins and digital assets in gaming, with a bit of NFTs on the side that are benefiting brands most,” Jackson says.
The basic distinction between NFT versus non-NFT digital assets is that NFTs are part of a blockchain-based cryptocurrency system, while other digital assets can be bought and sold with regular money or an in-game currency. Some of the most popular games in the world have not enabled NFT use on their platforms, but are still prominent in the digital fashion space.
The game Fortnite, which has more than 269 million monthly users, has collaborated with fashion labels Moncler, Balenciaga and Louis Vuitton on branded in-game skins and other items. Roblox, which has more than 220 million monthly users, has worked with Tommy Hilfiger and Gucci in the same way. Not incorporating NFTs doesn’t hold these platforms or their partners back. According to a 2022 study by consulting firm Kantar, 74 per cent of Gen Z-ers have purchased digital items in games, such as accessories or skins for their avatar, with more than half willing to pay up to US$50 an item. Last May, a virtual Gucci bag garnered headlines after being sold in Roblox for the equivalent of US$4,115, or about US$715 more than its real-life counterpart.
Regardless of whether these gaming platforms enable NFT use, they share what, from an aesthetic perspective, constitutes a considerable glitch in fashion’s digital aspirations. “Unfortunately, a lot of these platforms right now, they don’t support a hyper-realistic approach” in digital design, says Ben Christy, whose Precision Design fashion manufacturing studio in Richmond, B.C., offers clients the option of creating both virtual and physical wearables.
Within a metaverse, a garment looks “very childlike, very angular,” he says. In order to render graphics quickly enough to facilitate smooth gameplay, these platforms use relatively simplistic designs that look like something between Lego people and The Sims. As a result, one of the most compelling aspects of digital fashion – the fact that it allows for physics-defying, fantastical creativity such as the ethereal works of digital designer Scarlett Yang – cannot yet be replicated on many platforms.
“A few years down the line, I think the metaverse is going to offer opportunities for luxury brands to do something a whole lot more sophisticated than the sort of gaming cartoony type of engagement,” Jackson says. If he’s correct and these virtual spaces expand, improve and become more accessible, the platforms could develop into worlds where creativity, not just consumption, is a driving force.
Most fashion brands are just beginning to experiment with how digitally innovative they can – or want – to be. For all their hype, fashion NFTs still cater to a niche audience, but in the future they could take shopping into a whole new world. The question is, do we want to go?
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