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NFTs and What They Mean for Fashion and Luxury Brands | by Neri Karra, PhD

  • NFTs consume a great deal of energy. While it would be reasonable to suppose that NFTs would be environmentally sound — they’re digital, after all — they use the same technology as cryptocurrency. And cryptocurrencies use a tremendous amount of energy, so much so that the impact on the climate is a very real concern. In fact, Ethereum, a blockchain that hosts NFTs, uses nearly as much energy in a year as the entire country of Denmark.
  • Is it a fad? While a brand may rush to capture market share by incorporating NFTs into its strategy, NFTs may never take off in the fashion world. As with any fad, there may be a great deal of attention and energy expended on it in the short term, with the potential for it to lapse and quickly die off. And investing in a fad also means committing to and adapting a follow-up strategy for that time when the fad loses its popularity.

    • The application of NFTs to fashion can be confusing, with many details still to be ironed out. This would include the need for a very well-defined marketing strategy given the fact that, at this time, only a particular consumer group (mainly the younger generation) is embracing NFTs. Moreover, fashion is about physical products. Most of us want to try on, touch, wear, and carry our purchases. Working within these constraints presents challenges.

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