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The modern fashion industry is rapidly discovering the massive potential of the NFT marker to boost the sector’s revenues. From luxury brands such as Dolce & Gabbana to sporting clothing, blockchain technology leads to new business models.
This article will discuss Adidas, the latest multinational clothing company to join the NFT market. After reminding readers about the NFT concept, we will analyze Adidas’s choice and place it in a broader market context.
The popularity of NFTS
An NFT (non-fungible token) consists of an irreplaceable and traceable digital asset on the blockchain. Unlike a fungible token (i.e., a standard cryptocurrency), it owes its market value to its uniqueness.
In other words, think of a case where a trader sends 1 BTC to another, receiving the same amount. Such an exchange would not generate value for either counterparty, as the tokens are perfectly interchangeable.
The same is not valid for NFTs, which, from this point of view, follow the same model of exchange of works of art. So, for example, it can exchange a Picasso painting for a Michelangelo statue, but it is not objective to say that the two pieces have the same market value.
Interest in NFTs has grown tremendously throughout 2021. Many popular crypto exchange platforms have launched online NFT marketplaces in response to this growth. The popularity of this technology derives from many factors, among which we can mention the following:
- Expectations of increase in value: usually, the most purchased NFTs are associated with assets for which the market expects growth in value over time
- Exclusive ownership: NFTs solve the problem of the lack of copyright on digital assets. It is clear that, in an increasingly virtual economy, finding a solution to this problem is an essential step towards global economic progress.
- A general sense of hype: as already seen with fungible tokens, we know that the crypto market is very attentive to the news in the sector. It is a young industry, often dominated by new traders, and this behaviour should not come as a surprise.
A new initiative by Adidas
In December 2021, we witnessed one of the most anticipated NFT drops of the year. The well-known sportswear company Adidas has sold out its NFTs on several marketplaces.
The whole process developed in two phases:
- Private sale: at this stage, several essential players in the NFT market could participate exclusively. Technically, this phase is the “pre-mint,” which is the one that precedes the actual creation (or “minting”) of a new NFT.
- Public sale: after the private sale phase, the public sale operation was opened, selling out in a short time
The collection consisted of 30,000 different NFTs, with a minting price equal to 0.2 ETH. Considering that the initiative managed to sell all the pieces, the operation generated revenues of several million dollars.
Implications for the Metaverse
This commercial operation represented one of the most critical and successful NFT drops for a multinational company. “Into the Metaverse” – the name of the initiative – will give the right to exclusive access to the virtual universe of Adidas.
The fact that companies of this caliber are taking an interest in the initiative provides an exciting preview of the future of the Metaverse. Web 3.0 is getting closer and closer, and many important players of our economy are rushing to get a front-row seat in the new market.
A look at the rest of the market
Speaking of this sector, Adidas is not the first brand to seek its fortune within the Metaverse. In fact, in 2021, we often read news regarding Nike’s entry into many online virtual universes.
Nike’s official interest in this market came with the confirmation of the acquisition of RTFKT Studios, a company working in the creation of NFTs. The purpose of this operation is the union of the Metaverse and the NFT technology, which are notoriously closely related.
Industry sceptics must consider that this industry has always thrived on non-material assets. The value of a fashion brand is perhaps the best example of this market trend. Now, technology helps certify the authenticity of a brand or a virtual product. Many see this as an increase in protection for the end-user.
Adidas is only the latest company to join the NFT market hype. Many may still find it hard to understand how 30,000 non-fungible tokens could sell for millions of dollars. However, this business is large and growing.
The next few years may see an increasing number of companies entering the market, with potential diminishing returns for latecomers. Big companies are aware of this, so many are rushing into this new virtual world.