Nonfungible tokens, or NFTs, have become one of the most discussed markets in the crypto space this year. A recent report from Cointelegraph Research found that NFT sales are aiming for a $17.7 billion record by the end of 2021.
This may very well be the case, as a number of mainstream brands have begun launching NFTs. According to recent research from Bain & Company and the online luxury fashion platform Farfetch, digital interactions with consumers are becoming increasingly important for brands. The report specifically states that “digital interaction with peers is on the rise when choosing to purchase a product.” As such, nonfungible tokens tied directly to brands and their consumers are now more important than ever before.
Understanding what utility means for fashion NFTs
While it’s notable that mainstream labels like Adidas, Dolce & Gabbana and others have already released NFTs, the utility behind nonfungible tokens is proving to be the real key to a fashion brand’s success. Karinna Grant, co-chief executive officer of The Dematerialised, a digital fashion marketplace, told Cointelegraph that utilities are what give nonfungible tokens purpose and value:
“Just as in real-life, where a physical card can scan you access into a club, a utility can be anything from using the NFT as a membership pass to the ability to wear an asset in a game, or incorporating a sustainability or social responsibility benefit for purchasers of the NFT.”
Grant noted that The Dematerialised has experimented with multiple forms of utility with each of the fashion NFT drips the platform has launched. She explained that previous releases have included utilities like wearing or playing with a 3D asset in augmented reality, or unlocking access to brand communities. “With Rebecca Minkoff’s sold-out NFT collection in September, the highest tier of NFTs unlocked VIP access to brand experiences for a year.” She added: “Karl Lagerfeld’s “x Endless” collection provided an opportunity for owners of Karl collectibles, an IRL and URL ticket to a brand event in Paris in 2022, which will feature another launch where only Karl holders will be invited to take part.”
It’s become clear that fashion NFTs must offer some type of consumer engagement, allowing brands to interact with individuals in both the physical and the digital worlds. Avery Akkineni, president of VaynerNFT — an NFT consultancy agency — told Cointelegraph that while the utility of some NFTs can simply be for the sake of art, brands launching NFTs require deeper functionality built upon an existing community.
For example, Akkineni shared that VaynerNFT recently helped the global fashion house, Coach, launch its first NFT collection, which featured eight Coach Holiday animals from the brands’ Snow City digital game. Akkineni added that the NFT launch was also in celebration of Coach’s 80th birthday, which resulted in the creation of 80 unique digital art pieces featuring the eight Coach holiday animals.
Akkineni explained that each digital Coach NFT also grants the right for the initial holders to receive one complimentary made-to-order physical rogue bag in 2022. “Something that Coach wanted to do was to explore this new world of NFTs, but wanted to in a way that wouldn’t commercialize their IP or ask consumers to pay for anything,” she said. To efficiently engage with the Coach community, Akkineni mentioned that the Coach NFTs were given away for free during Dec. 17–24 this year:
“The Coach NFTs were claimable on the Polygon blockchain. Coach made sure not to commercialize too early and to learn about the space to gauge demand to see if their audience was interested in NFTs.”
Fashion NFTs must also function in the Metaverse
The fact that brands must now interact with consumers both virtually and in real-life has also added an extra layer of technical utility to NFTs. As Bain & Company’s latest luxury goods report states, “new keywords and phrases — such as metaverse, personalization at scale, and tech stack — will come to the fore as the industry grows and evolves.”
As such, some companies have started to explore NFTs in the Metaverse. For example, Pet Krewe — a pet apparel e-commerce company — recently opened a digital commercial space in the Metaverse community known as “ShibaVerse.” Allison Albert, founder and chief executive officer of Pet Krewe, told Cointelegraph that the company is promoting its brand by featuring its NFT pet clothing in a Metaverse containing balloon dogs called “Shibaloons.”
According to Albert, Pet Krewe’s NFTs will be worn as unique designs that fit the Shibaloons. While Albert pointed out that these costumes can be held and swapped out on different Shibaloon dogs within ShibaVerse, Pet Krewe is using this digital commercial space as another form of brand engagement or marketing. “We can connect with dog-loving customers in a dog-centric Metaverse. This is reaching our customer base in an entirely different marketing element.”
The 18-year-old fashion label Mishka has also entered the NFT space with its famous eyeball logo. The collection of 6,696 NFTs is known as “The Keep Watch Crew,” or “KWC” for short. Greg Mishka, founder of Mishka NFT and the Keep Watch Crew, told Cointelegraph that Keep Watch is the most iconic and well-known branding element of Mishka, for both fans and the streetwear and fashion community.
Given the label’s strong user base, Mishka explained that the KWC NFTs are the next chapter for the brand. “The KWC is your ticket into what we like to call the MISHKAVERSE. Immediate utilities include lifetime discounts and exclusive merchandise,” he explained. Mishka added that the label is working on integrating Web3 elements to their website. “This would allow for consumers to verify the NFTs they own in order to access exclusive pages and drops via the website.”
Should fashion NFTs still be tied to physical items?
While the utility of fashion NFTs extends beyond simply offering digital items connected to physical goods, some in the industry believe that this is still one of the most important functions. For instance, Grant noted that connecting physical items to digital NFTs is a critical part of the adoption process for nonfungible tokens of all categories. She elaborated:
“We have a very interesting split perspective with our current community, with half asking for more physicals and half asking more digital-only. However, when we survey outside of our current community the figure is much higher. This makes sense as first-time or new NFT owners tend to still hold more traditional beliefs that physical products are more “valuable” than digital ones.”
Echoing Grant, Mishka commented that it’s important to have physical items that can be claimed or achieved by acquiring something in the Metaverse since most consumers still live in the “real world.”
This is why it shouldn’t come as a surprise that a mainstream fashion label like Coach gifted NFT holders with physical made-to-order rogue bags. Interestingly enough though, Akkineni mentioned that sometimes NFT holders don’t redeem their physical items, which has proven to be the case for other drops associated with consumer-facing brands. “VaynerNFT did a collaboration called “Anwar Carrots x Veefriends,” which was a collection sold at Nordstrom and made available to all “Self-Aware Hare” NFT holders. It was only after some reminders that the holders did claim the physical items,” she commented.
Fashion NFTs will be a trend
The rise of NFTs in 2021 has demonstrated growth moving forward for major brands. While companies like Nike have already taken steps to enter the Metaverse, more labels will follow suit. This has become the case as the world moves toward digital business models, which have also been promoted by the rise of COVID-19. For instance, Albert explained that Pet Krewe is still unsure of how COVID-19 is going to play out in 2022, noting that current supply chains are still being disrupted:
“We need to hedge our bets on alternative revenue streams. Entering into a metaverse that aligns with our own company values means that we can add additional revenue streams through art NFTs and digital wearables.”
Grant further remarked that The Dematerialised is excited for “behavior-changing launches,” which include using NFTs to disrupt physical production methods. However, it’s important to point out that brands will face challenges along the way.
According to Grant, fashion labels will encounter three main obstacles, with the first being a shift in thinking when it comes to the value of Web3 and digital ownership. Secondly, Grant explained that understanding the purpose and narrative of an NFT launch is important: “We support launches that are part of long term strategic commitments to Web3, not a marketing gimmick to briefly drive revenue.”
Finally, Grant pointed out that it will be challenging for major brands to ensure a 3D asset design pipeline in house. Yet Grant remains optimistic that these challenges will be resolved: “Mainstream adoption will come as more major fashion brands, influencers and creators get involved.”
Fed report finds most Americans who own crypto tend to be high income hodlers
Only 12% of American adults used crypto in 2021, and the demographic gap between those who invested in it and those who used it in transactions was enormous.
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The United States Federal Reserve Board has included data on cryptocurrency in its new Economic Well-Being of U.S. Households in the 2021 report. The Fed’s ninth annual report looked at survey results from 11,000 people questioned in October and November 2021.
The report indicated financial wellbeing is the highest it has been since reporting began, with 78% of U.S. adults “doing okay or living comfortably financially.” That is an increase of 3% over the last three years. As a diagnostic of financial fitness, the report cites the 68% of Americans who say they could cover a $400 emergency expense using cash or its equivalent alone.
The report looked at cryptocurrency usage for the first time. It found that 12% of U.S. adults held or used crypto in 2020, with 11% holding it as an investment, 2% using it for a purchase or payment and 1% sending it to friends or family. Investors holding crypto “were disproportionately high-income, almost always had a traditional banking relationship, and typically had other retirement savings.” Forty-six percent had annual incomes of $100,000 or more and 89% of those who were not retired had retirement savings. Twenty-nine percent had incomes under $50,000.
The profile of the typical user making transactions with crypto differs starkly from investors. The report claimed that almost 60% of these users had incomes below $50,000, with 20% having incomes under $25,000. Only 24% had incomes above $100,000. Thirteen percent did not have a bank account. That compares with the 6% of adult Americans who lack bank accounts. Twenty-seven percent of those who used crypto for transactions did not have credit cards, compared to 17% of the total population.
Those who used crypto for transactions faced other disadvantages as well. Almost a quarter did not have a high school diploma, according to the results of the report.
WEF 2022: Bankers at WEF see the need for caution and speed on central bank digital currencies
Experts point out sticking points as well as greatest needs in the creation of central bank digital currencies for domestic and cross-border, wholesale and retail, uses.
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The process of introducing a central bank digital currency (CBDC) is fraught with unknowns, some of which were elucidated in a panel of experts gathered Monday at the World Economic Forum in Davos, Switzerland. The panel concluded that good design is key to a successful CBDC, and there are fewer challenges for wholesale CBDC introduction.
Bank of Thailand governor Sethaput Suthiwartnarueput said that although many central banks are considering a CBDC, there is little practical experience with them. The Thai National Bank began proof-of-concept programs in 2018. Its mBridge project began as an experiment in establishing a cross-border wholesale payment corridor with the Hong Kong Monetary Authority and has grown to include the Bank of China, the United Arab Emirates and the Bank for International Settlements. Cross-border transactions using traditional banking technology can take days to complete, while CBDC transactions are much faster.
Suthiwartnarueput said the use of blockchain technology can have unintended consequences. It is good for transparency, he said, but anonymity affects scalability. There is risk in a CBDC’s design because smart contracts require that the handling of every situation be specified ahead of time. He cited the current sanctions on Russia as an example of a potential challenge to CBDC design. The Thai central bank is looking at a “limited pilot” for a retail CBDC in the fourth quarter of this year.
International transactions between persons, especially remittances from workers located in other countries, which make up a market of $48 billion per year, are one of the most pressing use cases for CBDCs. Suthiwartnarueput said CBDCs can carry out such transactions at 50% less expensive and 68% faster than current money transfer technology. Currently, the average fee for a transfer of this type is 6.3% of the transaction sum.
Credit Suisse chairman Axel Lehmann pointed out the rapid progress being made by non-blockchain fast payment technologies and raised questions for domestic retail CBDCs, such as whether accounts with central banks would pay interest. Privacy and intermediation are other thorny issues for retail CBDCs. International Monetary Fund managing director Kristalina Georgieva said, “We feel a little behind the curve” in the creation of retail CBDCs, and Bank of France governor François Villeroy de Galhau agreed, saying a “CBDC is not the monopoly on progress,” and central banks should not waste time in introducing it.
Suthiwartnarueput and the French central banker agreed that cross-border wholesale CBDC settlements may become a reality within five years.
fUSD stablecoin launch and rumors of Cronje’s return send Fantom (FTM) price higher
After a strong 2,000% rally in early 2021, Fantom (FTM) price collapsed alongside multiple altcoins and even though the blockchain has an impressive capability, it has yet to find mass adoption due to the lack of a compelling use case. FTM price hit an all-time high at $3.46, only to collapse to its pre-bull market lows under $0.25 after the failure of the Solidly DeFi project and the departure of developer Andre Cronje.
Three reasons for the uptrend in FTM price are the launch of the first native stablecoin on the Fantom network, new protocol upgrades and partnership announcements, which bring new functionality to the network, and speculation that Andre Cronje is working with decentralized finance (DeFi) protocols on Fantom.
Fantom launches its first native stablecoin
The most notable development to occur in the Fantom ecosystem in the past few weeks was the release of fUSD, the first native stablecoin on the network.
The launch of fUSD comes on the heels of the collapse of TerraUSD and looks to capture some of the capital flight from algorithmic stablecoin by offering an over-collateralized alternative.
On May 20, the Fantom Foundation released an update outlining the maximum collateral factor and minting cap for each supported form of collateral. The foundation also set the fUSD staking reward at 11.3%
The update also included details on Fantom liquid staking, setting a global cap of 150 million staked Fantom (sFTM), removing validators for the list of those eligible to mint sFTM and setting a loan-to-value (LTV) ratio of FTM at 90% for the purposes of minting sFTM.
New partnerships improve sentiment for FTM
A handful of recent protocol updates and new partnerships have also helped to bring a boost in momentum to Fantom, including the launch of Snapsync, which allows new nodes to quickly join the network.
With the integration of Snapsync, the time it takes for new nodes to synch could be reduced from 24 to seven hours, helping to enhance network reliability, improve scalability and create a greater degree of decentralization.
Fantom has also announced that it is currently in the process of launching Gitcoin on the Fantom network to simplify the process of obtaining grants to develop in the Fantom ecosystem.
Fantom also partnered with Unmarshal and XP.Network. Unmarshal is a Web3 infrastructure provider that will integrate its indexing services with the Fantom protocol to give developers easy access to organized and granular on-chain data.
Through the partnership with XP.Network, Fantom users will be able to bridge nonfungible tokens (NFTs) between Ethereum (ETH), BNB Smart Chain (BNB), Elrond (EGLD), Aurora (AURORA), Tron (TRX), Avalanche (AVAX) and Velas (VLX).
Did Andre Cronje return?
Another factor, albeit speculative, bringing a boost FTM price is speculation that well-known DeFi developer Andre Cronje could be contributing toward DeFi development on the Fantom network.
Amid rumors about the return of lead DeFi developer Andre Cronje, the price of the native FTM token has risen by almost 40%. Cronje proposed a number of measures aimed at stabilizing the situation and increasing the sustainability of the Fantom ecosystem as a whole.
— Ashley Torres (@torresamba) May 23, 2022
The speculation started when Cronje submitted an fUSD optimization proposal that designed to solve a major depegging issue with the stablecoin on May 20 . A Fantom wallet that is believed to belong to Cronje has also added more than 100 million FTM over the past two weeks.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for FTM on May 20, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score for FTM spiked to a high of 89 on May 20 at the same time as its price began to increase 62.3% over the next three days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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