WEBVTT - Luxury Staples Embrace NFTs 0:00:02.720 --> 0:00:05.920 This is Bloomberg Crypto, a daily Bloomberg I Heart podcast, 0:00:06.120 --> 0:00:09.079 And I'm Stacy Marie Ishmael, Managing editor of Crypto for 0:00:09.119 --> 0:00:25.360 Bloomberg News. It's Monday, August twenty nine. Hi. I'm Annerera, 0:00:25.520 --> 0:00:29.040 a senior crypto editor for Bloomberg News. In Today for 0:00:29.080 --> 0:00:34.440 Stacy Marie Ishmael, the frosty winds of crypto winter are 0:00:34.479 --> 0:00:37.240 still blowing, and yet n f t s are still 0:00:37.240 --> 0:00:41.120 bringing the heat for many high end products. Non fungible 0:00:41.120 --> 0:00:44.320 tokens have become super popular with many luxury brands, and 0:00:44.360 --> 0:00:47.839 they remain a powerful draw for some consumers. High end 0:00:47.840 --> 0:00:50.520 retailers Gucci and Tiffany are the latest to jump into 0:00:50.520 --> 0:00:54.000 the fray with new n f T offerings. Caring Scucci 0:00:54.280 --> 0:00:56.360 says it will accept eighte coin as a legal tender, 0:00:56.400 --> 0:00:59.040 and select US stores l V, M, H, S, Tiffany 0:00:59.120 --> 0:01:01.600 and Co also an it's launching what it calls n 0:01:01.640 --> 0:01:05.160 f TIFFs. These are collectible passes that can be redeemed 0:01:05.160 --> 0:01:07.120 by owners of crypto punk n f T s for 0:01:07.120 --> 0:01:11.080 a physical custom pendant. Some two trillion has been wiped 0:01:11.120 --> 0:01:13.800 off of crypto's market cap, and the demand for n 0:01:13.840 --> 0:01:16.280 f t s has slumped in recent months along with 0:01:16.360 --> 0:01:19.800 resell value. So why are these brands so bullish on crypto? 0:01:21.840 --> 0:01:24.440 With me to discuss why luxury brands have embraced n 0:01:24.480 --> 0:01:27.640 f T s are Bloomberg journalists, Emily Nicole, You buy 0:01:27.680 --> 0:01:29.800 one at the top and hope that it holds its 0:01:29.880 --> 0:01:31.759 value over time and you might be able to sell 0:01:31.800 --> 0:01:34.880 it for triple the price. Lace around and Tazz actor 0:01:34.880 --> 0:01:39.880 the building shops, outlets, virtual galleries in the actual metaverse. 0:01:44.080 --> 0:01:47.840 Emily Tazz, thanks for joining me today. Thanks for having us, 0:01:47.880 --> 0:01:50.600 Hey Anna, thanks for having thus. Okay, let's get right 0:01:50.640 --> 0:01:53.200 to it. So when did luxury brands fall in love 0:01:53.240 --> 0:01:55.520 with n f T s. So luxury brands have been 0:01:55.560 --> 0:01:57.600 circling around the n f T space for about a year. 0:01:57.640 --> 0:02:00.320 You know, really is n f T collections themselves started 0:02:00.360 --> 0:02:02.200 to take off and they began to see it's what 0:02:02.720 --> 0:02:06.440 younger generations might be interested in in terms of luxury items, 0:02:06.520 --> 0:02:09.440 because n f T s, if they're successful, aren't cheap. 0:02:09.680 --> 0:02:13.000 A digital artwork a non fungible token and n f 0:02:13.080 --> 0:02:16.360 T the name of the artist is people has sold 0:02:16.440 --> 0:02:22.360 for sixty nine million dollars at Christie's auction House in 0:02:22.400 --> 0:02:25.680 New York. Older generations are more keen on buying the 0:02:25.760 --> 0:02:28.799 things that they know, like watches and cars and clothes 0:02:29.120 --> 0:02:32.519 that younger generations are more open to new product streams, 0:02:32.560 --> 0:02:34.680 and so an n f T might be something that 0:02:34.720 --> 0:02:37.440 they can particularly tap into because they're already at a 0:02:37.480 --> 0:02:41.079 higher price point. Younger generations might be more savvy. They're 0:02:41.080 --> 0:02:44.280 also massive wealth signalers as well, so for the people 0:02:44.280 --> 0:02:46.239 who want to look like they have money, n f 0:02:46.280 --> 0:02:47.640 T s are a really big way to do that. 0:02:49.320 --> 0:02:52.120 So I think obviously many fashion brands are still in 0:02:52.240 --> 0:02:55.720 like a very experimental stage right now, so um Dodging 0:02:55.720 --> 0:02:59.480 Gubano is a very notable brand. They launched their n 0:02:59.520 --> 0:03:02.880 f T doing the fashion event that they hold every year, 0:03:03.160 --> 0:03:05.120 and their n f T s particularly well because I've 0:03:05.120 --> 0:03:08.359 sold for millions and they've also had like a physical 0:03:08.560 --> 0:03:12.200 item also given to the person that's obviously bought the 0:03:12.320 --> 0:03:16.040 n f T. What's going on with with Gucci and Tiffany? 0:03:16.040 --> 0:03:19.480 Why did why did they make the news recently? So 0:03:19.760 --> 0:03:22.320 for Gucci, it was that they wanted to expand the 0:03:22.400 --> 0:03:25.040 number of cryptocurrencies that they accept as a means of 0:03:25.080 --> 0:03:28.040 payment in their stores. At the moment, it's just stores 0:03:28.080 --> 0:03:30.240 in the US, and there's a few there's a few 0:03:30.240 --> 0:03:32.960 cryptocurrencies that are involved. The one that we reported on 0:03:33.560 --> 0:03:38.160 was ape coin, which is a cryptocurrency that is affiliated 0:03:38.240 --> 0:03:40.560 with a popular n f T project called the board 0:03:40.560 --> 0:03:43.480 ape Yok Club. UM. It's not necessarily linked to it, 0:03:43.600 --> 0:03:46.040 so it's not necessarily like a win for one is 0:03:46.080 --> 0:03:49.400 a win for both UM. But in the case of Gucci, 0:03:49.840 --> 0:03:52.880 the way that they accept these cryptocurrencies is quite interesting 0:03:52.960 --> 0:03:55.720 because for a big company like Gucci would be a 0:03:55.800 --> 0:03:58.320 big deal if they were to be taking those cryptocurrencies 0:03:58.600 --> 0:04:01.480 directly onto their balance too, and that would mean you know, 0:04:01.920 --> 0:04:04.880 a lot of tax implications, a lot of accounting implications, 0:04:04.920 --> 0:04:07.760 and the regulatory hurdles for that would just be insane. 0:04:08.040 --> 0:04:10.760 So they do it via third party provider that basically 0:04:10.960 --> 0:04:13.480 gives Gucci the dollars. Once the crypto comes in, it 0:04:13.520 --> 0:04:17.400 gets um converted and then put into the into Gucci's 0:04:17.400 --> 0:04:19.839 bancout as a dollar UM. So whether or not that 0:04:19.920 --> 0:04:22.560 counsels accepting crypto, I guess is up to you. For 0:04:22.640 --> 0:04:25.800 Tiffany as well, it was also another area where it's 0:04:25.800 --> 0:04:28.240 a bit of like, you know, playing both sides. They 0:04:28.279 --> 0:04:32.240 decided to launch an n f T collection for holders 0:04:32.360 --> 0:04:34.720 of the Crypto Punk n f T. So if you 0:04:34.800 --> 0:04:36.920 own a crypto Punk nty, which by the way, it 0:04:36.960 --> 0:04:40.200 isn't to do with tiffany um, you could buy an 0:04:40.360 --> 0:04:42.640 an f tiff which is a Tiffany n f t 0:04:43.200 --> 0:04:45.760 UM and then that would basically be a digital pass 0:04:45.880 --> 0:04:49.359 to then convert that into a physical Tiffany necklace in 0:04:49.400 --> 0:04:53.520 the likeness of your crypto Punk. So again you're buying 0:04:53.560 --> 0:04:56.280 something digital, but really you're getting something physical out of it. 0:04:56.960 --> 0:04:58.839 So who are they going after with this, right because 0:04:58.880 --> 0:05:01.039 you said that they are not going to accept the 0:05:01.080 --> 0:05:03.880 actual coin, and how many people have that coin and 0:05:03.920 --> 0:05:06.520 do want to spend it to buy like bags? Like 0:05:06.680 --> 0:05:08.440 what is the deal here? Is it for a marketing 0:05:08.520 --> 0:05:12.479 like you know, you mentioned younger generations trying to you 0:05:12.520 --> 0:05:15.440 know them, trying to attract them, like, what what's the deal? 0:05:16.200 --> 0:05:18.040 I mean, I'm a little bit on the skeptic side. 0:05:18.080 --> 0:05:20.640 So in my mind, it's always a marketing point. It's 0:05:20.680 --> 0:05:22.560 a it's a it's a way to show that you 0:05:22.640 --> 0:05:24.520 as a brand are keeping up with the times and 0:05:24.640 --> 0:05:27.239 keeping up with you know, what's hip among the young people, 0:05:27.520 --> 0:05:30.560 which is crypto at present um but i'd be interesting 0:05:30.560 --> 0:05:32.640 to see, you know, how many people are really spending 0:05:32.640 --> 0:05:35.240 with crypto. And actually there was a story that Tas 0:05:35.279 --> 0:05:37.520 wrote earlier this year where she went to visit a 0:05:38.120 --> 0:05:41.680 store in London, the Philip Line. Yeah, yeah, and they 0:05:41.720 --> 0:05:44.160 actually accepted what was it like quite a lot and 0:05:44.240 --> 0:05:46.279 there was they started to accepting crypto. So it's like 0:05:46.279 --> 0:05:50.240 a web three crypto concept store opened in like old 0:05:50.279 --> 0:05:54.200 Bond Street. Um, really flashy and yeah, I mean some 0:05:54.240 --> 0:05:57.760 of the sneakers were priced sorry ridicularly surprised. Sorry Philip Blind. 0:05:58.000 --> 0:05:59.800 I'm sure they're worth it, but um, and then they 0:05:59.839 --> 0:06:02.719 had like QR colds, they had like, you know, really 0:06:03.279 --> 0:06:05.359 trendy s type n f T s that they were 0:06:05.400 --> 0:06:08.800 giving away with purchases. And I think that Philip Line 0:06:08.839 --> 0:06:12.640 store is the first in London to accept crypto as well. Um, 0:06:12.720 --> 0:06:15.120 yeah it is, isn't. Yeah, So I'm just looking back 0:06:15.160 --> 0:06:18.120 at the article you wrote then, which was in April, 0:06:18.640 --> 0:06:22.000 um and back then that Philip Pline said that last year, 0:06:22.160 --> 0:06:25.200 payments in crypto accounted for around three percent of its 0:06:25.279 --> 0:06:28.920 roughly one hundred million euros and online revenue, which isn't 0:06:28.920 --> 0:06:31.920 a large amount, but it's also not nothing and so 0:06:32.320 --> 0:06:34.520 there's a I guess that arguments that we had for 0:06:34.560 --> 0:06:37.960 some of these companies. This obviously was online revenue compared 0:06:38.000 --> 0:06:40.159 to instore revenue. And how many of us are being 0:06:40.480 --> 0:06:44.160 like trying to spend crypto in a physical way when 0:06:44.160 --> 0:06:47.560 you enter a store as another matter. But it's definitely 0:06:47.640 --> 0:06:50.719 also a revenue stream that brands don't want to ignore. 0:06:52.880 --> 0:06:55.440 So obviously this isn't happening in a void, right, Like 0:06:55.560 --> 0:06:58.160 there's a market around n f T s and there's 0:06:58.200 --> 0:07:01.080 a market around crypto, So so what's happening there? And 0:07:01.120 --> 0:07:05.760 how do the Gucci and Tiffany lot drops as people say, 0:07:05.839 --> 0:07:08.760 in the sector fall within that? Emily, do you want 0:07:08.760 --> 0:07:12.360 to give us a sense At the moment, particularly this year, 0:07:12.400 --> 0:07:14.280 we've seen a bit of a slump in demand for 0:07:14.400 --> 0:07:16.720 n f T s, a lot of the performance of 0:07:16.920 --> 0:07:19.680 even some of the top n f T collections sometimes 0:07:19.800 --> 0:07:22.400 we call them blue chip collections, like crypto punks, like 0:07:22.480 --> 0:07:26.440 board apes, um, those have been falling. Four prices are 0:07:26.440 --> 0:07:28.680 lower than they used to be, and there's even just 0:07:28.760 --> 0:07:31.520 little demand for things once they've already been minted. The 0:07:31.560 --> 0:07:34.240 secondary sales market isn't doing that well. I think our 0:07:34.280 --> 0:07:36.760 colleague Olga Cry for a really great story earlier this 0:07:36.840 --> 0:07:40.000 year that said that, you know, one in three n 0:07:40.080 --> 0:07:43.520 f t s has little to no secondary trading after 0:07:43.640 --> 0:07:46.200 it's been born. Once red hot, n f t s 0:07:46.240 --> 0:07:49.440 are now cooling off a bit. The secondary market for 0:07:49.680 --> 0:07:57.120 the majority of people's paintings today is down from the peak, 0:07:57.400 --> 0:08:00.760 as is most an ft art. So kind of shows 0:08:00.800 --> 0:08:03.320 that n f t s are performing in line with 0:08:03.600 --> 0:08:05.920 the same way the rest of crypto is. At the minute. 0:08:05.960 --> 0:08:08.760 Nothing is really you know, booming. Nothing's going to the 0:08:08.800 --> 0:08:13.120 moon in general. It's pretty much just subdued slump. I 0:08:13.120 --> 0:08:18.960 guess it's how you could put it. And so when 0:08:19.000 --> 0:08:21.520 these brands have come in, we expected to see a 0:08:21.560 --> 0:08:23.440 bit of a bounce, and I guess we did see 0:08:23.480 --> 0:08:25.200 a little bit of a of an uptick and some 0:08:25.280 --> 0:08:27.000 of the floor prices of these n f t s, 0:08:27.080 --> 0:08:29.760 you know, on the day of the announcements, but those 0:08:29.760 --> 0:08:34.199 bounces haven't really held since then. We'll be right back 0:08:34.280 --> 0:08:37.280 with more from Bloomberg reporters Emily Nicole and taz Aktar 0:08:37.600 --> 0:08:45.240 on how big brands are getting into the cryptosphere. So 0:08:45.360 --> 0:08:47.240 I'm curious to hear your thoughts on this. I've been 0:08:47.280 --> 0:08:49.400 hearing that you know, in a sense, the n f 0:08:49.440 --> 0:08:53.040 T world is a bit disconnected from the broader like 0:08:53.080 --> 0:08:55.560 crypto markets in the sense of crypto prices of bitcoin. 0:08:55.679 --> 0:08:57.840 Do you think that in a way, you know, it's 0:08:57.880 --> 0:09:02.439 become its parallel thing because it's more connected to reality 0:09:02.480 --> 0:09:05.080 because we have these brands and these companies coming in, 0:09:05.200 --> 0:09:07.680 or do you see it as always intertwined in that 0:09:07.800 --> 0:09:09.600 you know, if one goes badly, the other one will 0:09:09.600 --> 0:09:12.719 go badly too. If we look at this purely from 0:09:12.720 --> 0:09:17.640 a market's perspective, crypto has been very volatile over the 0:09:17.720 --> 0:09:19.760 last year, as it as it always has been. We 0:09:19.800 --> 0:09:23.079 haven't really seen that improving en T s haven't been 0:09:23.120 --> 0:09:25.640 as volatile, and so in that way, they're not really 0:09:25.679 --> 0:09:28.920 a parallel because they do operate slightly different. It is 0:09:28.960 --> 0:09:31.959 more of a kind of store of value in a sense, 0:09:31.960 --> 0:09:33.920 because you buy one at the top and hope that 0:09:33.960 --> 0:09:36.440 it holds its value over time and you might be 0:09:36.480 --> 0:09:38.640 able to sell it for triple the price later on, 0:09:39.080 --> 0:09:41.920 compared to crypto, where people are you know, making quick 0:09:42.040 --> 0:09:44.760 arbitrage trades and trying to make money off the pennies, 0:09:44.800 --> 0:09:48.960 and difference between prices on different exchanges um but that's 0:09:48.960 --> 0:09:52.440 not to say that they don't also get affected by 0:09:52.440 --> 0:09:54.199 the same things. You know, if you were a crypto 0:09:54.240 --> 0:09:57.079 trader and you were seeing losses elsewhere in your portfolio, 0:09:57.200 --> 0:09:59.400 you might sell an enterty to make some money back, 0:10:00.280 --> 0:10:02.439 and vice versa if you if your n f T 0:10:02.559 --> 0:10:05.280 s were crashing, which to be honest, doesn't happen very often. 0:10:05.320 --> 0:10:08.920 We don't see crashes that often in floor prices. What 0:10:09.000 --> 0:10:11.200 did we learn about Gucci while we were reporting this 0:10:11.240 --> 0:10:14.079 Emily and that that's also connected to n f t s, 0:10:14.120 --> 0:10:17.920 but not necessarily just n f T s. So when 0:10:17.960 --> 0:10:19.760 we were looking into this story, we were kind of 0:10:19.760 --> 0:10:23.319 trying to position how these most recent drops in enterty 0:10:23.400 --> 0:10:27.319 collections or accepting more crypto payments is situated within their 0:10:27.360 --> 0:10:30.640 broader push into web three UM, and for Gucci, it's 0:10:30.640 --> 0:10:33.240 something they've been working on for a while. Speaking to 0:10:34.400 --> 0:10:36.679 a representative at Gucci, we learned that, you know, this 0:10:36.760 --> 0:10:38.440 is part of a push they've been doing for about 0:10:38.480 --> 0:10:40.640 a year and a half and they have this new 0:10:40.760 --> 0:10:43.840 unit within the business um that they hope to become 0:10:43.880 --> 0:10:46.199 a little bit like a startup that is more free 0:10:46.280 --> 0:10:48.520 to do what it wants within crypto and web three 0:10:48.559 --> 0:10:51.840 without the constraints of the big parent behind Gucci carrying, 0:10:52.160 --> 0:10:54.840 you know, tapping over its shoulder. And one of those 0:10:54.880 --> 0:10:57.480 things is to hire a head of Web three, like 0:10:57.520 --> 0:11:00.840 a global manager that can oversee the operation stions and 0:11:00.880 --> 0:11:04.120 push the brand forward in this digital space. But they 0:11:04.160 --> 0:11:07.360 advertise for that role in January and it's still accepting 0:11:07.400 --> 0:11:11.440 applications in August um, so you know how successful that 0:11:11.480 --> 0:11:14.280 push has been is a matter of a guest looking 0:11:14.320 --> 0:11:17.000 at whether or not this drop takes off, will find 0:11:17.000 --> 0:11:19.880 out in results whether or not, how like how much 0:11:20.600 --> 0:11:24.040 they accept every quarter and crypto payments, and if they 0:11:24.040 --> 0:11:26.840 ever fill this role, you know what that person's strategy 0:11:26.880 --> 0:11:28.720 will be and what their goals will be, because that 0:11:28.720 --> 0:11:30.719 would be quite interesting to see how that how they 0:11:30.720 --> 0:11:33.240 plan to take the Gucci brand forward in a digital world. 0:11:37.200 --> 0:11:39.760 They've also bought like a plot of digital land in 0:11:40.040 --> 0:11:43.520 the sandbox as well, is a gaming virtual world built 0:11:43.520 --> 0:11:46.480 on the Ethereal block chain where players can build on 0:11:46.960 --> 0:11:51.240 and monetize their gaming experiences using non stopes and crissies 0:11:51.240 --> 0:11:55.440 of experimenting with similar as well. They're building shops, outlets, 0:11:55.600 --> 0:12:00.480 virtual galleries in the actual metaverse, right, so everything is yeah, 0:12:00.600 --> 0:12:03.480 virtual alright, so we do have to go back to 0:12:03.480 --> 0:12:05.640 the real world, in our real desks to do some 0:12:05.920 --> 0:12:08.600 you know, reporting of the world that's not in the 0:12:08.640 --> 0:12:12.320 metaverse for now, so amazing. Thank you both for joining me. 0:12:12.600 --> 0:12:14.680 You can find more of Emily and taz is reporting 0:12:14.679 --> 0:12:17.000 on the Bloomberg terminal on Bloomberg dot com and on 0:12:17.000 --> 0:12:20.559 Twitter at Emily J. Nicole and at Tanzil Underscore Actor. 0:12:24.800 --> 0:12:27.760 On the next episode of Bloomberg Crypto. Even if you 0:12:27.840 --> 0:12:31.320 haven't ever heard the phrase the merge before, you should 0:12:31.400 --> 0:12:34.080 know that it's one of the most important upcoming developments 0:12:34.080 --> 0:12:37.000 in the world of crypto. We'll tackle this long awaited 0:12:37.040 --> 0:12:40.320 software upgrade to the Ethereum blockchain and what might happen next. 0:12:49.880 --> 0:12:53.040 This is Bloomberg Crypto, a daily podcast from Bloomberg and 0:12:53.080 --> 0:12:56.040 I Heart Radio. For more shows from I Heart Radio, 0:12:56.280 --> 0:12:59.400 visit the I Heart Radio app, Apple Podcasts, or wherever 0:12:59.440 --> 0:13:02.880 you get you our podcast. Send us your comments, questions 0:13:02.960 --> 0:13:05.800 or suggestions for the show to Crypto at Bloomberg dot 0:13:05.840 --> 0:13:10.920 net or find us on Twitter. We're at Crypto. The 0:13:11.000 --> 0:13:14.920 supervising producer Bloomberg Crypto is Vicky very Galina. Our senior 0:13:14.960 --> 0:13:19.560 producer is Janet Babin. Our producer is Mohammed Farup, Associate 0:13:19.600 --> 0:13:23.480 producer is Mosses and Um Desta wonder At is our engineer. 0:13:24.240 --> 0:13:29.439 Original music by Leo Sidrin. I'm Stacy Marie Schmal We'll 0:13:29.480 --> 0:13:30.199 be back tomorrow.