Crypto is only growing in use and it is due to changes in consumer habits within the luxury digital space. The crypto industry is becoming increasingly mainstream, especially with the big hype around NFTs (Non-Fungible Tokens) since 2021.
Since the pandemic, a growing number of people have turned toward fintech solutions as well as cryptocurrencies. By 2020, there was a tremendous increase in cryptocurrency. The crucial moment was when the luxury market became an important factor in the crypto space.
Crypto’s impact on the Luxury industry
Luxury brands have embraced virtual experiences in the recent past by adopting technology into their product design and even collaborating with tech brands. There is no denying that technology and luxury fashion have united and will only continue to move forward together.
Some of the luxury brands that are embracing cryptocurrency are:
- Recently, the luxury Italian brand Gucci announced that it will accept crypto in certain U.S. stores.
- Luxury watch brands Hublot and Norqain are accepting crypto payments. Moreover, Hubolt even launched a collection of watches that were exclusively available to purchase via Bitcoin.
- Travel agent, Travala.com offers its clients a wide selection of cryptocurrencies to pay from for their vacation.
- TJB Super Yachtsstarted accepting crypto early this year.
- Tesla will begin to accept Bitcoin as payment again.
- Sotheby’s Auction house sold Banksy’s “Love is in the Air” for US$12.9 million. It is the first piece of physical art sold by a major auction house paid for using crypto.
- Equinox, one of the world’s top luxury gyms, is set to start accepting cryptocurrencies after partnering with leading cryptocurrency payment processor BitPay
Blockchain as a solution
By using blockchain, fashion brands can digitize, track, and trace the entire lifecycle of an item. With blockchain, brands can create a record of all steps in the supply chain, capture specific data points, such as sustainability certifications and claims, and provide open access to this data publicly. Some companies are even building in the metaverse and minting branded NFTs.
When it comes to fashion brands, blockchain technology can significantly reduce the operating costs in retail fashion by providing better data management tools, enhancing supply chain management, and reducing the risk of counterfeit markets. Advancements in data management prompt cost savings and improve trust in outsourcing everything from overseas. While accepting cryptocurrency as a means of payment, especially given how volatile some of them can be, is tricky, services have also leveled up to help luxury brands manage their backend.
NFT’s in the fashion industry
The fashion industry has adopted different ways to follow the trend of digital assets. Some of them have adopted NFTs for various means. But what are NFTs?
NFTs or non-fungible tokens have taken center stage in recent times. According to Wikipedia, it is an interchangeable unit of data stored on a digital ledger. Since the advent of NFTs, it has been used in memes, sports, music, etc.
Similarly, many fashion brands will be releasing their tokens over the coming years. For instance, Nike took the first token steps by releasing their own NFTs called CryptoKicks. Since then, some luxury fashion companies which have immersed with NFTs are Burberry which uses NFTs for mythical games, Louis Vuitton possesses NFTs that cannot be purchased but can only be used as collectibles, and Gucci, who are using theirs for a short film. It is a growing pool of fashion industries using NFTs, and will only grow.
Future of crypto in the luxury market
According to the report, the global luxury market might reach US$1.5 trillion by 2025, dominated by millennials. As of today, 58% of the crypto population are millennials and generation Z. As millennials and generation Z consumers drive 85% of global luxury sales growth, the decision for luxury brands to adopt crypto becomes extremely important. Crypto users tend to purchase more expensive items. Besides, 56% of high-net-worth individuals have expressed their interest in crypto investment.
Overall, the luxury sector, like many other sectors, will take time before cryptocurrency and blockchain technology as a whole is embedded into it. The process of accepting cryptocurrency and infusing blockchain into the industry has already started and from all indications, will not stop anytime soon.
Considering that, will crypto wages be the next big thing? As companies come to embrace crypto, some are opting to use it as a way to pay their employees. In the future, fashion’s push towards Web3 will demand crypto wages by offering crypto as a form of compensation. However, embracing this digital change will only help luxury brands to develop new ideas, new concepts and promote creative growth.