Blockchain-enabled digital fashion creates new business models for brands

Non-fungible tokens (NFTs) may be revolutionizing the trillion-dollar fashion industry, but NFTs are just one piece of a much larger puzzle that is revolutionizing this sector. Rather, blockchain technology as a whole continues to be a game changer for the fashion industry.

While blockchain-based supply chains served as some of the earliest use cases for how the technology could help detect fraudulent items, digital wearable devices that are built on blockchain networks are now coming into play. Megan Kaspar, co-founder and CEO of Magnetic, a private cryptocurrency and blockchain investment and incubator firm, told Cointelegraph that the digital craze is a very powerful use case for blockchain technology. However, he noted that many brands are unaware of the value that blockchain can provide in terms of creating new business models.

The rise of digital fashion and its impact

To explain the tremendous opportunities that blockchain can bring to the fashion world today, Kaspar noted that all brands will initially move to a "digital first" model in the near future:

“This is where collections are created digitally first, either in-house or outsourced to a company. The digital-first process reduces time, energy and capital, all of which is no longer required to preview collections prior to production. The digital collection can be superimposed on the photos through digital adaptation.”

To put this in perspective, Kaspar recently graced the cover of the January issue of High life. This was unique in that it was the first fashion magazine cover in the United States to show luxury designer digital garments on a human. In addition, the High life The cover is equipped with QR codes that generate augmented reality proofing functions, allowing readers to scan barcodes to see what each featured digital piece would look like. The designs, which were created by Fendi and digitized by DressX, can be purchased directly from the Fendi website.

While innovative from a marketing perspective, there are other benefits of going digital first. For example, Adrienne Faurote, fashion director for High life, he remarked in his report history that “the days of shipping 20+ trunks of clothes all over the world” are gone. This is an important point to consider, especially as the COVID-19 pandemic has resulted in a number of supply chain issues, such as delays in shipping containers around the world.

It is also important to note that a blockchain network is not required when it comes to digital first models. Daria Shapovalova, co-founder of DressX, told Cointelegraph that while the Fendi garments Kaspar wore on the cover of High life they are completely digital, they are not NFT:

“With this first digital cover in the US, our goal was to promote digital fashion to a mainstream audience by making the trial capabilities of Fendi AR available to everyone, free of charge. Releasing the items as NFTs, on the other hand, would mean that AR and digital assets would only belong to NFT holders, significantly limiting the audience's ability to interact with digital garments."

According to Shapovalova, while NFTs are capable of bringing many opportunities to the digital fashion industry, such as providing a sense of belonging and a scarcity effect, this was not what DressX was aiming to achieve with this specific campaign. Kamal Hotchandani, chief operating officer of the Haute Media Group, added that the High life The cover demonstrates how major publishing features are moving into the digital landscape, with the rise of shoppable publishers and augmented reality (AR) testing capabilities.

However, when the capabilities of blockchain are applied to this combination, the benefits are much greater. For example, blockchain technology is enabling Web3 electronic commerce between digital and physical items.

Justin Banon, co-founder of Boson Protocol, a decentralized trading platform, told Cointelegraph that the company has developed a foundational base layer for Web3 that enables smart contracts to execute e-commerce transactions within virtual metaverse environments. Due to the capabilities provided by smart contracts on the Boson blockchain network, Banon said that trust issues that could arise in a metaverse setup can be resolved:

“For example, if an individual entered a metaverse and came across another avatar who was selling a car, one might wonder how secure this transaction would be. The Boson Protocol serves as the layer of trust between the metaverse and the universe by allowing the sale of NFTs encoded with game theory that can then be redeemed for real-world items.”

Blockchain serving as a trusted layer between Web3 business transactions is critical here, especially as major brands like Nike and Adidas set up stores in the metaverse. Digitizing items like NFTs becomes the necessary next step in selling products in virtual environments, bringing about additional functionality.

For example, Kaspar explained that early digital collections can be sold solely as NFTs and then manufactured if a buyer wishes to have the physical items: "Leveraging blockchain technology and NFTs allows for the amount of production, the visibility of each garment, and the global access for the first time. time in history. Limited editions and on-demand manufacturing could easily be byproducts of Web3.”

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Banon added that while 2021 was primarily focused on brands selling NFT fashion, this year will see a bigger push towards "digi-physicals" or "phygitals." According to Banon, this is when brands sell physical fashion items in Web3 ecosystems that are associated with NFT counterparts. “Think of physical sneakers with a wearable NFT version as well,” Banon said. this was recently proven by cryptocurrency fashion house RTFKT, as the company collaborated with "CryptoPunks" to create 10,000 NFT sneakers. A custom pair of sneakers was created for each "CryptoPunk" released and then given to their rightful owner to wear.

The transparency provided by a blockchain network is also beneficial. For example, Kaspar noted that limited-edition fashion apparel appeals to certain consumers. As such, it is possible to understand how many items actually exist on a blockchain network when they are sold as digitized NFTs. This was recently demonstrated when Dolce & Gabbana launched its nine-piece NFT collection "Collezione Genesi".

Although the Fendi collection appeared in High lifeThe January 2022 issue was not NFT, Natalia Modenova, co-founder of DressX, told Cointelegraph that non-fungible tokens will provide the next layer of utility within the fashion industry:

“NFTs maximize opportunities and open up new realms for self-expression and creativity. We compare NFTs to high-end fashion or haute couture because it provides a sense of belonging, a scarcity effect, and a sense of luxury, which would not otherwise be achieved in the digital world.”

How soon will digital fashion be adopted first?

While the first digital models are capable of providing the fashion industry with a number of advantages, there are challenges that can hinder adoption. For example, while it's remarkable how realistic Fendi's digital collection appears at Kaspar, the amount of work required to create that effect is enormous.

At this point, Modenova shared that the garment digitization process always depends on the materials provided by the brand. "All nine Fendi outfits were digitized from photographs, recreating the fabrics, patterns and silhouettes of luxury garments in 3D space from scratch," said Kaspar, adding that all elements of fashion design, such as shape, color, space, texture, etc.—play a fundamental role in the digitization of garments to create a perfect visual design. As such, this process requires a professionalism that can be difficult to obtain given that the space is still in its infancy.

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This challenge does not seem to affect the role that blockchain is likely to continue to play in the fashion sector. Hotchandani commented that in the future, High life plans to convert all the magazine covers to NFTs. “Our covers are pieces of art and content relevant to that moment, so I feel like creating NFTs from our covers gives our art another expression and a permanent home on the blockchain.”

Modenova noted that the rise of the metaverse has resulted in a "meta-fashion", noting that digital assets previously only used for gaming are now being designed to wear digital versions of humans:

“People with a background in technology and gaming quickly understand this, but now, the mainstream is starting to actively follow it. This is a common pattern that emerges when innovative products are launched. Wearables are the most natural extension of the metaverse and the most important pillar of the metaverse economy."