Speculators are pondering the future of digital fashion after a recent $3.1 million sale of some NFT sneakers. Why the NBA’s Top Shot clips and downloadable outfits in video games like Fortnite may contain some clues.
A COLLABORATION BETWEEN design studio Rtfkt and Fewocious, an 18-year-old digital artist based in Seattle, saw the release of a trio of sneakers that looked like doodled-on Air Force Ones on February 27. The three chaotic designs, each slightly different, were listed at$3,000,$5,000, and $10,000 and sold in a seven-minute period. A total of 621 pairs were bought for a total of $3.1 million. This rapid-fire exchange of money isn’t as surprising as it sounds in today’s frenetic sneaker market. (In August, a single pair of Air Jordans fetched $615,000 at auction.) The fact that Rtfkt’s shoes cannot be worn is genuinely remarkable. They can’t even be carried or touched. Not yet, at least.
NFTs, or nonfungible tokens, were used to create these virtual rainbow-colored sneakers. NFTs are digital art or collectibles that are authenticated or “minted” using blockchain technology and then bought with cryptocurrencies like Ethereum. A public digital ledger keeps track of who owns which NFT and ensures that it cannot be duplicated or tampered with. The fact that you own an NFT does not imply that you own the copyright to a particular asset, but it does give you bragging rights. NFT sales can be massive: last week, net artist Mike Winkelmann, also known as Beeple, sold a single digital collage to the Singaporean crypto fund Metapurse for a record-breaking $69.3 million at Christie’s.
With all of the money sloshing around the NFT market, it would appear to be a natural playground for luxury brands like Gucci, Saint Laurent, and Prada, which have long sold expensive, attention-getting products. So far, Rtfkt (an intentional misspelling of the word “artifact”), an approximately year-old company, has been the most influential player in selling NFT sneakers and now clothing. Its success could provide fashion companies with a road map if they decide to enter the NFT market.
“Sneakers were the basic vehicle to start with,” explained Benoit Pagotto, one of Rtfkt’s three founders, because they were an existing asset class. (Mr. Pagotto is based in Paris, but his partners Chris Le and Steven Vasilev are in Salt Lake City and Los Angeles, respectively, in a very internet-age business structure.) Mr. Pagotto, who previously worked in the esports industry, believes that by2021, even teenagers will understand that they can buy a new, hyped-up sneaker like the Adidas Yeezy Boost one day and sell it for a significant profit the next.
Even in the digital world, a sneaker’s flippability applies. Fewocious “shoes” are selling for nearly double their launch price just a few weeks after their release. And, unlike the traditional auction market, Rtfkt gets a cut every time the NFT is resold. This is a common practice in the market, which makes NFTs even more appealing because creators can make money indefinitely on paper.