These artworks were not bought with actual dollars but cryptocurrency. Bids for the Nyan Cat NFT began at 3 Ether (ETH), valued at US$1,544, and closed at 300 ETH, approximately US$590,000.
What exactly is an NFT? It’s a digital object, with a unique signature, that represents a real-world item. They are bought and sold online with cryptocurrency and the holder’s proof of ownership is tracked on a blockchain. Part of their appeal is the allure of that which cannot be replaced (non-fungible means ‘not interchangeable’). Their popularity is surging.
The NFT game has become so serious it is no longer limited to art. Indie fashion brands were among the early adopters of NFTs; sales for digital jackets and custom Nike Air Force 1 sneaker designs raked in thousands overnight. These sky-high profit margins have tempted even the old guard, like Gucci, Louis Vuitton and Prada, to partner with blockchain experts to leverage this new market boom.
Since the initial craze earlier this year, NFTs have been incorporated into video games, social media, and digital magazine covers – with more to come. Beyond the obvious profit opportunities within crypto trading, NFTs also represent the progression of the metaverse and how the lines between the physical and digital world are ever blurring.
Outside of the West, NFTs have gained the interest of bitcoin holders in Asia’s global hubs, like Hong Kong and Singapore. “We have seen a lot of interest from people holding bitcoin in Hong Kong coming to our art exhibitions and talks, since we opened up our art pieces to bitcoin payments,” said Alexandra Yung, managing director of Macey & Sons, brokers of fine whisky and antiques.
While NFTs have certainly made an impact on the art and fashion markets, skeptics have not been shy to critique this new form of exchange, especially the inflation risk that comes with trading in cryptocurrency.
Famed auction house Christie’s was one of the first in the traditional art world to sell an NFT art piece; however, the majority of NFT sales happen on blockchain-supported platforms, such as OpenSea, Nifty Gateway and Larva Labs. This opens up the world of art trading to a completely new audience. Due to the flexibility of what qualifies as an NFT, how we view, appraise, source and pay for artwork will also change greatly.
For many artists, NFTs serve as an opportunity to break the glass ceiling. In the metaverse, status, socioeconomic and geographic limitations do not exist. There is an equal opportunity for all forms of artwork to be sold, allowing them to bypass the gatekeepers of the traditional creative industry or major corporations.
The way NFTs are set up through blockchain technology allows them to be profitable in the long run for the original artist. Every time an NFT gets resold, the artist will be able to make a percentage of the revenue – similar to a royalty fee.
Efforts to bring NFT platforms closer to Asian shores and benefit local creators have been put into motion. The Hong Kong Digital Asset Exchange is set to be Hong Kong’s first one-stop platform for trading both physical and digital forms of art, animation, music and film. Similar NFT-supporting platforms are set to debut in Beijing and Singapore this year.
Pushing the boundaries of design
NFTs challenge traditional perceptions of design or product. In an interview on the Complex Sneakers Podcast about the future of NFT sneakers, Bobby Hundreds, founder of streetwear brand The Hundreds, mentions, “If the [NFT] shoes don’t have to be worn, why do they have to look like shoes? Why do they have to look like they fit on your feet at all?”
This creates new possibilities for the future of design. If artwork or products in the metaverse are no longer bound by physical limitations, we may finally see the next evolution of clothing, even if it means it cannot exist in 3D.
While this may sound slightly dystopian, digital fashion is hardly new. From magic mirrors and augmented-reality sneakers to custom skins, the fashion industry has toyed with the idea of virtual clothing for years but has been unable to turn it into something profitable. NFTs and gaming content will probably change that.
In June of 2021, a Roblox player spent more than US$4,000 on a Gucci Queen Bee Dionysus bag through a special event in the online gaming platform. The pixel version of the bag was sold for nearly a thousand dollars more than what the bag costs in real life.
Vogue Singapore was the first fashion magazine recently to feature an NFT dress on the cover of its highly anticipated September issue. The Balmain ‘Flame Dress’ NFT was made in celebration of creative director Olivier Rousteing’s 10th year with the brand and was done in collaboration with gaming company Altava. It will be available for auction as part of Vogue Singapore’s September NFT collection, along with two digital-only covers.
These covers will be the first of many NFT offerings by Vogue Singapore. Media Publishares, the publisher of Vogue, Esquire, Robb Report and Buro in Singapore, has launched a new partnership with blockchain-powered advertiser Vidy for a new fashion and luxury NFT platform.
“The NFT market has grown over 229 per cent since 2020, to reach over US$500 million. However, it’s still in early stages and has a long way to go with regards to infrastructure development,” states Matthew Lim, co-founder of Vidy. “With the metaverse and rise of digital models, people will be able to live in a parallel virtual world where they can own a digital identity and purchase items not just in a digital file, but as any unique asset in their virtual land, similar to their physical world.”
Ethics and sustainability implications
During the beginning of the pandemic, the fashion industry was forced to go through a painful transition from analog to digital processes. Through this transition, other issues that had long plagued this industry, like sustainability and unethical practices, were brought to light.
Most of the current discussions surrounding NFT and virtual fashion are associated with the reduction of manufacturing and waste. If customers shifted some of their spending to digital fashion – the thinking goes – fewer physical products would have to be created, putting less pressure on the environment.
Although this claim is not entirely wrong, NFTs are not exactly eco-friendly. The mining of cryptocurrency consumes an enormous amount of energy – as much as some countries. For instance, bitcoin’s power consumption is up to 118.9 terawatt-hours a year; whereas, countries like the Netherlands and Pakistan consume up to 120 terawatt-hours a year.
There is also much to be sorted about the cyber-security of digital wallets. Cases of people being hacked and drained of their coins are becoming increasingly common. Scams involving fake NFT artwork and platforms designed to steal credit-card information have also been reported.
Are NFTs here to stay?
Even if many people don’t fully understand what an NFT is or how the metaverse works, most of us have encountered them in some capacity. From Paris Hilton talking about her NFT purchases on The Tonight Show with Jimmy Fallon to the countless articles trying to explain what they are in layman’s terms, the hype surrounding this topic has undoubtedly never been higher.
The concept of NFTs has existed since 2014 but has entered the mainstream only recently. Michael von Schlippe, president of Media Publishares, believes NFTs will be undervalued in the long term, as general audiences will still have a tough time comprehending the complex technology. He is also confident, however, that the metaverse will be an essential part of daily lives and businesses in the future.