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Cryptocurrency in the Luxury Industry
Crypto is a luxury
Cryptocurrency has demonstrated its influence over the Luxury industry, with brands like Philipp Plien, and Hublot entering the crypto scene in 2021. Here’s an overview of how global luxury brands use cryptocurrency to grow their business and engage their customers.
Potential of crypto in the Luxury industry
The global luxury market will reach US$1.5 trillion by 2025, with millennials representing 50% of the total market. As of today, 58% of the crypto population are millennials and generation Z under the age of 34. As millennials and generation Z consumers drive 85% of global luxury sales growth, the decision for luxury brands to adopt crypto becomes more important.
The number of affluent consumers in the crypto population is high, with over 36% of them having an annual income of US$100k. Crypto users tend to purchase more expensive items as a typical crypto user has an average order value (AOV) of US$450, compared to an AOV of about US$200 for non-crypto users. Besides, 56% of high-net-worth individuals have expressed their interests in crypto investment.
Blockchain as a solution to counterfeiting and transparency
Every year, luxury brands lose around US$30 billion worth of sales to counterfeits online, and many expressed that they bought them without knowing it. Blockchain technology enables brands to tokenize non-fungible assets, also known as NFTs, allowing each asset to be held, purchased, exchanged, and traded with ease online. Through the use of blockchain, users can track and trace the product from raw material to production to sales, assuring the customer of its history and authenticity.
Luxury brand conglomerate LVMH, owner of the iconic Louis Vuitton label, is among the first few to launch a blockchain to prove high-priced goods’ authenticity. Other brands which are doing so include Gucci and Rimowa.
Luxury brands that are accepting crypto
Global luxury brands have set foot in the crypto space. Below are some of them to pay attention to,
- Luxury watch brands including Hubolt, Franck Muller and Norqain are accepting crypto payments. Among them, Hubolt even launched a collection of watches that were exclusively available to purchase via Bitcoin.
- Luxury travel agent, Travala.com offers its clients a wide selection of cryptocurrencies to pay from for their vacation.
- TJB Super Yachts started accepting crypto early this year, and Tesla will most likely begin to accept Bitcoin as payment again.
- Sotheby’s Auction house sold Banksy’s “Love is in the Air” for US$12.9 million. It is the first piece of physical art sold by a major auction house paid for using crypto.
Crypto’s impact on the Luxury industry
Cryptocurrency is going to be around for a lot longer than most think. As major brands in the other industries are starting to accept cryptocurrency, the influence will impact the luxury industry to shift toward crypto adoption.
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