A Michigan-based online marketplace is selling NFTs of sneakers. What does that mean?
DETROIT – A Detroit-based online marketplace is allowing customers to buy and sell sneakers without…
DETROIT – A Detroit-based online marketplace is allowing customers to buy and sell sneakers without ever possessing the real-life shoe.
Last week, StockX, a multi-billion-dollar sneaker and streetwear resale company founded by Josh Luber and Quicken Loans founder Dan Gilbert, started selling NFTs that are tied to rare sneakers.
Here’s how it works:
NFTs, or non-fungible tokens, are unique digital collectibles like photos, videos, music or art.
Purchasing an NFT is kind of like buying an original painting that has a certificate of authenticity. Being exchanged on a “blockchain,” which acts as a digital fingerprint of transactions, provides the authenticity for NFTs.
“It’s using the uniqueness of the blockchain to create scarce digital assets or products,” said Wayne State University faculty in finance Matthew Roling.
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Everyone from artists to celebrities to the NBA have gotten on the NFT train.
Last year, renowned art seller Christie’s Auction House sold $150 million in NFTs including one piece of digital art for $69 million. And a popular Bored Ape Yacht Club collection sells avatars of apes for hundreds of thousands of dollars, according to CNET.
“They’re very controversial because if somebody purchases any NFT for $400,000, there is literally nothing stopping you from right clicking on it and downloading the image,” Roling said. “I don’t think those criticisms are wrong but it’s interesting to see the blockchain being used for something new.”
In StockX’s case, the NFTs act as proof of ownership and cut out the middleman in sneaker trading.
Roling says it’s a clever move by StockX that enhances their existing products.
Typically, sellers ship products to StockX for authentication before they’re sent to the buyer. For people who trade sneakers, this can slow down the process of buying and reselling.
“By bridging the physical and digital worlds, we’re able to provide a more efficient trading experience anchored by lower costs and storage capabilities — a buyer no longer has to wait several days before they can resell a product, and they don’t have to pay the fees associated with multiple legs of shipping and physical authentication,” StockX CEO Scott Cutler wrote in a statement.
With StockX’s NFT service, users can buy, for example, an Air Jordan 4 Retro White Oreo NFT for $935. After purchasing the NFT, the buyer also owns the real-life Air Jordan sneakers that are stored in climate-controlled StockX facility. The sneakers can either stay in the vault, be shipped to the customer or be sold to a new owner.
“It’s pretty smart,” Roling said. “You’re using (NFTs) to simulate an analog product that is ruled by the laws of logistics and freight.”
StockX currently has nine pairs of sneakers that can be purchased as NFTs, ranging from $858 to $42,069. The company plans to expand its NFT offerings, personal wallet withdrawals and cryptocurrency payments.
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