NFT & luxury - The advantages of a growing system
It's impossible not to have heard about it. Closely linked to blockchain, NFTs have recently revolutionized the luxury and art market. At the height of digitalization, need for authenticity and new proximity, let's take stock of the relationship between luxury and this digital and monetary innovation with more than attractive advantages.
What are NFTs?
NFT or Non Fungible Token are digital tokens with a unique identification and their own characteristics.
Their value varies according to supply and demand and they can represent a physical asset (a work of art, a branded product) or a digital asset (a digital work, a video game avatar...). Each token has a certificate of authenticity linked to the blockchain, which makes it unfalsifiable. All the steps that these tokens have gone through are identifiable and listed, via a secure and above all decentralized system, (whether they are sold or not). Certifiable and traceable, they are a significant advantage in the era of transparency and digital security.
A promising system
If art and entertainment were among the first sectors to seize the phenomenon, luxury is not left behind and seems to want to take advantage of the benefits offered by NFTs. Proof of this technological craze: according to a report by L'Atelier BNP Paribas, by 2020, the global NFT market will have reached a value of $250 million and the number of buyers will have increased by 66%.
This exponential growth is due to the advantages of this financial ecosystem. Indeed, for brands and luxury goods in particular, NFTs activate three essential levers: authenticity, rarity and customer experience. Regarding the latter, by eliminating the intermediaries between the sender and receiver of an NFT, the blockchain offers an exclusive purchase and a reinvented proximity between the customer and the brand. A unique and privileged digital experience.
An example is the LVMH group, which has joined forces with the Richemont group to develop the first international luxury blockchain: Aura Blockchain Consortium. A system that proves the authenticity of items and traces their origins from raw materials to the point of sale (and even to second-hand resale markets).
A global visibility that should also allow the houses to offer their customers exclusive offers and events, all part of a unique loyalty approach.
Authenticity & Certification
If there's one factor the luxury industry likes to control, it's the quality of its products. However, according to a report by the European Union Intellectual Property Office, in 2019, counterfeiting accounted for $464 billion. For the past fifteen years the scourge has been spreading and the web is becoming the favorite playground for counterfeit products.
Before the advent of blockchain and the authentication of digital works, they were infinitely reproducible, like any digital file. This made it difficult to distinguish the real from the fake and to really know the origin of the items. Today, thanks to NFTs and their unique identification, issuers and buyers have an irrefutable title of ownership, a true certificate of digital ownership, guaranteeing the authenticity of a product while facilitating and securing its possible resale.
Another intrinsic link to luxury: exclusivity.
In the field of art, for example, NFTs have dried up the market by making it possible to identify works that were previously copied, thus driving up bids on the originals, even if it means creating a (healthy) shortage.
Unlike a bitcoin, which can be exchanged for another, an NFT is unique. And as Thibaut de La Rivière, director of Sup de Luxe, points out: "Because they are unique, NFTs are also associated with the notion of rarity and can create value within a brand's universe, as well as a particular craze and a 'collector's' effect on certain products". An innovation on which the luxury industry will undoubtedly be able to rely...