The cryptocurrency industry is a 2 trillion dollar industry with huge potentials still for growth. The trillion-dollar question that many have asked is, “why is crypto booming?” What is behind this massive growth and adoption?
Aside from the financial side of cryptocurrency’s boom, there is an increased number of adoptions, which is more than 100%, making blockchain and cryptocurrency adoption the fastest technology ever adopted in human history.
This growth, first in the amount of money in the space, and the number of adopters, has made the inclusion of luxury brands a must. Luxury brands, which are known for riding trends, are fast immersing themselves in the cryptocurrency and blockchain space, whether it is through crypto fashion or other luxury means.
From accepting bitcoins and other cryptocurrencies for payment for luxury goods to creating NFTs for luxury goods, the luxury industry is well prepared to milk the new tech on the block: Blockchain technology and cryptocurrency. Having missed out on the early days of the e-commerce boom, the luxury industry is taking advantage of people’s interest in cryptocurrency. And the increasing number of millionaires in the cryptocurrency space, which, according to many analysts, is democratizing the spread of wealth, makes cryptocurrency the perfect ground for luxury brands.
THE BRAND LOYALTY GAME
In 2020, Luxury brands such as Hublot accepted bitcoin as payment for some of their rare timepieces. More and more luxury brands are seeing the massive potentials in bitcoin and cryptocurrency, tagging it the currency of the future.
While the acceptance of bitcoin is a massive step in bitcoin and cryptocurrency’s adoption in the crypto fashion space, more can be achieved and is being achieved.
With cryptocurrency and blockchain booming, luxury brands can build a community of people who are loyal to them.
Brand loyalty is important for luxury brands because with a community of people loyal to a brand, they become more than just customers; they become brand ambassadors. Building brand loyalty with cryptocurrency comes in various forms:
- Give Bitcoin or other cryptocurrency as reward to customers for using your product: Fashion brands are fast adopting the bitcoin rewards for their customers. Lolli, for example, rewards shoppers who shop with any of Lolli’s 100 partners with bitcoin. This gesture, which, according to Matt Senter, co-founder of Lolli, will help more customers amass bitcoin. Giving rewards such as this will boost sales and increase customer loyalty.
For brands who don’t want to give bitcoin rewards to luxury shoppers, other options exist.
- Luxury coin: With the Ethereum blockchain’s adoption, more luxury brands can now build tokens, specially made for their community. These luxury coins, which will only be available to the brand’s community members, will allow holders to buy special luxury products from that brand, get in on exclusive “insiders’ deals. One company harnessing the power of luxury coins and its teeming community support is JVCKJ. JVCKJ is an American musician who released his new EP and sweatshirt on blockchain. With his move, fans can buy the album and sweatshirt with cryptocurrency. JVCKJ created the $PTSL coin, a unique token that allows fans who hold the coin to pre-order clothes and access new music and live videos only accessible to the community. When the price of this luxury token increases – based on increased community acceptance and usage – the fans and holders feel they are part of the JVCKJ brand. Increased emotional and psychological between customers and brands is something luxury brands can tap into. And should these tokens get listed on cryptocurrency trading and exchange platforms such as Redot.com, the adoption becomes even wider as scarcity ensues, and scarcity leads to increased value.
Another brand that is leveraging the brand loyalty capacities in luxury coins is Anna Karenina.
Anna rewards everyone who attends her fashion shows with her own crypto tokens. The token distribution can be used by her fans to crowdfund a design. This move has helped increase brand loyalty among her customers. They feel more invested in the Anna Karenina brand.
OPPORTUNITIES AND RISK
The lure for the crypto fashion space is huge. And their excitement is reasonable.
Non-Fungible tokens, NFTs, have opened the gate to what is possible for luxury brands. NFTs help luxury brands leverage on exclusivity.
Nike created NFTs of some of their shoes, allowing customers to own the virtual and real versions of the same product. This initiative allows customers to have exclusive rights to these products from NIKE.
Other brands such as LVMG are using NFTs to authenticate users’ purchases. When users buy their products, they can confirm if the product is the original or not by taking a picture of their new product.
Other opportunities for high-ended companies include creating and profiting from both NFTs and offline products.
However, there are risks involved with cryptocurrency in the luxury goods and service industry.
Cryptocurrency’s prices are volatile. The price changes are a major drawback for many brands. For example, the price of a product might be worth 4 bitcoin today, when bitcoin’s price is $54,000. A year later, the price of bitcoin might fall to $50,000. The company has obviously lost good money.
Environmental degradation issues related with the mining of bitcoin and other cryptocurrency is another major drawback with cryptocurrency.
However, recent innovations in Ethereum and the proof-of-stake technology is reducing the environmental impacts of mining these cryptocurrencies. Also, miners and other cryptocurrency enthusiasts are committed to using environmental-friendly energy sources.
Yes, the dangers with cryptocurrency exist, but the future looks bright, and luxury brands adapt to the plethora of solutions available on blockchain technology, they can only get better.
TAKE A BETTER BUSINESS DECISION
Investing in blockchain, and by extension, cryptocurrencies, is a wise business decision for high-end companies. The future of money, it seems, is in cryptocurrency. Taking advantage of brand loyalty, faster and smoother payment method, with negligible transfer fees, inherent in blockchain and technology is imperative for brands who want to succeed now, and in the future. Redot helps you achieve this in a safe way.
Cryptocurrency’s adoption is most among Gen Zs and millennials. And with the new set of millionaires in the digital currency space, it is only common sense that businesses adopt cryptocurrency and blockchain technology.
Because we are just scratching the surface of what is possible with cryptocurrency and blockchain, the business of the future welcomes blockchain technology and is invested in its usage.