Insight, Thoughts, Web

How Cryptocurrency & Blockchain will Impact the Luxury Sector

The cryptocurrency industry is becoming increasingly more mainstream, especially with the big hype around NFTs (Non-Fungible Tokens) during the start of 2021. Crypto is only growing in use and we believe it’s due to explode and change affluent consumer habits within the luxury digital space. Charlotte Brodie, Web Account Director at VERB, explores how she foresees its impact on the future of luxury consumption.

What are NFTs (Non-fungible tokens)?

I’m sure the majority of you readers have heard of NFTs recently, regardless of whether you fully understand what they are or not. In short, a ‘non-fungible token’ is something that is completely unique, cannot be replaced by anything else and is exclusively digital and therefore not interchangeable. NFT’s can represent digital files in the form of art, collectibles, video and even gaming. For example the first tweet by founder, Jack Dorsey, was recently sold as an NFT for a cool $2.9 million. Digital has become a commodity. 

This made me think of some of those key values luxury brands heavily depend on; exclusivity, quality craftsmanship, authenticity and scarcity, to name a few. All of which could be represented by NFTs in the near future, particularly when paired with the sale of a luxury item –  a revolutionary movement in preventing counterfeits and to protect the scarcity and value of high end products. 

Interestingly, the fashion industry was one of the first industries to embrace crypto as a means of promoting accountability, sustainability and transparency. In 2018, Ukraine’s fashion week (known as Kiev Fashion Days) hosted a Blockchain Fashion Conference (1). Socially conscious consumption is at the forefront of luxury buyers’ considerations, more so now than ever before. Even the likes of Louis Vuitton have been developing their own platform on Quorum, JP Morgan’s enterprise blockchain, as a means of tracking authenticity of their products through the supply chain and to the end consumer(2). 

For the first time in history we have been able to track provenance in the digital world, and the ability to create “digital twins” of real world assets – tokenized versions of physical goods with a digital link to the blockchain. This, in many respects, protects the luxury sector, and the value that is assigned to individual goods based on their provenance and history. A step forward for a sector that has a long and on-going battle of counterfeiting.

Integrating Online Cryptocurrency payments into your site

We are seeing more luxury brands taking payments via Bitcoin, with luxury cars, watches and hospitality taking the lead. Hubolt launched a collection of watches that were exclusively available to purchase via Bitcoin and was a huge success pre-selling 210 of the limited edition Big Bang model after a week ahead of launch.

Luxury travel agent, offers its clients a wider selection of cryptocurrencies to pay from than normal currency.

There are an abundance of other brands out there that target HNWI’s accepting payments via crypto and can easily be added to your ecommerce platform. 

Shopify, Magento and Woocommerce all have native payment gateways that accept the likes of Bitcoin, Nano and Ethereum through integrations with platforms such as Coinbase and other crypto currency exchanges. 

They are straightforward to set up on your website so if your target audience are engaging with crypto-currency, we can help you get set up here. 

Website hosting with Blockchain technology: Permaweb

One cryptocurrency project, Arweave, describes itself as “a new type of storage that backs data with sustainable and perpetual endowments, allowing users and developers to truly store data forever…As a collectively owned hard drive that never forgets, Arweave allows us to remember and preserve valuable information, apps, and history indefinitely. By preserving history, it prevents others from rewriting it.” (3).  

One of the applications of Arweave, coined “the Permaweb” , will allow website hosting on the blockchain at a one time fixed cost, with immutability, high speeds and no maintenance costs… The dream right? So where do I sign up!

The future of Cryptocurrency and the affluent consumer

Research suggests that over 56% of HNWI invest in crytocurrencies which is unsurprising in the crypto ‘bull market’ indicating the number of affluent investors is going to increase.  Tesla and TJB Super Yachts have recently announced they are taking cryptopayments meaning the momentum isn’t slowing down any time soon. Even recently, an NFT by artist Mark Winkelmann, also known as “Beeple”, was sold at an astounding $69 million, the third most expensive piece of art sold by a living artist in history. The next big thing is the use of cryptocurrencies in everyday life without even knowing you’re using cryptocurrency or the blockchain in the same way we currently use a credit card or tapping your phone as experts forecast this new way of buying is going to become a widely accepted in the near future. Watch this space… 

We pride ourselves as experts in all website development. If you are interested in learning more about how cryptocurrency could benefit your business please get in touch to speak to myself or one of our digital consultants.