The spectacular rise of digital exchange FTX and its arguably even more spectacular fall are poised to enter the annals of technical lore. A case study in hubris, if not outright criminality, the story has garnered attention everywhere from niche blockchain blogs to mainstream media publications, with critics wondering whether the fate of FTX founder Sam Bankman-Fried will hammer the final nail into the cryptocurrency’s coffin once and for all. .
Not so fast, says the ever-thriving breed of related artists and business executives who rely on the digital currency. There is a base of entrepreneurs, creatives and established brands that continue to invest in emerging technology and the applications and experiences it unlocks. For them, the FTX debacle seems to have little impact on things like trendy NFTs, Web 3.0 projects, and shopping metaverse initiatives, at least for now.
“We’re watching where the wind blows, but no, we don’t have plans to change priorities at this point,” one insider at the apparel company told WWD on condition of anonymity because the person was not authorized to discuss. matter. “Digital fashion is going to happen, it’s already happening. There is still a lot to invent – for everyone in the industry, not just for us. But the genie is in the bottle and you can’t stuff it in there. Who would like?”
Others have expressed similar sentiments to WWD for various reasons. After heavily promoting their entry into Web 3.0, some brands don’t like having egg on their faces. There is also a general feeling that many executives really do not yet know what to make of the situation and do not want to act hastily. Digital fashion, the shopping metaverse and non-fungible tokens or so-called “phygital” retail will become big business in the future and nobody wants to miss out, leading to a widespread “wait and see” approach.
Of course, for at least some cryptoevangelists, a reality check may be coming, regardless.
Earlier NFT projects, such as the celebrity-powered yacht club Bored Ape, paved the way for start-ups such as virtual product and experience innovator RTFKT, now part of Nike, as well as luxury houses such as Dolce & Gabbana, which attracted the equivalent of millions of dollars. with virtual/physical collections, whetting the appetites of high-risk investors, decentralized autonomous organizations or DAOs, and more. While a steady stream of similar gonzo transactions has always been unsustainable – for common sense – an FTX collapse is now even harder to imagine.
Maybe it’s how deep society has sunk.
Celebrity endorsements from Tom Brady, Steph Curry, Shaquille O’Neal, Larry David, Kevin O’Leary and many others, plus a number of high-profile acquisitions, have given the fledgling crypto exchange a magical, fairytale quality fit for a unicorn. At this point last year, FTX, then just two years old, had raised an eye-popping $400 million in funding, bringing its total to $2 billion and its valuation to $32 billion. His achievements seemed to prove the cryptocurrency’s legitimacy and viability, and the 30-year-old Bankman-Fried was portrayed as a visionary worthy of the $26.5 billion net worth he amassed at his peak.
A year later, the unicorn looks more like a donkey. A series of revelations late last year depicted sketchy maneuvering between FTX and Alameda Research, a slightly older Bankman-Fried crypto hedge fund. Alameda Research held a massive stake in FTT, the digital currency created by FTX. But FTX also used it as collateral on its balance sheet, adding to a confusing situation that even well-honed financial experts found opaque and hard to track. That’s never a good thing, but it seemed particularly dire for blockchain-based operations. (With blockchain, computers share a decentralized ledger that is able to track digital assets. In other words, transparency is supposed to be the key point.)
Although Bankman-Fried filed for bankruptcy protection, it could not shield itself 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 businesses, and the long-simmering financial scandal culminated in the arrest of a young tech founder in December.
It’s a mess of rare proportions, that’s for sure. Less certain, however, is whether this is enough to shake faith in crypto, blockchain, NFTs and the like, especially now that their mainstream potential is starting to mature. Because so far, most of the hand-wringing seems to come from pundits, not fashion, technology or other trailblazers blazing a virtual trail.
Call it a collective shrug, but these innovators don’t seem to have been deterred, and the key to understanding that impervious optimism is actually quite simple: they were already used to intense cryptocurrency swings. They know that volatility preceded Bankman-Fried and that the roller coaster ride is likely to continue no matter what happens to him.
Professionals like Femi Oluwafemi, a veteran of the FaZe clan who now runs the Web 3.0 creative content company Fourth Frame Studios, are eyeing blockchain’s huge potential. “There is tremendous value in the NFT space and applications,” he told WWD. “There are some brands that are starting to do great things within digital [and gaming] world like Balenciaga. I think there’s an appetite and an audience for it.”
In other words, there is no shortage of desire from brands for the metaverse and Web 3.0. What they lack is the know-how, but they are figuring it out. “I think we’re still in the discovery phase,” he told WWD. “But I think he’ll survive. There are utility applications that haven’t been discovered yet, and some really cool brands are entering the space.”
For Oluwafemi, who has worked with a notable list of brands including Ralph Lauren, L’Oréal, Walmart, Roblox and Beats by Dre, among many others – including his previous employer, FaZe Clan – the metaverse is still a very young concept. That’s exciting because it means there’s a lot of room for new ideas, and those discoveries can be game-changing.
“It’s like the very early stages of the Internet,” he explained. “People jumped on board really quickly, [even though] they didn’t really know what it was. A climb down followed. There was a bubble. And then suddenly it started to pick up again.
“So where we are in the lifetime of this whole space, I’m not sure. But I can see that it has a long life and a future in it.”
Big tech appears to agree, even as it faces economic headwinds and regulatory battles.
Meta’s race to the metaverse has turned Instagram into an NFT-mining machine. Meanwhile, Apple’s mixed reality headset appears to be on track for release in late 2023. Retail platforms like Shopify are still finding their place in the virtual world, but they’re making progress. Last summer, the company announced it would offer NFT support, and on Thursday, Venla’s new Shopify app appeared to pay off by allowing merchants to design, mint, and sell their own Avalanche NFT with just a few clicks.
A number of notable offerings also signal a rising tide of exciting new projects and ventures – from the inaugural Fashion Designer Council NFT and metaverse exhibition to crypto legend Gmoney’s new fashion label and the launch of Mntge, Sean Wotherspoon and Nick Adler’s NFT. a platform for premium vintage clothing. Decentraland also announced that it will host the second Metaverse Fashion Week from March 28-31, following last year’s inaugural event, which attracted Tommy Hilfiger, Etro and Guo Pei, among others.
It is tempting to believe that they are ignoring the state of cryptocurrency and turning their eyes away from the writing on the digital wall. However, this is not necessarily accurate. He sees what’s going on. They just don’t see it as bad news.
“There are builders and profiteers in the space right now, and that’s what actually makes it really healthy,” explained Mntge’s Adler. “I think it’s really nice and organic to our growth. That’s the positive outlook we have on it: It’s time for real builders and for all kinds of profits [to get] to ‘pull the rug’ out and just sort of wash it away because that opportunity is no longer there for them.
“So I think it actually cleans up the market nicely.”