Despite concerns, NFT craze set to expand into fashion, entertainment

The nonfungible tokens market, which first sent the art industry into a frenzy, is expected to take a deep plunge into the fashion and entertainment world, amid fast-growing interest in making new money using the blockchain technology.

NFTs are digital tokens of physical or digital assets, mostly of music or art. Through the blockchain, every NFT can be verified by an identification number or a signature of an artist or a creator. A buyer can thus hold ownership over something that is one of a kind.

At first, the blockchain-backed digital assets tapped into the art world. Reeling in big money, the NFT fever has spread to other industries such as fashion and entertainment as well.

Nike, the global apparel giant, has already applied for a patent to launch an NFT platform dubbed “CryptoKick.” When a consumer buys a pair of shoes, a digital representation of those shoes can be generated thorough the CryptoKick platform.

“Using the platform, consumers could safely resell the real-world pair of shoes and a digital version of them without the concerns of counterfeits. In a way, the NFT sneaker acts as an authenticity certificate, truly proving they are original sneakers,” said Park Sung-joon, head of the Blockchain Research Center at Dongguk University.

CryptoKick also allows customers to mix and match the designs of two digital shoes to create their own customized tangible pair of shoes, according to Nike.

In August, Burberry dropped its NFT collection in Mythical Games’ Blankos Block Party blockchain game. It sold 750 NFTs of “Sharky B,” a shark character that has Burberry’s monogram engraved all over, within 30 seconds. The NFT’s price, originally $300 apiece, was sold for over $1,000 on the game’s marketplace among gamers.

Also, Louis Vuitton’s parent company LVMH, Prada and Cartier have joined forces to form the Aura Blockchain Consortium to issue a digital proof of authenticity for their products.

The consortium will provide detailed information on the product’s lifecycle as well.

“Sharing the lifespan of a product will be a smart way to secure customers. The NFT platform of luxury fashion brands can send phone notifications to customers when they have grown tired of wearing the same clothes or shoes. Suggesting new product lines could encourage them to visit the brands’ brick-and-mortar stores,” Park said.

Market insiders say one of the next hot trends in the NFT market seems to be “meta-shopping,” selling and purchasing NFT fashion items that will only ever exist in the metaverse, virtual communities that let users interact with avatars in real time.

Recently, Korean fashion tech startup Oscar Futurera has opened its NFT meta-fashion platform, OFOTD, and announced that it will sell a digital version of K-pop star Lee Hyo-ri’s outfit that she wore at the 2021 Mnet Asian Music Awards. The platform photoshops the digital dress onto photos, after which buyers can also upload the pictures on Instagram or Twitter.

Fashion is not the only arena NFT platform operators are hoping to piggyback on celebrity fame.

Dunamu, the operator of the Korea’s largest crypto exchange Upbit, agreed in November to join hands with Hybe, the powerhouse behind the K-pop boy band BTS, and form a joint venture that will develop and issue NFTs such as BTS photo cards.

Other popular music stars are showing heightened interests in NFTs.

Famed rapper Snoop Dogg has sold 1,000 NFT party passes to join him in a “Private Ethereum Metaverse Party.” The tickets were sold for around $3,440, according to Sandbox, a gaming platform who created the NFT.

Snoop Dogg is also building a replica of his mansion, where fans could join in on live concerts taking place in the NFT house in the “Snoopverse” metaverse. An unnamed person paid $460,750 to buy a plot of virtual land next to his NFT residence, according to media reports.

“NFTs targeting celebrity fans lies on their desire to show support by buying merch or concert tickets or to identify themselves with their wannabes,” said Lee Eun-hee, a consumer science department professor at Inha University.

Concerns over NFT frenzy

However, concerns loom over the fledgling market as some market players lack an understanding of the legal restrictions related to the copyrighted work.

For instance, Hermes recently lambasted the NFT sale of “Meta Birkins,” a Birkins bag NFT created by digital artist Mason Rothschild. The collection was sold for 230 ethereum, around $936,000, according to the auctioneer OpenSea.

According to reports, Hermes denied the legitimacy of such trading, saying the company didn’t give consent to the commercialization or creation of their Birkin bag.

Wannabe International, a Korean PR agency behind an auction company, tried to sell the works of some of the country’s renowned modern painters -- Lee Jung-seop (1916-1956), Kim Whan-ki (1913-1974) and Park Soo-geun (1914-1965) -- that were owned by several art collectors.

The family of the deceased who hold the copyrights to the works strongly criticized the agency. The art collectors and the agency apologized for the scandal.

Still, experts painted a rosy outlook for the NFT market.

“Every new industry driven by innovative technology can be chaotic before it is stabilized. But with regulations such as mandating NFT platforms to act as a gatekeeper for preventing copyright infringement, I think the future is bright for NFT,” said Park.

Driven by the NFT craze, the global NFT market is expected to reach new highs in the coming years.

According to data from global NFT market tracker Nonfungible.com, the worldwide transaction volume of NFT has already surged by 1,699 percent on-year to $ 5.9 billion in the third quarter this year. The NFT market size is expected to double this year and reach $80 billion by 2025, data showed.

By Byun Hye-jin (hyejin2@heraldcorp.com)