Digital ownership, the next wave of sneaker culture

Digital ownership and sneaker culture are perfectly placed to supercharge each other.

TL;DR

Digital ownership and sneaker culture are perfectly placed to supercharge each other. Both holding similar characteristics.

Scarcity is key. 

Collecting as a behaviour.

1 of 1’s are the holy grail.

Wanting to be able to flex across digital spaces.

Digital ownership also tackles many of the challenges in sneaker culture. 

Digital sneakers can always be box-fresh. 

It removes the issue of fakes. 

It allows anyone to own custom silhouettes and colourways. 

It gives people additional opportunities to not take L’s on drops.

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What is digital ownership? That deserves an article in its own right, and many have done just that. So I am going to cover the basics here whilst linking out to others who are much more informed than I am and are able to give the full download. The focus of this article is what digital ownership cold mean for sneaker culture in particular.

Digital ownership is what it says on the tin - the owning of digital items. Whether that be digital art, GIFs, articles, fashion items or many other things. Digital ownership is particularly rife across collectables markets - art, sports cards, gaming and fashion. NFT’s (Non-Fungible Tokens) are what make digital ownership possible. You can read more about digital ownership and NFT’s here. 

At it’s most basic, it means that you own an original of a digital item. Allowing you to brag, hold value or sell these items as you please. Being able to prove ownership as the record of ownership is stored on the blockchain forevermore.

Think of it in the way that Bobby Hundreds explained it in his recent article. 

‘We’ve been trained to believe that nobody owns anything on the Internet. Online media is to be liberally sourced and shared with all. And there is no monetary value in a tweet or a TikTok. But, that’s not true. Your social media posts do make money. It’s just that you don’t see any of it.’

Everything online is owned by somebody. It’s just usually not owned by the people who create it. Instead, the majority of our digital ‘items’ are owned by Facebook, Twitter, Google or whatever the creators platform of choice is. Digital ownership changes this. It switches the ownership model to allow anyone to own what they create - or what they choose to buy in a digital format.

If you can’t get your head around why people would want to own digital items - especially items such as digital art or GIFs which anyone can copy to their desktop and say they own…

Let’s look at a few reasons digital ownership is likely to take off.

The expansion of the metaverse:

With the metaverse quickly expanding, we are going to be spending more and more time interacting with people in digital spaces (more on the metaverse here), digital spaces that will become more like physical spaces. Spaces for us to decorate, ‘face to face’ meetings for us to show off our latest fashion items. In that world, digital ownership starts to make a lot more sense.

Power to the creators:

Digital ownership can put the power in the creator’s hands and enable fans a different kind of connection. People will be able to set the value of the digital assets they create and have a model that allows them to break free from the cut that platforms take. Artists won’t have to rely on auction houses and the cut they take. Social media creators will be able to make revenue beyond YouTube and platforms like Patreon. 

‘Ownership’ in gaming:

A form of digital ownership already exists on a mass scale in gaming. Fortnite’s revenue was forecast to hit $5b in 2020, with the majority of that revenue coming from in-game purchases of things like it’s digital skins - arguably a form of digital ownership. 

But this isn’t true digital ownership because you can only use your skins within the Fortnite eco-system and you can’t sell them on. So really they are still owned by Fortnite, you’re just paying money to be able to have access to them. 

However, what this does show is that the behaviour of paying money for digital items already exists on mass. Now imagine if you bought those skins for real. If you actually owned them. You would have the ability to take them beyond Fortnite into other areas of the metaverse. You would be able to sell them and purchase new skins from other players or other assets like music, art or anything else. Or hold them as a store of value to sell in the future if their value increases over time.

Digital Humans:

Creating digital versions of ourselves is already mainstream via tools like Bitmoji. The fidelity and use of these digital versions of ourselves is set to explode though. Opening up a whole host of opportunity for digital ownership.

More lifelike Digital avatars have been around for years now - arguably the Gorillaz bringing the market to fame. Digital avatars or influencers have found a home in the fashion and streetwear space with the most famous being Lil Michala with over 3m followers on Instagram. Lil Miquela has partnered with the likes of Samsung and Prada, she has had her own music career with advertising taking over Times Square. And in 2018 Time magazine ranked her one of the 25 most influential people on the internet.

We are now seeing living people making these high fidelity computer-generated versions of themselves too. Our behaviour online vs offline is already multiple parts of our personality. From how we show up on our public social channels, to how we show ourselves on our closed social channels to our nearest and dearest - we cultivate our personality for different digital and physical spaces. 

As our digital spaces expand and we spend more time meeting ‘face to face’ in these online worlds, it’s not unlikely that more and more people will start to develop one or multiple digital avatars for their different digital identities. The launch of Epic’s MetaHuman, built on Unreal Engine gives everyone the ability to do so. And these digital versions of ourselves will need clothes, accessories, space, art and more - all playing into digital ownership more and more.

Gucci is leading the way in fashion:

In fashion, Gen Z favourite Gucci is leading the way when it comes to digital ownership across gaming and dressing our digital selves. The brand has already designed collections for their own computer games and created their own digital avatars dressed in new lines. They are now also creating clothes that you can own digitally and use to dress your our own lifelike digital avatars.

Gucci is the brand that got me thinking about the role of digital ownership and the sneaker industry. They recently launched their first digital sneaker along with their ‘Sneaker Garage’ tool that gives everybody the ability to design their own digital sneakers. Bringing us to digital sneakers, and why I think digital ownership could be the next wave of sneaker culture.

Sneaker culture is the perfect space for digital ownership to thrive

Sneaker culture is rooted in scarcity.

It is a culture where the ethos of collecting and resell is central, whether people like it or not.

It has a community who will pay seemingly crazy price tags for the shoes they covet.

And it intersects with wider culture across various touchpoints who are already involved in digital ownership - namely art, fashion, sport and gaming.

Sneaker culture isn’t the niche it once was, it has become a mainstream part of culture. The sneaker resell market alone is set to reach $30 billion by 2030, with sneaker stock markets like StockX trading over $1b of gross merch value in 2019, legitimising sneakers as an investment or as a store of value. Whether you like it or not, resell has become a niche part of sneaker culture in its own right.

Still, at the edges of sneaker culture remains the collectors, those who will queue for days to get their hands on that special colourway or enter draw after draw on Nike’s SNKRS platform or End’s sneaker draws with the hope that one day their name will get picked. Those who are buying for the love, for the story - over the hype or resell price.

For both of these parts of the culture, some things ring true.

Box-fresh is key:

Yes, for many sneakers are to be worn, but not for all. For many sneakers are art, especially when you get your hands on that rare drop. So keeping them box-fresh is key. Whether it’s about maintaining their value for resell or so you are be able to look at them in pristine condition for the rest of your days.

The rarer the colourway or silhouette the better:

Sneaker collectors and resellers are looking for that rare drop. Whether it’s the classic Jordan’s whose supply is purposely limited or a new colourway of an AM90 that you want to add to your collection. Scarcity makes sneakers special, more desirable and therefore more valuable.

Customs bring an added layer:

Whether you’ve customized a pair yourself or paid a known customizer to do them for you, they add something special to your collection. It means you get a true 1 of 1. Something that nobody else has or ever will have.

Fakes are an ever-present challenge:

Like with any product of desirability, value and collectibility, fakes are a challenge in sneaker culture. With fakes now being of such high quality it is often hard to tell the real deal when buying resell. With much of the collectable sneakers only being available in the resale marketplace, this raises issues around trust and validity.

Why does this play into the hands of digital ownership?

You can keep your sneakers box-fresh but still flex:

Digital ownership opens up the opportunity to both keep your physical collection box-fresh but still flex your sneakers. Imagine if every pair of real sneakers you bought for your collection came with a digital pair too - a digital pair that you could ‘wear’ in various online spaces.

Matching physical and digital like for like, you get the same scarcity value that is achieved with the physical sneaker culture, giving your digital sneakers the same collectable and resale value as the physical pair. Proving your ownership on the blockchain enabling us to overcome the issue of fakes for both the digital and the physical sneakers.

RTFKT (pronounced Artifact), the leaders in digital sneakers right now, have recently taken this approach. Selling a 1 of 1 pair of digital sneakers named ‘The X’ for 22 ETH ($13,000 at the time), with the buyer also getting a physical pair from the brand.

Own true 1 of 1’s tied to you:

Scarcity is a key matric in sneaker culture and 1 of 1s are the holy grail. When it comes to physical sneakers true 1 of 1s only really exist if you custom them yourself or pay one of many famous custom designers to custom them for you. This could all change when it comes to digital ownership though.

Digital sneakers give designers - whether that be brands, customizers or amateurs to create their own 1 of 1s. That could be unique colourways of your favourite silhouette or a new silhouette entirely.

This adds a whole new dimension to sneaker culture, and potentially a whole new market for creators.

Power to all creators and another level of innovation:

Digital ownership and NFT’s open up sneaker design to a wider audience. Moving beyond the designers who work in the sneaker industry already or have access to materials and cashflow to make physical sneakers at a sustainable scale. WIth digital sneakers, if you have access to a computer capable of running 3d design software then you have the potential to be a sneaker creator and earn money for your creations.

By creating a digital sneaker brand minting NFT’s you are able to be a viable sneaker designer. This doesn’t just open up more diversity of creatives who can create their own sneakers, but it also has the power to move the power dynamic from company to creator in the culture.

Sneakers that travel:

If you’re a sneakerhead, the more opportunities to show off your collection the better. Digital ownership opens up opportunities for your sneaker collection to travel to more spaces, more worlds online. 

Imagine buying a pair of sneakers and then being able to flex them on socials, place them on your favourite NBA2k players or wear them in Fortnite. If the sneakers you own are rare, or you have created them yourself - you also have the ability to increase their value through building hype for them by getting them in front of people on your Twitch streams. 

The opportunity doesn’t only exist within gaming. With the metaverse quickly expanding more and more digital spaces are going to open up - giving you more spaces to take your sneaker collection to show them off and enjoy them without ever needing to worry about scuffing them up.

What’s next?

The move into digital sneakers isn’t just for new startups, major brands are starting to make their moves too. Last year Nike filed for and were issued a patent for their ‘Cryptokicks’, a system that assigns a digital asset to a physical shoe. How they’ll use this isn’t clear yet, but it shows the biggest Sneaker company could be moving towards digital ownership in some form in the near future. 

In a different industry, but one that is strongly rooted in sneaker culture, the NBA has launched its NBA Top Shot. A digital collectable marketplace. You could see how the NBA could quickly move from a collectables marketplace of clips on the court to collectables in the culture that surrounds the sport too - sneakers included. 

What I find most exciting though is the role that sneaker culture could play in bringing more people into the wider world of digital ownership.