Sneakers and non-fungible tokens (NFTs) are, seemingly, made for each other.
As rare, limited-edition pairs have become tradable assets like stocks, digital collectibles seem to be a natural progression for sneakers. Resellers often purchase sneakers through digital means and flip them to another person before they even have the item in-hand. You can see it on outlets like eBay or Grailed, where sellers will often post screenshots of their order confirmation instead of their own photos of the sneakers.
Even the final buyer may not get much use out of the sneakers they purchase. Perhaps they take a photo for Instagram, wear it a few times while it’s still new, and then stock with the rest of the collection — which could be anywhere from dozens to hundreds of sneakers.
Russ Bengston, a veteran sneaker writer, sees sneaker NFTs as inevitable and a no-brainer from the brand perspective especially. “In the past decade, there’s been less emphasis on the shoe itself,” Bengtson said. “It’s so much more about the moment of purchase, being able to brag about owning it, and just sort of checking things off a checklist — and hardly any of those things require an actual shoe. So if you’ve got a thousand-sneaker collection that gives you the same sort of cultural cache without having to figure out where to keep it… it seems like something people would be willing to do.”
The day when sneaker NFTs become, if not a replacement, a complementary aspect to the culture may be quite soon. A brand called RTFKT Studios already sells nothing but sneakers as collectible and tradeable tokens. Its virtual shoes don’t exist in the real world and often look like bootlegs of existing sneakers such as the Air Force 1 and Air Jordan 1. Many of the brand’s NFTs are made in collaboration with digital artists and have sold for up to $10,000 a pop. In just seven minutes earlier this month, RTFKT Studios sold $3.1 million worth of sneaker NFTS.
Real-life sneaker brands may find NFTs too lucrative an opportunity to pass up. The NBA has been practically printing money by selling basketball highlights as NFTs under the TopShot banner. During the final week of February alone, TopShot sold more than $150 million in video clips as NFTs, including a LeBron James dunk that fetched a record-setting $208,000. The musician Grimes has cashed in on NFTs, too, selling $6 million of her art in a single day on February 28. Even Christie’s, the famed auction house, is getting in on the action and sold an NFT artwork by Beeple for over $69 million last week.
Real-life sneaker brands may find NFTs too lucrative an opportunity to pass up.
Should sneaker companies get involved, they’ll be able to do so without the overhead that physical shoes require. Manufacturing and distribution aren’t an issue — they’ll just need to create the assets and establish a network to host NFTs on the blockchain. Brands can sell NFT versions of their existing silhouettes and create digital-first designs to win over collectors. But before we get further into the possibilities, let’s take a step back to explain exactly what NFTs are and where the hell they came from.
NFT is short for non-fungible token and is, in essence, a digital collector’s item. Buying one doesn’t give you the rights to the asset or even a file, but instead an individual link to where the NFT is stored on the blockchain. Ownership of an NFT is transferable, creating a secondary market not unlike what we have in the sneaker world. Some NFTs are one of a kind, while others are sold in numbered editions. The phenomenon essentially began in 2012 with the introduction of colored Bitcoins, which could be used to identify their attributes and turn them into more specific tokens. Two years later, users could add further marks to bitcoins.
The launch of Cryptokitties, a blockchain-based video game in which players collect and trade virtual cats, marks the beginning of NFTs as we know them today. Other distinct tokens then began to emerge, including characters created by the CryptoPunk collective. By the end of 2020, before most people even knew what an NFT was and the craze began in earnest, the market was already worth an estimated $338 million. And now that sports leagues, brands, and celebrities are getting involved, that figure should balloon by the end of this year.
While some people do acquire NFTs merely for personal ownership, a large portion of the market is purely speculative. People see the exorbitant prices NFTs are re-sold for and think they, too, can make a profit by investing and selling down the line. But if a majority of people are buying NFTs at already high prices just to sell down the line, it’s hard to judge their true value. Already, there’s a bubble waiting to burst.
“It could all come crashing down quite quickly.”
Ollie Leech, a reporter for the blockchain-focused outlet Coindesk, agrees with this prognosis. “With more and more companies stepping in, it’ll probably prolong the duration of the bubble,” he told Input, while pointing out that storage is a major issue. Many people don’t know where their NFT is being stored or how secure they are. An NFT’s creator or the company supporting it could disappear and poof, there goes the NFT along with it.
“It could all come crashing down quite quickly,” Leech said. “And once the momentum of the speculative aspect runs out, people won’t be able to ship them off because the demand’s no longer there. People would be stuck with a lot of, you know, pointless artwork. Don’t get me wrong, some of it is very unique and incredible. But for the most part, the memes that are going for crazy money right now, there’s just no value and no one in their right mind would pay millions of dollars because they find it interesting.”
No one knows how long it’ll be until the bubble bursts. It could be years — and sneaker brands would still be smart to get in on the NFT phenomenon soon. A brand’s largest investment would be in the servers used to support the network, but besides that, it’d take little money to see a huge return. “I mean god, look at how much more profit there is in that area,” Bengtson said. “You look at a company like Nike, and the way they’ve built up their digital business selling directly to consumers, it doesn’t have to change. It’s just a different method of distribution.”
Unbound by physical production, brands could make as many NFTs as they desire. Distribution would also be expedited exponentially, allowing for countless possibilities. Take player-exclusive sneakers, for example. NBA players will often wear sneakers in unique color schemes that don’t become available to the public — or if they do, they come in limited numbers and usually weeks down the line. With NFTs, a brand could release a virtual version of that sneaker while the player is still wearing it on the court.
Manufacturing flaws have created delays for high-profile releases, another problem removed by digital sneakers. And with NFTs, no one will ever be disappointed when their package arrives and they find that their box has been crushed. Brands could also package NFTs along with the physical purchase, similar to how digital copies of albums are often bundled with the physical ones in the music industry. So when you purchase a sneaker, you get the NFT right away while you wait for the real thing to arrive. Suddenly, the concept of “one to rock, one to stock” — in which sneakerheads often buy two versions of the same shoe so one remains unworn — takes on a whole new meaning.
Sizing would no longer be an issue, so NFT customers won’t have to fret if their shoe size is more popular or if it’s so big that brands produce little stock. And even though a large part of sneaker sales go down online, many still occur in local boutiques that give local residents an advantage. With NFTs, everyone in the world would have the same opportunity to purchase (setting aside, of course, those who will inevitably use bots to boost their odds).
Bengtson theorizes that the moment of purchase now creates more of a rush than when the sneaker actually arrives — and he’d like to see EEG scans of the brain to confirm it. So if more pleasure is generated by the act of purchasing than holding a sneaker in your hand, why even bother with the real thing?
Older sneakerheads, the ones who got into the culture just because they wanted to wear cool shoes, are more likely to be resistant to sneaker NFTs. But for the newer audience more concerned with hype and the pride of owning something rare, having a tangible sneaker may not matter. It certainly wouldn’t for resellers, who would have less work to do in the process of flipping sneakers for a profit.
What’s fascinating is that sneaker NFTs, only in their infancy, are already selling for significantly more than some of the most coveted sneakers released in recent memory. For less than the $10,000 RTFKT Studios sold its AF1 lookalike with a skin from the digital Fewo for, a person could buy a Nike Air Yeezy 1, Tom Sachs x Nike Mars Yard 2.0, or Off-White Air Jordan 1 brand new on the resale market. They could even buy two of the three and still have money left to spare.
If sneaker NFTs are released in limited numbers similar to their real-life counterparts, it’s possible the former could become worth more than the latter. The discrepancy would be bizarre, but so is the entire NFT phenomenon if you get down to it. “It makes feel old because I’m just like, ‘What you have nothing?’” said Bengtson. “What do you do with it? You can’t even put it on a wall like sneaker art. But it just goes to show that it’s entirely besides the point.”
And sure, the sneaker NFT is just as susceptible to a bubble effect as the wider landscape — but so is the sneaker game as we know it. Chasing after rare sneakers used to be a niche pursuit, and it will be again when the masses eventually move onto the next “cool” thing. For now, at least, there’s a whole lot of money to be made from the brand and secondary side of the sneaker market. The same can be said of NFTs, and how many corporations the size of Nike do you know to leave money on the table?