Will NFT luxury assets transform consumer values?

category - society
sector - media & technology
sector - youth
sector - luxury
type - opinion
Opinion
Artist Sebastian ErraZuriz and his studio have created Digital Diamonds, the world’s first crypto gems. But are luxurians ready for such intangible assets?

As a provocateur, the obvious choice for Sebastian ErraZuriz’s latest protest art was a controversially themed non-fungible token (NFT). Previously, the multidisciplinary Chilean artist gained notoriety for virtually vandalising an augmented reality (AR) Jeff Koons collaboration with Snapchat in 2017.

He announced the project – Digital Diamonds – in a recent series of Instagram posts. One hundred virtual diamond NFTs have been minted on Ethereum’s blockchain, with 10 available immediately. The largest diamond, The Great Vitalik, is named after the creator of Ethereum, Vitalik Buterin, and has been dubbed a Digital Blood Diamond in an ode to Ethereum’s energy intensive mining model, and a reference to the carbon footprints of the diamond, NFT and art industries.

ErraZuriz accepts that merging these complex concepts creates convoluted messaging; he admits, ‘I think I’m a little obsessive and layering too many things [in the project].' Further, many sentiments within ErraZuriz’s rallying cry against diamonds are vague. In his Instagram video announcement of the project and on NFTDiamonds.co, he cites false scarcity, a lack of provable provenance, and claims most diamonds are man-made – referring more so to the manufacturing industry, rather than jewellery-grade diamonds. It feels as though with more research and hard statistics, Digital Diamonds could have packed a greater punch against at least one of the industries that it protests.

Digital Diamonds are presented as a like-for-like virtual alternative to physical diamonds, starting at a price of one Ether per carat – currently, one Ether equates to about £1,454 ($1,995, €1,680). Even for digital-first luxurians, will the idea of ‘bragging rights’ for owning NFTs be comparable to the appeal and status signalling from owning significant diamonds?

Published by:

12 April 2021

Author: Jodie Marie Smith

Image: Dell XPS Youniverse by MPC & YMLY&R

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NTD Diamonds Co. / Sebastian ErraZuriz

So much of diamond marketing focuses on their intrinsic beauty, but Digital Diamonds are not a faithful recreation of the physical product – rather, a sci-fi interpretation of colourful, shape-shifting crystals. The artist tells me: ‘Most digital art until now has just been a jpeg... but it's fascinating for me to play with the architecture of a diamond and take it to its full potential.’ If this proves to be appealing, the bidding on Digital Diamonds may be most useful to the luxury industry in signposting how the owners of these personal digital accessories will want to see their NFTs displayed online and in virtual worlds.

Arguably, in this moment, such crypto art seems to pose no real threat to the diamond industry. By the nature of the project, Digital Diamonds are likely to only appeal to those already invested in NFTs, and with little to no interest in buying physical diamonds. ErraZuriz states that the project will be successful, ‘As long as we can prove by the end of the year that there were a small quantity of people that preferred to buy digital diamonds over physical ones.’

Yet crypto art ccollaborations with established luxury industry players are already happening. High-end watchmaker and jeweller Jacob & Co. auctioned the world’s first NFT watch with Artgrails.com on 7 April 2021. Myriad luxury fashion brands and platforms are nipping at their heels, where consumers can buy digital doubles of their favourite garments.

Looking ahead, more artists, disruptive brands and cryptocurrency enthusiasts will use the luxury industry to compare digital money markets to traditional asset classes. Arguably, we are in a handover stage between traditional investments and emerging digital markets, with Goldman Sachs and Morgan Stanley announcing investing and trading in Bitcoin and all related digital assets on behalf of their high-net-worth clients starting in Q2 2021.

Back to Digital Diamonds. It reveals an exciting opportunity to open up an educated conversation around ethical issues in the diamond industry, but with so many facets to one project ErraZuriz may struggle to generate the desired hype to whip the combined diamond, NFT and art markets into shape. Despite this, the luxury industry at large is only just beginning to embrace the potential of augmented brand experiences and alternative modes of ownership.

So will Digital Diamonds endure? ErraZuriz enthuses, ‘Eventually, we could offer our buyers an exchange for an AR version of these diamonds... continually upgrading these artworks means they can maintain fascination.’

Jodie Marie Smith is a journalist, trend forecaster, brand consultant and copywriter based in California, specialising in the fine jewellery industry.

‘Arguably, the luxury sector and its customers are in a handover stage between traditional investments and emerging digital markets.’
Sebastian ErraZuriz, artist

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