Digital fashion has made its way into the mainstream fashion market since its beginnings in the gaming industry a few years ago. There is an ongoing debate about how we consume fashion in an increasingly digitalized environment, and notions like virtual collections, avatar influencers, and other similar concepts are becoming more popular. The emphasis then turns to ensuring that digital designers not only get sufficient recognition, but also receive enough compensation for their work. The fashion industry is going through a transformative change thanks to the innovation brought forth by the blockchain technology and also in the retail and e-commerce sector thanks to virtual currencies and stablecoins.
In the world of fashion, crypto-fashion refers to digital items that may be traded and validated through a distributed ledger. It’s gaining traction and becoming more widely used (a data structure that holds transactional records and ensures security and decentralization). After the pandemic fashion has gone mostly online, Crypto Fashion Week has solidified digital fashion’s importance as cryptocurrencies are becoming more popular.
Crypto-fashion is also attracting a lot of attention with jam-packed online schedules replete with seminars, exhibits, and discussions taking place on platforms like Clubhouse, Twitch, YouTube, and the metaverse as a consequence, bringing together a community of designers, artists, engineers, and anyone else with an interest in digital fashion to participate.
Another sector which is massively taking over the luxury fashion industry are NFTs, a new kind of decentralized digital asset released on the Ethereum blockchain and certifiably single, similar to a one-of-a-kind piece of art, may experience fast growth this year. NFTs are expected to expand at a high rate this year. While the practice of selling digital assets — such as avatar skins — is not new. According to Nonfungible.com, which monitors the crypto collectible market, total NFT sales exceeded $100 million in July 2020, indicating that the fashion industry’s demand for newness and unique items may help NFT producers thrive.
Major companies are already producing and selling NFTs: Nike has used them to build digital shoes that are connected to real-world shoes, and Louis Vuitton uses them to monitor the origin of premium products. NFTs are also being used to track the provenance of medical devices. This trend is continuing in 2021 as fashion adopts the metaverse — a virtual environment in which people interact with one another via avatars — as a way of life.
Luxury brands are integrating crypto payments on their platforms:
We are seeing a rise in the number of high-end companies that are accepting Stablecoin payments, with luxury cars, watches, and hotels taking the lead in this regard. Hubolt launched a collection of watches earlier this year that could only be purchased with Bitcoin. It was an enormous success, with 210 copies of the limited edition Big Bang variant being sold in the first week after it was introduced to the market.
When it comes to conventional currencies, Travala.com, an upscale travel service, offers its clients a wider selection of cryptocurrencies to pick from than it does traditional currencies.
Stablecoins in the Luxury Retail Industry
According to a recent survey, over 56% of high-net-worth people invest in cryptocurrencies, which is consistent with the current crypto ‘bull market,’ indicating that the number of rich investors is likely to increase. TJB Super Yachts just announced that they would accept bitcoin payments, suggesting that the trend is unlikely to reverse very soon. An NFT by artist Mark Winkelmann, dubbed “Beeple,” was just sold for an astounding $69 million, making it the third most expensive work of art ever sold by a living artist. Experts believe that in the near future, using stablecoins in everyday life will become as natural as using a credit card or tapping your phone.
What stablecoins bring to the Luxury Fashion Industry
Stablecoins have a value that is intended to remain steady over an extended period of time. This characteristic makes stablecoins an excellent safe haven asset because, unlike cryptocurrencies such as Bitcoin, whose value can fluctuate dramatically on a daily basis, an individual who uses stablecoins to store value faces no risk of losing their investment, especially because they have complete custody of their assets. It has recently been demonstrated that the importance of both price stability and the self-custodial nature of stablecoins has been highlighted by the political and economic crisis in Venezuela, where many citizens fleeing the country have stored their savings in Bitcoin in order to avoid being forced to surrender their fiat money.
Brining innovation in Escrows Payments
Escrow payments are common in the luxury fashion and retail industry. Stablecoins fully automate the process of escrow via the use of smart contracts that programmatically assess escrow circumstances, eliminating the need for third-party intermediaries. The fact that smart contracts using stablecoins are executed on the blockchain ensures that they are completely and publicly auditable. Stablecoins, in addition, help to maintain price stability for escrow smart contracts, which, particularly when dealing with substantial escrow assets, may incur considerable losses due to price fluctuation.
Brining more speed
Stablecoins facilitate the speeding up of a variety of financial transactions. Smart contracts that make use of stablecoins simplify the process of escrow. Stablecoins enable settlement and financial transactions to take place at any time of day or night since the blockchain works independently of a central institution with fixed operating hours.
Lowering Transaction Costs
Credit card processing fees across major credit card providers such are approximately 2 percent per transaction on average. As a result, many small companies charge their clients extra for credit card transactions, restrict the use of particular credit cards with higher fees, or even only accept cash payments as payment. Using stablecoins, however, these large transaction fees may be avoided, resulting in a win-win situation for both companies and consumers.
Bitcoin’s capacity to function as an anonymous, international store of wealth has proved to be a real-world need for millions of people across the globe. It is impossible for Venezuelans to leave the nation with their fiat currency. They are unable to transfer it abroad via their banks, and they are unable to physically take their money with them since it would be confiscated from them at the border crossing. As a result, Venezuelans have resorted to the cryptocurrency Bitcoin. Stablecoins, on the other hand, perform much better as a store of value than both Bitcoin and the Bolivar, since stablecoins are not susceptible to speculative markets or uncontrolled inflation.
Transactions on the blockchain may be seen by anybody with internet connection using a blockchain explorer, which displays all of the transactions on the blockchain. Furthermore, stablecoins, may provide complete transparency into the method by which they are supported via frequent audits.
Using stablecoins for Rewards Programs
The usage of stablecoins by companies as a means of connecting with and rewarding their fan groups is becoming more popular. Famous fashion brads are developing platforms that enables anybody to earn stablecoins by buying online. While most reward programmes provide consumers with points or rebates, brands are distributing stablecoins straight to users’ wallets whenever they purchase online. Online platforms are also collaborating with other stores, including Nike, Sephora, Ulta, Bloomingdale’s, Saks Fifth Avenue, and, most recently, sneaker marketplace StockX etc.
No matter if you’re purchasing baseball tickets, booking a trip, hailing a taxi, or ordering a cup of coffee, or buying yourself a luxury watch you’re participating in a multi-trillion-dollar digital economy. Sales in retail e-commerce worldwide surpassed $3.53 trillion in 2019, with an anticipated total of $6.54 trillion by 2022, according to the Statista research firm. And, perhaps most intriguingly, these figures do not include expenses for travel, transportation, and special events of any kind. In spite of the fact that the internet has been in general usage for almost two decades, the possibilities for internet-native commerce continue to be immense, and the demand for digital-first products and services continues to rise. However, this does not change the fact that digital-first companies face a unique set of difficulties that other businesses do not.
The Fashion sector has seen a significant increase in the use of blockchain technology in general and stablecoins in particular as a result of these developments. The fashion industry is taking a keen interest in the $2 trillion cryptocurrency sector and is exploring new methods to get into this massive market. A fantastic platform for luxury and fashion companies to reach more consumers online and offer new and unique services that allow them to buy for more products using stablecoins is provided by stablecoins.
Because the options are almost limitless, companies are always inventing and bringing fresh concepts and ideas to the table. Perhaps the most significant impact stablecoins have had on the fashion and retail industries is that they have helped to keep the industry afloat even during a financial downturn, when crypto investors are flocking to purchase luxury watches and automobiles with the money they made during bull markets in cryptocurrency.