Crypto

The only thing I knew for sure about my clothes prior to the pandemic was that they were tangible and that they could be reliably found cramming my closets. It turns out that I was wrong. As life moved online during COVID-19, so did our clothes. And our artwork, if we are a little posh.

The news buzz about digital fashion for the benefit of “commercial growth and marketing activation”  turned into a lion’s roar about digital fashion “overtaking physical stores”  to further “consciousness and identity shift.”

WOW! Talkabout COVID-19 accelerating trends! As fashion brands cancelled runway presentations, they had to come up with projects to get their vision across. Ballenciaga created a video game and Gucci entered into a digital collaboration with Pokemon for the player’s avatars. We are starting to see the formation of a market for these projects and their designers need to receive credit and be paid, which requires a special technology that protects ownership. This past February’s first ever Crypto Fashion Week was an example of such a platform that couldn’t exist if it weren’t the blockchain technology.

As proof of ownership is one of the fundamental properties of cryptocurrencies, the traditional high end fashion industry is also becoming increasingly interested in blockchain technology. Louis Vuitton, Cartier, and Prada have built Aura on blockchain technology to fight the counterfeit goods war.

Despite this avalanche of adoption, crypto fashion is still in its infancy. It is a complex field that goes beyond NFT’s into gaming, metaverses and augmented realities. Natalia Modenova, co-founder of the (exclusively) digital fashion retailer DressX thinks that “it’s going to take leaders in the market to push mass adoption.” It will be interesting to see what happens and if the push will come from the fashion industry or somewhere else.

So far the biggest news splash was made by Andreessen Harowitz and its $8 million investment in the virtual fashion platform RTFKT, which specializes in digital sneakers and other virtual accessories. I personally find it hard to believe it’s just coincidence that Marc Andreessen was also one of the first investors in bitcoin. Remember how we discussed that the future of bitcoin depends exclusively on whether there are reasons for it to exist? I believe Marc Andreessen and his investment in virtual fashion just gave bitcoin a stylish raison d’etre.

Image credit: 3DSculptor via iStock by Getty Images

Crypto is creeping into fashion. If you don’t know this, you should. Bitcoin was created in the aftermath of the 2008 financial crisis and it has been defined as: a protocol, a currency, a payment system, a technology platform, or an open source software.

Venture Capitalists like Mark Andreessen understood the technology quickly and were its early adopters, but regular investors were slow to warm up to it.

Bitcoin’s high volatility, large number of scams, and reputation for being the preferred currency for criminal activity did not help the adoption process. Despite its ups and downs, its market capitalization continued to climb and recently reached one trillion dollars.

As of today, investing in it is still very risky and determining the exchange rate is almost impossible. Governments don’t back it up and it has no fundamental value. An interesting theory states that what matters in determining the exchange rate is the payment transaction volume and its continuity:

“Bitcoin exchange rate can be fully determined by two market fundamentals: the steady state transaction volume of Bitcoin when used for payments, and the evolution of beliefs about the likelihood that the technology survives”.

With all the problems Bitcoin has faced in its short existence the question remains: Bitcoin, fad or future? It looks like the answer depends exclusively on whether there are reasons for it to exist.

In the next installment of this article we will try to understand whether crypto fashion, NFTs, and crypto fashion shows have intrinsic value or are just serving as Bitcoin’s much-needed raison d’être.

Image credit: xpoint via iStock by Getty Images