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Back to news Blockchain and luxury: the new connection of the virtual world Blockchain and luxury: the new connection of the virtual world

Blockchain and luxury: the new connection of the virtual world

The luxury market is increasingly linked with the latest technological frontiers, just like blockchain: let's find out what it is, how it works and the latest luxury trends in the metaverse.

11/2/2022

The luxury market is increasingly linked with the latest technological frontiers, just like blockchain, whose use is spreading among high-fashion brands within the virtual world. Let’s discover what blockchain is and how it works, as well as the latest luxury trends in the metaverse, from the real estate to the fashion market.

TABLE OF CONTENTS:

What blockchain is and how it works

Blockchain and luxury: what they are - Santandrea Luxury Houses It is certainly not easy to explain in detail what blockchain is and how it works without delving into computer technicalities, which are not very appropriate for the context. However, it is possible to explain what blockchain is and how it works on a more general level, aimed at understanding how this technology is linked with the world of luxury, as highlighted by the expression “blockchain luxury”. Blockchain - as recalled by the word itself - is a technology that allows for the creation of time chains of blocks, namely specific data structures that have the peculiarity of being unique and authentic, as they are absolutely unchangeable. Blockchains, then, are chains that make it possible to generate digital certifications of authenticity and thus enable transactions - in the form of data exchange - and tracking that guarantee uniqueness and originality of works of art, luxury products, video games and high-fashion items. The authenticity of such digital content is certified by the now well-known NFTs (Non Fungible Tokens), which are actual certificates of digital authenticity that identify intangible virtual content.

Going into luxury products, blockchain therefore also enables the creation of a kind of "digital passport" for items, which offers users a secure and verified means of verifying the entire history of the product they own, starting with the raw materials and ending with the purchase process, as well as other information on the date of production, serial number, all materials involved and their provenance. This digital passport for luxury products has not yet definitely come into use, partly because of some critical issues related to its use, such as excessive information sharing-the "dark" side of transparency. But some hypotheses for a solution already exist, such as the possibility for brands to decide which information to give access to or not, perhaps hiding some internal negative information (sales declines or company "secrets" related to the making of certain products). In short, the most famous brands in the high-end market are gearing up, so the full-fledged entry of blockchain into the world of luxury is only a matter of time.

Discovering the relation between blockchain and luxury

Blockchain and luxury: more about the relation - Santandrea Luxury Houses But the relation between blockchain and luxury has already begun, as evidenced by the very special partnership - which could be called “blockchain fashion” - formed in early spring 2021 by three of the biggest competing groups in the fashion market - LVMH, Prada and Richemont, which together own as many as 103 fashion houses. This has given rise to many NFT-related initiatives in the global fashion landscape. In addition to the LVMH blockchain, Adidas has also partnered with Prada to create a "Create it yourself" NFT artwork. Notably, the Aura blockchain consortium, initially initiated by LVMH and technology partners ConsenSys and Microsoft, has been tasked with addressing the issue, anticipated a few lines ago, of a digital passport for high-fashion products, starting with issues such as the traceability of luxury goods and their unique digital identity. From the introduction of blockchain in the luxury world, the challenge of sustainability could also benefit - as we write in a dedicated article.

Yes, because a digital certification would also allow brands to demonstrate their commitment to reducing the environmental and social impact caused by their production and sales activities. As in the case of the LUXO token, the NFT used within the Virgo platform (developed by Luxochain in partnership with PwC, Temera and Var Group), designed to allow manufacturer brands to self-certify each product in various ways, including blockchain certifications, in order to track the entire lifecycle of a product. Thus, fashion brands have the opportunity to ensure maximum transparency with respect to the supply chain, the origin of garments, the raw material used, the ethical sustainability of the product and its impact on the environment and society. A transparency and a commitment to sustainability that, more and more, represent essential values for all those brands that want to establish a relationship of trust and loyalty towards their customers.

All about luxury in the metaverse: from real estate to fashion

Blockchain and luxury: luxury and metaverse - Santandrea Luxury Houses The increasingly central role of the virtual world, that is the metaverse, within the luxury market is a trend that has been experiencing exponential growth over the past two years. This is evidenced by both the growth of the luxury real estate market in the metaverse and the massive investments of the most famous fashion brands precisely on the virtual world, culminating, on an image level, with the Metaverse Fashion Week. Beginning with the first of the two trends, it must be said that the quintessential luxury goods in the real world are prime real estate, namely luxury homes. And even in the metaverse this trend is taking hold, as virtual land and villas have become a favorite investment of VIPs and large corporations in recent months. During 2021, about 500 million euros were spent on virtual real estate, while for the 2022 budget we still have to wait a few months, although estimates speculate that the sum will at least double to over a billion euros. Turning to the world of luxury fashion, in our recent analysis regarding virtual luxury trends, we noted how many brands have already landed in the metaverse, including Gucci, Dolce & Gabbana, Balenciaga, Louis Vuitton, and Moncler.

These high-fashion brands testify to how the market for luxury clothing and accessories in the virtual world is already flourishing, partly in the wake of the many VIPs who have pioneered the purchase of virtual designer items. According to an estimate by the Morgan Stanley lending institution, the virtual world market will cover more than 10% of the total luxury goods market by 2030, to the tune of 45 billion euros. But even the art world is not exempt from the metaverse's growth trend. In fact, so-called “crypto art” is increasingly in vogue. The expression "crypto art" generically means digital art, that is, all that set of digital works or physical works subsequently digitized, the basis of a dense commercial network of goods that can be purchased and sold as exclusive content, even in special virtual art galleries. And at very high figures. Suffice it to say that, in the span of 2021, crypto art generated a revenue of about 25 billion euros, growing exponentially from about 95 million euros in 2020, waiting to find out the budget for 2022. It is therefore now clear that the virtual world is increasingly central when it comes to business and luxury, and not only with respect to art or high fashion, but also with respect to the real estate market and to that whole, now flourishing, commercial network based on the exchange of cryptocurrencies to be accumulated in one's virtual wallets.



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