Crypto is down.
NFTs are hurting.
The broader market is… shaky, at best.
So why are luxury brands pouring money in crypto? And whatever happened to broader adoption?
This is something we’re seeing firsthand here at Plexus, as more and more luxury brands, from cars to auction houses, are turning to crypto even in the middle of a crypto winter.
What’s going on? Let’s take a closer look.
Luxury X Crypto: Exploring 2 Use Cases
In general, luxury brands are turning to crypto for two primary use cases:
Why those two?
First, payments. Luxury payments have always existed in a world where money and wealth take many forms; many luxury goods are (or where) currencies themselves. Think gold, jewelry, etc.
Accepting crypto payments for luxury goods fits with the broader trend.
From the general to the specific; while crypto payments make perfect sense – after all, luxury brands aren’t the only ones moving towards crypto – NFTs might initially seem to be a less natural fit.
But NFTs hold a certain appeal to luxury brands that goes beyond any idea of utility. The core value of an NFT is that each one is unique. More broadly, any given collection of NFTs is, almost by definition, rare.
And rarity is a core element of every luxury brand. After all, if everyone had a Lamborghini, or if everyone owned a Rolex, or if Tiffany jewelry was commonplace, then those brands wouldn’t be luxury brands at all.
For that reason, luxury brands have turned to NFTs even when the broader market hasn’t. NFTs carry built-in utility for luxury brands, simply by existing.
Luxury X Crypto: 3 Matches Made in Branding Heaven
Three examples illustrate how the luxury industry blends crypto payments and NFT rarity.
In 2022, Tiffany’s launched a collection of diamond-studded pendants based on the iconic CryptoPunks NFT collection.
250 pendants sold out in 20 minutes, and netted Tiffany’s over $12 million.
In early 2023, the company began dispatching the pendants. Tiffany’s embraced the rarity of Cryptopunks, combined it with the natural exclusivity of high-end jewellery, and found a winning luxury product even in a down market.
The NFTiff collection also demonstrated a way forward for phygital items – physical items with a clear digital footprint. In essence, the pendant is forever tied to the NFT, and the NFT to the pendants, blurring the line between the two.
Louis Vuitton VIA
Fashion house Louis Vuitton took things even further with their VIA collection in June 2023. The VIA collection consisted of a soulbound NFT to unlock a “box” – an evolving collection of collectables both physical and digital, rolled out over weeks and months.
Soulbound tokens are NFTs that can’t be resold, bound forever to a single wallet. VIA owners – and only the original VIA owners – would be able to access exclusive Louis Vuitton releases.
The idea of soulbound tokens has long been suggested as a way to draw more utility to the world of NFTs. Soulbound tokens could be used to integrate medical data, for instance. But in the world of consumer luxury goods, soulbound tokens can also be used to achieve the ultimate in exclusivity.
Ferrari Crypto Payments
Add Bitcoin, Ether, and USDC to the ways you’ll be able to pay for your next Ferrari.
The luxury carmaker is working with BitPay to process cryptocurrency payments in the three currencies mentioned above. New payment methods can also be new paths forward for potential customers, particularly when those customers are often crypto investors.
The intersection between crypto user and luxury goods consumer isn’t an accident. Most crypto investors aren’t millionaires – but despite the downturn, crypto still gave tens of thousands of people seven-figure wealth.
One report estimates that over 88,000 people, worldwide, turned millionaires due to crypto. That’s not a large number of people in total, but luxury brands are well accustomed to working with smaller-but-wealthier markets.
A Luxurious Web3 Ahead
There’s little sign of the luxury industry turning away from web3, crypto, and NFTs anytime soon. Blockchain technology and its built-in exclusivity are powerful draws for luxury markets, and even as broader adoption of cryptocurrency marches slowly on, the luxury sector is racing ahead.
That’s a good thing; adoption is adoption, no matter how limited the market, and even an NFT exclusive community is a community of crypto customers. And despite the well-covered struggles of the NFT market, the luxury industry continues to support that particular sector.
On the employment side, luxury companies working with web3 companies opens the door for new skillsets to enter the market. Salespeople with high-end customer experience, employees with a background in luxury retailers, and programmers and designers able to craft the fully immersive experiences the luxury goods industry craves.
It’s a luxurious web3 ahead.