You have probably heard about cryptocurrencies, digital fashion collections, or digital artwork being somehow related to the popular term Non-Fungible Tokens (NFTs). Why is everybody talking about it, and what exactly does NFT mean?  

Last March, NFT artwork released by the artist Mike Winkelmann, a.k.a. Beeple, was sold for $69M in an auction at Christie’s. It was a tipping point for the explosion and fever around NFTs, which has now  found its way into fashion and luxury. Will that change the game, or is it too soon to speak?

First of all, NFTs are digital assets linked to a blockchain database, in a similar way to cryptocurrencies Bitcoin or Ethereum, for example. However, what sets them apart from the cryptocurrencies, is their uniqueness, and the quality of being irreplaceable or unexchangeable. 

A cryptocurrency works the same way as traditional money, it is fungible, which means you can trade it for the same amount, number, or equivalent. When we deal with an NFT, that is not possible, due to its “one-of-a-kind” characteristic. The rareness and scarcity are positive qualities of an NFT as an intangible digital asset, however it can be bought and sold like art or other tangible objects. 

NFTs can multiply and take the form of many digital artworks such as GIFs, tweets, images, video content, digital clothing, drawings, and animations, to name a few. As it only exists in digital spaces, we are not exactly buying the piece itself nor the copyright.  

What Exactly Are We Buying in A NFT World? 

As a digital item, shareable and storable by everyone on the Internet, the general public started to question the utility of buying something that individuals can download from their computers.

This is the tricky part, because what we are actually buying is the token value, such as the original serial code for that particular NFT piece. The acquisition is guaranteed by a digital certificate of ownership, so no matter if there are plenty of copies all over the Internet, that code proves its “original” source and provenance through blockchain. 

Several examples of NFTs auctions are featured in worldwide media in a mix of skepticism, sky-high prices, and confusing terms. Last January, the “Disaster Girl” meme, sold for 180 Ethereum, valued at $500,000 Zoë Roth (now a young woman), told the  New York Times she will use the money to pay student loans and for charity purposes. In March, the user Sina Estavi was the winning bidder for Jack Dorsey’s (developer and Twitter CEO) first-ever tweet, for $2,9M. 

Musician and artist Grimes did a similar move, auctioning a collection of digital artworks for $6M including video pieces. Music band Kings of Leon have generated $2M in sales of their latest album NFT When You See Yourself

The market is rising, especially in the art world, and auction institutions such as Sotheby’s have presented this June Natively Digital: A Curated NFT Sale featuring NFT Artworks by Ryoji Ikeda, Pak, Don Diablo, and Mario Klingemann. The online auction was co-curated by Sotheby’s and leading crypto artist Robert Alice. 

Furthermore, the sale introduced a new category of NFTs: the intelligent NFT or iNFT, a collaboration with cutting-edge AI company Alethea AI. Alice is the first truly intelligent, conversive, self-learning artwork that lives in cyberspace sold for $478,800. 

The global sale soared to $17.1M attracting new buyersto Sotheby’s accounting for nearly 70% of sales, and more than 1,300 bids across the sale. Alien #7523 CryptoPunk NFT, was sold for $11.8M creating a new world auction record for a single CryptoPunk, one of the most coveted and recognizable works of digital art coming out of the NFT movement. 

Are  NFTs Now in Fashion, or Not?

As Internet speed is faster than fashion, it was a matter of time that fashion brands and the world of art started to test and experiment with the NFT phenomena. Both, the fashion and the art world are the masters of the tangible, oracles of what is worthy and valuable. 

It is a logical move for them to be the first to jump in, as their market could suffer from this new perspective and lead to unprecedented movements. However, do not bet so fast. 

This month Gucci sold NFT Aria at Christie’s Proof of Sovereignty‘ sale, curated by anonymous digital artist Lady PheOnix, and art specialist Noah Davis, for only $25,000. The NFT was inspired by the latest fashion film co-directed by Creative Director Alessandro Michele, and award-winning Photographer and Director Floria Sigismondi. 

In this context, the amount is a debatable success, considering that a crocodile Jackie 1961 bag from the brand is worth 20,000€, or that a ready-to-wear silk dress may be sold for 16,000€. On one hand, Gucci is pioneering new technologies and innovative forms to communicate fashion, as they did with the sold-out 12€ virtual sneakers. On the other hand, maybe the market is not ready yet or we are in the process of imagining the future. 

The road is still a long journey, as the main focus is NFTs related to 3D garments that have a limited utility inside the virtual world, and not yet into the mainstream. Save your bets because this is not over.