NFTs and Luxury

One of the many benefits of being in an MBA program, and particularly one that focuses on digital innovation, is getting to study and understand emerging trends in business as they are happening. Something that seems to be on everyone’s mind is NFTs (non-fungible tokens). While these started as digital art, they have expanded into almost every sector, including the luxury world. Businesses are using them in a multitude of ways, and the possibilities seem to be endless. Some people wonder though, is this just a trend that will eventually fade? Or will we all be using NFTs soon?

I admittedly knew very little about NFTs before starting my journey at POLIMI GSoM last September, so I had to do some research. I then realized that, as with everything in the luxury realm, the uses are a bit different. I spoke with Professor Alessandro Brun, Director of the Global Executive Master in Luxury Management and leader of the MBA Specialization in Luxury and Design Management, to discuss NFTs in more detail and get his insight into their use within luxury.

What is an NFT?

We need to start with what exactly a NFT is. As I mentioned above, it is a non-fungible token, but what does that mean? Non-fungible means the token must be unique and is not able to be duplicated. The token is cryptographic, meaning it is a unit of digital value that lives on the blockchain. This is different from cryptocurrency as they have no standard value, so they can’t be exchanged for each other directly like bitcoins. Professor Brun clarified that they are not necessarily an investment, but they can earn money.

What do NFTs look like in Luxury?

Currently luxury is really leaning into the metaverse, and NFTs are the perfect addition to that. Avatars can wear luxury fashion items in the metaverse, so companies like Hermès and Louis Vuitton are selling their iconic items as NFTs. Some are even selling their physical items with an NFT attached, so items can be displayed in their digital wallet, or used as a certificate of authenticity. The last point is particularly interesting as counterfeiting is a huge issue with luxury goods.

What effects do NFTs have in the short- and long-term?

Professor Brun speculates that NFTs will become even bigger than they are now, but we have already seen that the current laws are inadequate. Hermès has had legal battles with authors creating ‘fake’ Birkin bags[1], and other sectors have seen similar repercussions. On the more positive side, NFTs are likely to evolve and, to use the professor’s example, may be the way we buy concert tickets, with a forever digital memory of the event.

The metaverse and NFTs are constantly evolving, and it has been exciting to learn more about them. We have also had the opportunity to apply them to real business cases during the MBA, as more and more companies are discovering the value they can provide. Will they be the future, or just another trend? Professor Brun and I are betting on the former, but only time will tell.

[1] “Hermès Suing American Artist over NFTS Inspired by Its Birkin Bags.” The Guardian, Guardian News and Media, 22 Jan. 2022