How cryptocurrency is breaking into the fashion industry
Fashion & Economics
At the start if the year, the value of bitcoin surpassed the £41,180 mark.
Now, as digital tokens continue to surge as consumers move away from cash and more businesses across the world begin to accept cryptocurrency, retailers have begun to adapt accordingly.
Just this month Philipp Plein became the world’s first fashion company to accept payment in 15 different cryptocurrencies.
But what exactly is cryptocurrency and blockchain?
Simply stated, a cryptocurrency is a type of currency such as the pound sterling but it is digital. Cryptocurrencies use “decentralised control”, which means that they aren’t controlled by one person, government or central bank.
Meanwhile, blockchain is the technology that enables the existence of cryptocurrency.
Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology was invented.
Following the news of Phillipp Plein adopting crytocurrency as a form of payment, Katie Ramsingh, a fashion copywriter and content consultant, said this was the start of a new trend.
“The number of fashion brand’s accepting crypto will only increase in years to come,” she told Retail Gazette.
Luxury watchmaker Hublot is also accepting crypto payments, while luxury retail conglomerate LVMH is trialling blockchain-based authentication. Separately, leading fashion houses and retailers Burberry, Givenchy and Dolce & Gabbana are all dabbling in NFTs – another form of cryptocurrency.
“Digital assess and digital currency are the future, especially for Gen-Z consumers who are being bought up around a wide range of e-products,” Ramsingh added.
Katharine Wooller, UK managing director of crypto wealth platform Dahcxi, said: “There was always an inevitability of the acceptance of cryptocurrencies by international business, retailers being no exception – the question was never if it was simply when.”
Wooller stated that while Philipp Plein may be the first global fashion retailer to accept payment in crypto, we should expect many more to follow suit.
“Fashion retailers in general have complex and globally distributed supply and logistics chains,” she said.
“As a German-based company, even given the stability of the euro, the associated foreign exchange cost of paying for products in local currency from suppliers around the world must be enormous.
“If suppliers, distributors, and customers alike can be encouraged to transact in crypto, international finance becomes simpler and more cost effective at a stroke.
“Plein is a top-priced luxury brand so, in part, accepting payment in crypto may be playing to the transactional preferences of his high-net-worth customers.
“Then again, like many upscale fashion retailers, whilst for the time being keeping a high street presence, Plein is building its online presence.
“Crypto transactions between digital wallets makes e-commerce easy, whilst reducing transaction costs for both parties from card payment facilitators.
“At high street level it will happen too, albeit the pace will be slower.
“The day will come, probably sooner than most people think, when consumers will be able to opt to be paid in crypto.”
Wooller stated that the fact Phillip Plein was happy to accept crypto for retail goods meant it was finding its sense of purpose as a real currency.
At the height of the Covid-19 pandemic, shoppers were urged to use alternatives to cash when shopping to reduce the spread of the virus through notes and coins.
When asked if he thought the pandemic had accelerated the trend of cryptocurrencies, Geri Cupi, founder of banking app Twig, said he felt it did.
“With people spending more time online and thinking about ways to make their money work harder for them, cryptocurrencies saw a massive influx of new and interested individuals who may have been curious about cryptocurrency but didn’t previously have the time to look into it,” he explained.
Cupi cited social media as another major driving force in this trend, with investment methods easily accessible to new generations of people, with Instagram and TikTok accounts offering snippets of financial education in easy to understand bite-sized videos and posts everywhere.
While luxury brands continue to explore the potential use of cryptocurrency, can we expect to see high street retailers and budget chains adopt its use in the near future? Rhian Lewis, author of The Cryptocurrency Revolution, said this was “absolutely” not a trend that would be restricted to luxury chains.
“Rather than being a preserve of the super-rich, cryptocurrencies are used by all kinds of people in many different countries: you only have to look at the popularity of Bitcoin in Venezuela or Nigeria,” he added.
Venezuela was listed as the third country with the most cryptocurrency adaptation in the world by Chainalysis in its 2020 report.
In the past, high transaction fees on the bitcoin and ethereum networks have been a limiting factor when purchasing cheaper goods where the transaction fee may end up eating into the purchase price. But the rapid innovation in the sector means that now even the cheapest products can be bought with cryptocurrencies.
“There’s potential for any brands to adopt crypto, but I believe it will be most valuable to those with a younger consumer demographic,” Ramsingh said.
“Just as millennial’s learnt html code through platforms like MySpace, Gen-Z are learning to invest in crypto through the likes to TikTok, and in time this could become their preferred method of payment.”