The spectacular rise in popularity of digital currency exchange FTX and its probably even more spectacular decline have a chance to enter the annals of technology. As a case study of hubris, if not outright crime, the story has garnered attention everywhere from niche blockchain blogs to mainstream media publications, with critics wondering if the fate of FTX founder Sam Bankman-Fried would put the final nail in the coffin of cryptocurrencies once and for all. .
Not so fast, say, an ever-growing group of related artists and businessmen who rely on digital currency. There is a foundation of entrepreneurs, creators and established brands who continue to invest in the evolving technology and the apps and experiences it unlocks. For them, FTX’s failure seems to have had little impact on things like fashion NFTs, Web 3.0 projects, and Metaverse shopping initiatives, at least so far.
“We’re watching where the winds are blowing, but no, we have no plans to change priorities at this point,” one of the clothing company’s insiders told WWD, on the condition of anonymity, as the person was not authorized to discuss the matter. “Digital fashion will happen, it’s already happening. There’s still plenty to discover – for everyone in the industry, not just us. But the genie is out of the bottle and can’t be pushed back in. Who would?
Others have expressed similar feelings towards WWD for various reasons. Some brands, having made their entrance into Web 3.0 loudly, do not like to have eggs on their faces. There is also a general impression that many executives really don’t know what to do with the situation yet and don’t want to act hastily. Digital fashion, metaverse shopping, and non-fungible tokens, or so-called “figility” retail, have the potential to become big business in the future and no one wants to miss out, leading to a broad “wait and see” approach.
Of course, regardless, at least some crypto evangelists may come up with reality checkers.
Past NFT projects such as the celebrity-driven Bored Ape Yacht Club paved the way for start-ups such as virtual product and experience innovator RTFKT, now part of Nike, and luxury homes such as Dolce & Gabbana to attract the equivalent of millions of dollars with collections virtual/physical, whetting the appetites of venture capitalists, decentralized autonomous organizations or DAOs and others. While the steady flow of similar gonzo trades has always been unsustainable – for common sense reasons – FTX’s demise makes it even harder to imagine now.
Perhaps this is due to how much the company collapsed.
Celebrity endorsements from Tom Brady, Steph Curry, Shaquille O’Neal, Larry David, Kevin O’Leary and many more, along with a string of high-profile acquisitions, have given the young crypto exchange a magical fairy-tale quality worthy of unicorn. At this point last year, FTX, then only two years old, raised a staggering $400 million in funding, bringing the total to $2 billion and valuation to $32 billion. His successes seemed to prove the legitimacy and viability of crypto, with the 30-year-old Bankman-Fried being portrayed as a visionary worthy of the $26.5 billion in net worth he amassed at his peak.
A year later, the unicorn looks more like a donkey. A series of revelations late last year outlined sketchy maneuvers between FTX and Alameda Research, a slightly older Bankman-Fried hedge fund. Alameda Research had a huge stake in FTT, a digital currency created by FTX. But FTX also used it as a hedge on its balance sheet, adding to a confusing situation that even well-rounded financial experts found opaque and difficult to understand. That’s never a good thing, but for a blockchain-based operation, it seemed particularly glaring. (With blockchain, computers share a decentralized ledger that is able to track digital assets. In other words, transparency should be a key point.)
Although Bankman-Fried filed for bankruptcy protection, he could not protect himself from investigations by the Securities and Exchange Commission and the Department of Justice. Among other things, authorities aimed to unravel how funds moved between the two companies, and the long-running financial scandal reached its boiling point in December with the arrest of the young tech founder.
It’s a mess of rare proportions, that’s for sure. But what is less certain is whether it is enough to shake faith in crypto, blockchain, NFT and the like, especially now that their mainstream is starting to mature. Because so far, most of the hand-wringing seems to come from experts, not fashion, tech, or other pioneers blazing virtual trails.
Call it a collective shrug, but these innovators seem undeterred, and the key to understanding this impenetrable optimism is actually quite simple: they were already used to the intense volatility of cryptocurrencies. They know that volatility preceded Bankman-Fried and that the roller coaster ride is likely to continue regardless of what happens to it.
Professionals such as Femi Oluwafemi, a FaZe Clan veteran who now runs Web 3.0 content creation company Fourth Frame Studios, are pointing to the huge potential of blockchain. “The NFT space and applications are of great value,” he told WWD. “There are some brands that are starting to do cool things in the digital space [and gaming] world like Balenciaga. I think there’s an appetite and an audience for it.”
In other words, there is no lack of willingness on the part of brands to follow the Metaverse and Web 3.0. What they lack is know-how, but they can figure it out. “I think we’re still in the discovery phase,” he told WWD. “But I think it will last. There are utility apps yet to be discovered, and some really cool brands are stepping into the space.”
For Oluwafemi, who has worked with many well-known brands including Ralph Lauren, L’Oréal, Walmart, Roblox and Beats by Dre, among others – including his former employer, FaZe Clan – the metaverse is still a very young concept. It’s exciting because it means there’s a lot of room for new ideas, and those discoveries could be game-changing.
“It’s like the very early stages of the Internet,” he explained. “People jumped in very quickly, [even though] they didn’t quite know what it was. There was a downhill ride. There was a bubble. And then suddenly it started to rise again.
“So I’m not sure where we are in the lifetime of all this space. But I can see it has longevity and there is a future in it.”
Big tech seems to agree, even as they face economic difficulties and regulatory battles.
The Meta to Metaverse race has turned Instagram into an NFT beating machine. Meanwhile, Apple’s Mixed Reality Headset looks set to release in late 2023. Retail platforms like Shopify are still rethinking their place in the virtual world, but they are making progress. Last summer, the company announced it would offer NFT support, and on Thursday Venly’s new Shopify app seems to pay off, allowing merchants to design, mint, and sell their own NFT Avalanches with just a few clicks.
A series of noteworthy offerings also signal a growing wave of intriguing new projects and businesses – from the inaugural NFT exhibition and the Fashion Designers Council metaverse to the new fashion brand of cryptocurrency legend Gmoney and the launch of Mntge, Sean Wotherspoon and Nick Adler’s NFT platform for high-end vintage clothing. Decentraland also announced that it will host the second edition of Metaverse Fashion Week from March 28-31, following last year’s launch event which attracted Tommy Hilfiger, Etro and Guo Pei, among others.
It is tempting to believe that they are ignoring the state of crypto by looking away from the writing on the digital wall. However, this is not necessarily accurate. They see what’s going on. They just don’t see it as bad news.
“Right now there are builders and speculators in space, and that’s what makes it really healthy,” Adler of Mntge explained. “I think it made it really nice and green for our development. Here’s the positive attitude we have about it: it’s time for real builders and speculators of all kinds to be here [to get] carpet-pulling stuff and just wash it off because that opportunity no longer exists for them.
“So I think it actually clears the market beautifully.”