NFTs — non-fungible tokens — surged in popularity in 2021. BoF Insights reported sales reached $10.7 billion in Q3 2021, more than eight times the volume of the previous quarter — a figure that has plateaued over the past two quarters.
At BoF’s Professional Summit: New Frontiers in Fashion and Technology, Highsnobiety co-founder Jeff Carvalho and The NPD Group’s Matt Powell joined Coinbase product manager Ejaaz Ahamadeen to debate the place of NFTs in the fashion industry.
Today, their use-cases have evolved beyond digital artworks to include applications such as pre-purchase tokens that create a strong secondary market among consumers, or even as a strategy to unlock experiences that community build and create a stronger brand ecosystem.
Coinbase, a secure online platform for buying, selling, transferring, and storing cryptocurrency has been a pioneer in the market since its inception in 2012, operating as the largest cryptocurrency exchange in the United States by trading volume. Today, Coinbase has 89 million verified users worldwide, 1000 institutions, and 185,000 ecosystem partners in over 100 countries.
While primarily known as an exchange and storage service for bitcoin, Coinbase not only offers a wide range of other crypto and fiat currency exchanges, but is also making significant in-roads in the NFT space. This month, it launched its NFT marketplace to all users. This venture is born out of the company’s belief that the NFT community don’t just want better tools to buy and sell NFTs — they want better ways to discover them, to access the right communities, and to exist in spaces where proponents of NFTs spend time.
Here, BoF shares exclusive insights from Coinbase’s Ahamadeen shared in the debate.
Separate Hype from Commercial Opportunity
EA: “There’s no denying the huge euphoria and hype in NFTs over the last year and a half. As with any new piece of tech, there’s a lot of hype that can supersede what the actual value is, from a technological perspective. But that was the same as what we saw with web1, when we saw the dotcom boom, and we saw infinite websites pop up. What then takes place is just a constant cycle of innovation. What’s undoubtedly true is that, within every cycle of new tech, we see new innovations within it. We see more [use-cases] and ultimately we see more value for individuals. We’re still really early — if we have this conversation in a few years’ time, I think it’ll be very different again.”
Commercialise Existing Customer Use
“We’ve noticed people started using NFTs as a new way to communicate — as a kind of “online digital flex.” If you think about the evolution of goods, you have your basic goods, which are critical, then luxury goods, which — for the longest period of time — were always physical. Why? Because you can hold them, own them [and they’re] unique and authentic to a brand. This [has] progressed to digital value. That’s happening to a lot of things. Money, for example, is now digital information.
The bet here is in the years to come — the world, your digital world, your personal life, your online identity, presence and persona, is [all] going to become more important to some degree than your physical one. The idea is — how do fashion industries get involved in building the community, presence and influence.”
Build New Community Engagement Tactics
“NFTs are a new way to present yourself in a world that’s becoming increasingly digital. While the metaverse hasn’t been explicitly defined, we’re all agreed that it’s going to be a much more digital world. So, if that’s the case, how do you formulate that and build a community?
Adam Bomb Squad — an NFT project by The Hundreds — is a great example of establishing a token-gated community. Where tokens give exclusive access to drops. At its core, it’s all about involving the community in more ways. Brands are looking for more ways to engage with their consumers. They’re asking, “how can I interact with them? How can we represent our [community] effectively?” Offering your customer base a new way to engage will be [critical].”
This is a sponsored feature paid for by Coinbase as part of a BoF partnership. This interview has been edited and condensed for clarity.