Non-fungible tokens, or NFTs, have enjoyed a breakout year, with third-quarter sales delivering an absolute exclamation point at $10.7 billion.
And yet, despite that eightfold increase from $1.2 billion in the second quarter, NFTs are just getting started if you believe advocates who predict use cases for the technology are about to stretch into new industries far beyond digital art.
The fashion industry is providing the latest mind-bending example of just that. Fashion juggernauts, like Dolce & Gabbana, have recently started experimenting with wearable, digital collectibles that are attracting astronomical prices. At a recent auction, a combination sale including a jeweled physical crown coupled with a digital NFT version sold for more than $1 million. Accompanying custom-made digitally wearable Dolce & Gabbana jackets also attracted more than $300,000 apiece in ethereum.
Megan Kaspar, one of the members of the Red DAO group behind the winning bids for the items, explained to Yahoo Finance that the opportunity in digital fashion poses groundbreaking potential if AR technology can come to replace the need for physical clothes.
“The fashion industry alone is $2.7 trillion and we foresee that at least doubling over the next two decades because of digital fashion,” Kaspar said as she donned gold digital earrings during a Zoom video interview. “Digital fashion wearables give a new utility to fashion in general and it takes fashion to a sustainability level where all of the fashion that you're wearing, kind of like the earrings that I have on in the digital world, are not produced physically.”
That same promise has equally intrigued fashion companies looking to forgo the raw material and labor costs associated with producing physical clothing. It may seem like a far-off impossibility, but designers beyond Dolce & Gabbana are already experimenting by offering such wares right now.
DressX, a digital wearable marketplace startup that works with designers to offer 3D, AR garments, has already attracted millions in total backing from investors like Kaspar, despite only launching last year. The company boasts an app to let users “try on” different digital garments and has partnered with retail platform FARFETCH to let influencers promote digitized garments from the latest collections of Off-White, Balenciaga, Dolce & Gabbana, and others. DressX co-founder Natalia Modenova forecasts that while wearable NFTs for characters in games and digital worlds could also prove lucrative, even our current work-from-home life sets up nicely to use wearable NFT fashion today.
“The other use cases will follow and they are already popping up when you could wear some of the items in the gaming environment and virtual world, but it is way more limited,” she said. “We all have our own bodies and we don't need any kind of avatars to appear on the screen. We all have some kind of device which will help us show ourselves on the screen and that is why it opens up the biggest market and the biggest opportunity.”
Only time will tell if fashion NFTs enjoy an even hotter start than that of other digital collectible categories in 2021. Dapper Labs, the parent company behind NBA Top Shot, which sparked a frenzy of digital highlight collectibles and more than $700 million in sales activity, is planning to launch an NFL version soon. That alone could help provide a boost for a back-to-back NFT quarterly sales record.