In the digital world, so-called Non-Fungible Tokens (or simply NFTs) are currently the talk of the town. What is actually behind them and what role can NFTs play in the digital fashion world? That's what we wanted to know from Richard Hobbs. Together with various partners, the Briton and industry veteran has just launched the fashion-focused NFT platform bnv.me.
How would you explain what an NFT is to someone who is not a digital native?
Essentially it’s a digital certificate that proves ownership of a virtual item, or a digital asset. Up until relatively recently they were mostly connected to pixelated graphic items such as CryptoKitties and CryptoPunks which most “normal” people just didn’t get. But in recent months, with the explosion of activity in the art world in particular, they are being understood and accepted by a much wider audience.
If you use the comparison with sneakerheads who collect and trade they often are only taken out of the box for a quick view and most definitely not worn. They know that some items are rarer than others, and potentially more valuable, but nobody for sure knows how many pieces of a sneaker were actually produced.
With NFT’s you know exactly how many and who owns them. Every item and transaction is recorded on the blockchain for everyone to see. Owning that NFT allows you to sell that item without ever having to question it’s authenticity so proven scarcity equals true market valuation. That’s the core of it but the real interest, and fun, comes down the line.
We have been working on bnv.me for over 3 years as a concept and then for 15 months of planning and building the platform and the Smart Contract structure. From the beginning we knew there was huge potential for digital fashion as collectibles but with the development of customized gaming skins and wearables as well as the birth of various metaverses and 5G communication there are so many more possibilities.
Currently in the gaming world the doors are mainly closed to outside products (NFT’s) and essentially, if you buy a wearable in game you are giving money to the gaming companies exclusively. Where there have been branded products offered it’s often seen as a marketing expense by the brands and there is definitely zero scarcity of product or meaningful revenue for the brand.
You want to change that?
Imagine you had in your digital wardrobe a jacket or a pair of sneakers from a leading designer or brand and were able to wear that in Fortnite or NBA2K or Minecraft but you, and your friends and competitors, knew that it was a proper limited edition (provable on the blockchain) and highly desirable item? As you would when going out to a club or bar, when we are allowed to do that again!
In fact the pandemic has probably accelerated the awareness of NFT’s and digital wardrobes as people have been Zooming in their shorts for the last year and a bit while using green-screen backdrops and filters plus there are multiple apps that enable you to dress in virtual garments for social media.
Living and working more on-line is with us to stay and with Metaverses opening up such as Decentraland, Sandbox, Cryptovoxel and Somnium Space where you can be on-line as a personal avatar and shop, go to galleries, concerts, meet up in exhibition and conference centers and just engage with people and events mean that the opportunities are endless.
For fashion in particular we firmly believe that every brand should have a virtual product presence. It will of course be as well as their real world offering but there is every opportunity for purely digital brands to be created and be successful with massively different economics compared to IRL! We are building a sub platform for exactly that purpose.
The obvious fashion segments are probably streetwear and athletic/sports brands. As these are the dominant sectors and have merged in with contemporary luxury in the last decade we see this as being the main area of interest. In a few years time when some of the bridges have been built and some of the challenges around ETH prices and gas fees have been resolved then it can definitely be opened up to more commercial brands.
Luxury will definitely be important and we are actually in discussion with some people from that world who are very keen to come in as investors in the company.
And then there are definitely a couple of key demographics. For example, those who are already engaged with the crypto world. They have their wallets and Ethereum and believe in the future and are already investing in other areas, primarily digital art but also other collectibles. Then there are the GenZ and GenAlphas, or those who are older but whose mindset is in tune with the fusion of cultures and trends in the digital world.
So what’s exactly the business model of the bnv.me platform?
We work with brands to create super high resolution and detailed 3D apparel, footwear and accessories. When everyone is happy we create the Smart Contract for that style and decide how many pieces (NFT’s) to produce and offer at an initial auction. In the contract all the parties that have contributed have their wallets locked in. So the brand plus the 3D designer and anyone else that has helped put it together or promote will receive payment immediately when the auction closes. At the same time the winning bidders have the token transferred to their wallet.
The royalty structure is also locked in for any secondary sales so there is an income for life rather than a one off wholesale or retail price for the brand and certainly more compelling for a designer who will be rewarded based on the success of what they have had a hand in creating.
Our main difference is that we come from the fashion world rather than tech so we understand the concerns that brands will have in going virtual.
How can brands approach you? How does the process work in detail?
Once we establish suitability, a brief and a timeline we need tech packs or similar and then we partner up with the most suitable 3D designer from our extensive network. If everything goes smoothly we can go from idea to completed auction (with ETH in everyone's wallets) within 10 to 14 days. That’s certainly a much faster design, product development, sales samples, marketing preparation, purchase, finance, QC, ship, store, pick and pack, invoice, collect payment, process than normal and with a completely different cash flow model!
What are the future plans?
Medium term we are forging bridges with the gaming and metaverse businesses and in our most recent fundraising round have confirmed some key players from that world as investors. So, as well as creating more uses and benefits for our existing and upcoming token auctions we are getting lined up for the future.
What’s your personal motivation behind all that?
I founded the company and until recently was the sole shareholder. I have been in the business for well over 30 years starting in denim and then being part of the birth of what is now called streetwear. At all stages I have always been interested in how technology can change and improve what are in the main very antiquated and inefficient processes in the industry. When I got deep into 3D design over 4 years ago and then started to learn about the possible application of blockchain and DLT into the fashion cycle the light bulbs came on and so I have been focused on bnv.me since that point. The timing with the current noise and buzz around NFT’s could not be more appropriate but we are not opportunists and have been working on both the current version and new enhancements that will appear soon for a long time.