An NFT is a digital proof of ownership (token) that allows you to show that something, in this case an online sneaker, on the Internet is yours. Previously, nothing on the Internet could be referred to as property , but this has changed with the advent of blockchain. A concept you may already be familiar with from cryptocurrencies, such as Bitcoins. Blockchain is a public database that keeps track of exactly what belongs to whom. The difference between cryptocurrency and NFTs is that cryptocurrency has an exchangeable value, for example, you can exchange one Bitcoin for another Bitcoin. NFTs, however, are unique (non-fungible) and always linked to an online object, such as a piece of art or a sneaker that is sold in a limited edition or of which only one item exists.
Online vs physical
The possibilities of NFTs online are of course endless, but they can also play a role in the physical world. In late 2021, Adidas, in collaboration with Bored Ape Yacht Club, PUNKS Comic and G Money, released a project called ‘Adidas Originals: Into the Metaverse (Phase 1)’. This NFT features the avatars of the various collaboration partners dressed in Adidas. At the moment the NFT gives access to virtual clothing in an online game, but in the future the owners of the NFT will also have exclusive access to matching garments in the physical world.
The project sold out within an afternoon and although it is an estimate, the revenue for Adidas from the sale of this particular NFT project is estimated at $23 million. This immediately explains why large brands are now so actively engaged in this topic. Adidas itself has also started another partnership in this field, this time with fashion house Prada.
RTFTK & Nike
RTFKT Studios is a design studio that focuses on augmented reality (AR) sneakers. They designed the Cybersneaker, the first virtual sneaker to go viral. This particular sneaker design references Elon Musk’s Tesla Cybertruck and there is only one.
The fact that RTFKT Studios went viral did not go unnoticed by major brands either. In December 2021, RTFKT was acquired by Nike. “This acquisition is another step that accelerates Nike’s digital transformation and enables us to serve athletes and creators at the intersection of sports, creativity, gaming and culture,” Nike CEO John Donahoe said.
It turned out to be a good move commercially. In April this year, they launched their first collection of virtual sneakers, called Cryptokicks. The collection consisted of 20,000 NFTs, one of which, designed by Takashi Murakami, sold for $134,000. This is not the first NFT released by Nike. Previously, they launched a mysterious, virtual box, which could not be opened until some time after purchase. For all buyers, it was a surprise when it turned out that not every box contained the same digital sneaker. There were a few exclusive models for a few lucky people that turned out to be worth much more than the original purchase amount of the mysterious box, but a large part of the buyers turned out to have received a cyber sneaker worth the same or even less.
Move to earn
In addition to big brands, there are also many smaller parties entering this digital market. This includes Step’n, which shows that digital sneakers are not just there to be traded or worn in the metaverse. They offer various virtual shoes that allow you to earn cryptocurrency for every kilometer you walk or run in real life. You have to be patient though, only when you have walked a lot of kilometers and have reached level 30 as a result, you can convert your earned coins to digital dollars.
A sustainable and safe alternative?
Those who assume that collecting sneakers digitally is better for the environment because no physical shoe is produced and no emissions occur during transportation are, unfortunately, wrong. NFTs are often purchased with the digital currency Ethereum, this currency uses proof-of-work blockchain which is very energy consuming. One transaction requires so much computing power from computers that it emits 110 kilograms of CO2. In comparison, producing one pair of sneakers emits on average 13.6 kilos of CO2. Meanwhile, there is talk of making NFTs more sustainable by switching to other forms of blockchain that use much less energy, such as the so-called proof-of-stake model. When this will happen on a large scale is still unknown.
In addition, be careful when you want to invest in NFT sneakers. At the moment the market is not regulated and therefore not without risk. Regularly buyers are scammed when buying or selling their digital properties. Want to learn more about how NFTs can be stolen? Then listen to this podcast episode of Reply All.