This is one of the most asked questions whenever the topic of luxury brands and their voyage into web3.0 comes up. It makes sense for brands to offer crypto as a new form of payment even though many still don’t quite understand the concept. It is still not regarded as legal tender, but more businesses are in the process of including crypto as a form of payment.
Tech Savvy Luxury Enthusiasts
In March 2022, Off-white announced that they would accept payments in crypto in their stores in Milan, London, and Paris. This announcement caused a debate among luxury enthusiasts. They started to wonder if crypto was the future. At that time, the crypto market price was rising and bitcoin was worth about $42,000 while Ethereum was $3,000. Really, it was no surprise that a brand like off-white was getting into cryptocurrency. Its audience comprises mainly Gen-Z who is mostly crypto savvy.
The following month, Philipp Plein dubbed the Crypto king announced his intention to establish a Web3.0 concept store to sell NFTs and accept crypto payments. His announcement caught the eye of many skeptics who doubted the feasibility of the process. For many, crypto is still not seen as a real currency the way they use the dollar, Euro, or Pound. It has been placed as an asset in the same class as stocks, shares, and gold. This is a result of a lack of awareness.
The volatility of crypto prices
No one had anticipated the crash in the crypto market at this time. And suddenly the freefall started when Terraluna crashed. Just 10 days after Philipp Plein announced his intention to establish a store for NFTs, Bitcoin prices fell to $28,000.
Due to the volatility of crypto many wonders why luxury brands still insist on accepting crypto. They had planned to benefit from the post-pandemic bull market. However, they acted late unless there is a surprise turnaround on the cards.
From research and the opinions of leading crypto enthusiasts, I arrived at reasons why luxury brands see crypto as a viable payment option:
Why do Luxury brands choose crypto options?
Catering to Gen-Z
This demography of customers is the type who is looking to spend their wealth on luxury goods. If luxury brands do not capitalize on this market they will potentially lose out on this demographic. They need to provide options for them or potentially lose out. It is a bear market listening to define experts many believe that the present bear market is considered the Perfect Storm. It has forced speculators out of the game and only the true believers remain. The past two years have been extremely volatile and values could go up as much as 30% up or down in a single day. Today the situation is different shifts in the valuation of crypto is significantly less. Experts hope it will remain relatively stable so that institutions will not be too concerned about huge losses on their portfolios.
It’s a bear market that would potentially stabilize
Institutions are gearing up for web 3.0 adoption. Gucci was the first to introduce NFTs to its customers in March 2021. They collaborated with a third party to create digital sneakers. By accepting crypto payments Gucci develops better competencies having faced issues early on and resolved the initial features they came across. They have prepared their workforce for a web 3.0 future.
Today, more and more luxury brands are faced with clients who walk to the store asking for crypto payments. Many have to turn these customers away because they’ve not developed the infrastructure to support this.