The buzzy NFT market has been at the center of the sneakerhead conversation in recent weeks after millions of dollars worth of digital kicks quickly sold out. Now everyone is speculating about when Nike might make a leap into the space — a move that could shake up the resale world.
“If they don’t already have something cooking, I would be surprised,” said James Platt, a.k.a. “The Sneaker Savant” a longtime collector and the creator of a line of sneaker-inspired trading cards.
NFTs, or non-fungible tokens, are virtual collectibles that can be bought, sold, or traded online using cryptocurrency and blockchain technology. They allow collectors to own, show off, and (if they’re lucky) profit from digital assets — much as they might their prized sneaker grails in the physical world.
While tech insiders are mixed on how the NFT craze will ultimately shake out, the phenomenon has stirred up a frenzy in the art world. In Christie’s first NFT sale, the auction house sold a work by the digital artist Beeple for a record-breaking $69.3 million. The NBA, too, has gotten in on the action, partnering with blockchain company Dapper Labs to create NBA Top Shot, an online marketplace where fans can buy and sell video clips from pro basketball games. The clips, which function like virtual trading cards, have so far generated more than $500 million in sales.
And in the sneaker space, RTFKT Studios — which partners with digital artists — sold $3.1 million worth of sneaker NFTs in about 7 minutes.
“There’s an inherent mindset with sneakerheads of collecting and trading. So all those facets of what makes crypto-art and NFTs really desirable are already part of the culture there,” said Michaela Larosse, the head of content and strategy at The Fabricant, a digital fashion house.
So far, the Swoosh seems like a prime candidate for the first major brand to dip its toes in the market.
In 2019, Nike was granted a patent for “CryptoKicks,” a system for releasing digital footwear that could entail linking physical shoes with virtual versions that can be sold, traded, or stored in an online blockchain “locker.” The brand also envisioned the potential for “breeding” two pairs of digital shoes to create novel “shoe offspring,” whose origins would be tracked on a blockchain, a type of distributed digital ledger.
Nike did not respond to a request for comment about the technology or its possible entry into the NFT market, but this wouldn’t be the first time the sportswear giant experimented with selling virtual designs.
Nike’s Jordan Brand partnered with Epic Games in 2019 to release a series of skins available in its ultra-popular video game Fortnite.Those, however, could be purchased by any player for $13 to $18 a pop, while the value of NFTs lies in their scarcity. Collectors are paying for ownership of a specific asset — something that allows them to flex on their followers across digital worlds.
“What we do with sneakers and streetwear is sell this idea of social status and community and identity,” says Bobby Hundreds, co-founder of the streetwear brand The Hundreds and an NFT proponent, “and we can very much do that without the actual product. We can actually do it in a way where we make pixels and we write code on the blockchain.”
In today’s resale market, says Hundreds, many collectors don’t even want the sneakers they’ve purchased delivered to them, opting instead to flip them while they’re still safely stored on a shelf. “At the end of the day, it’s just a stock that’s tethered to a physical product that sits in a warehouse. If you leave it there, you can just trade it back and forth like a stock without anyone ever getting it. The actual shoe is removed from the equation,” he explained.
Under the current system, brands like Nike only profit directly from the initial sale of a pair of shoes, while marketplaces like StockX, Stadium Goods and eBay get a cut of each subsequent sale. In theory, the same pair of shoes could change hands an infinite number of times on a secondary marketplace, and that marketplace would bank a percentage of the sale price each time. With cryptographic digital shoes, Nike could embed a set royalty in the code of the NFT and ensure the brand continues to make money as its digital assets are resold again and again.
While this vision of the future of sneaker reselling bears little relation to the industry’s roots — the long lines snaking around blocks in anticipation of a drop, the hype generated by cutting-edge designs — it’s not a far leap from where the market stands today. It could also help address some of the pitfalls of the physical market, including overproduction, waste, and counterfeiting.
If every sneaker was tied to an entry on a blockchain, says Platt, it could eliminate the need for authentication services like his own. Authentication is a major differentiator for resale marketplaces, too, so a move such as this could potentially disrupt the current landscape.
At the moment, there’s also no go-to platform for digital fashion sales — whether NFTs or otherwise — says Larosse.
“This space is really wide open for exploration to do innovative, exciting things for any brand that’s willing to jump in,” she said.