Every physical garment will eventually be tokenized and sold primarily as NFTs (Proof of Ownership)

Understanding how the blockchain in tandem with oracles & other digital tools will bring physical Fashion sales & traceability into its “final form”, while also improving industry circularity efforts & the customer experience (B2C & P2P) on every level

Currently, there is much effort being exerted by some, us included, in order to effectively onboard the Fashion industry and its consumers into the metaverse over the next few years. Which is going very well, so far. We are seeing a rise in the number of brands stepping into the space and testing the waters, by: minting virtual garments; hosting digital events; as well as, some even exploring partnerships with DAOs, and popular metaverse games.

Comparable to a vacuum, it feels like increasingly more energy & focus is being driven towards the web3/crypto space. Which is providing much needed infrastructure and opportunity for those of the global population who want to be free of the structures of old and manifest the truest version of themselves online (or through some type of Mixed Reality.)

However, it shouldn’t be assumed that this is only a one way street. Yes, the blockchain is of great benefit for those who wish to delve further in to the digital — primarily those who wish to, live, work, & play in the metaverse. But the benefits of an immutable public ledger (such as Ethereum) do not stop there. As it will also fill in many “invisible” gaps in the physical world, also providing much needed additional layers of stability and transparency to our current legacy systems. There are many industries where this “revolution” will happen. But our focus here is Fashion.

Unfortunately, still, for many, NFTs are a muddled thought which only evoke images of exorbitantly priced animated pfp’s (profile pics) and unwanted DM’s from some random account shilling a new NFT project — usually in the following format: “adjective” + “animal”.

This misrepresentation has far too much weight in the public psyche. So much so, that its key utility is misunderstood and ignored for the most part. We have barely scratched the surface of what is capable. So, of course we can’t go any further without defining what an NFT is.

What is an NFT?

Before moving forward I would highly recommend anyone who hasn’t come across this before to read @ punk6529’s definition of what an NFT (Non Fungible Token) is in their exquisitely written Twitter thread, which I’ve linked here and below.

Let’s continue…

For those of you who skipped right past. In short, an NFT (Non-Fungible Token) is a non-interchangeable unit of data on a blockchain. This token (each with its own unique ID) can be associated with any given physical or digital asset of the NFT minter’s (creator) choosing. Thus serving as an easily verifiable digital certificate/proof of ownership for the NFT holder, or for anyone wishing to participate in an exchange for the given item.

Beyond Digital Art

Of course we know about digital asset ownership, which is what we’re all familiar with. To the point, Right-click-save was probably one of the most popular memes of 2021. Primarily used to berate NFT owners over the prospect of “buying a jpeg” (digital art).

Even in the liquor and spirits industry we’re seeing a shift, due to players such as BlockBar, who are providing a marketplace and storage for expensive liquors using NFTs to buy/sell and verify ownership. Which is easily replicable, as it pertains to fashion.

Now it seems the tide is turning, as even China, who have historically been (and continue to be) against cryptocurrencies are now exploring building their own blockchain specifically for NFTs, “that is not linked to cryptocurrencies”. One would imagine here, they will directly integrate this with their newly launched CBDC, the digital Yuan (sidebar: I will have an article with more on CBDCs very soon). Anyway, of the many interesting things that stood out to me from the article, I thought the following was particularly noteworthy. Said by, He Yifan, chief executive of Red Date Technology, which is providing technical support to the China’s state-backed BSN (Blockchain Services Network):

NFT is mainly used for digital art works, but He said the biggest market is certificate management, such as car licence plates and school diplomas as it is a “revolutionary database technology” that can differentiate different parties’ access to the data.

In NFT-based vehicle plate management, the car owner, government and insurer each have access to data such as mileage, engine number and repair history, and each is aware of the others’ rights, He said.

Fashion and NFTs

We are already starting to see some novel integrations of NFTs into other industries, and soon to be, at a government level also... But when bringing it back to Fashion, however, we are yet to see anything to the level of the aforementioned being built or publicised. Although some individual retail marketplaces are starting to test the waters.

StockX, recently launched their NFT-as-Proof-of-Ownership service, with VaultX, where each sneaker in the vault would be paired with an NFT for proof of ownership. So, in this case, buyers could purchase the token which is backed by the physical sneaker. As a result, “buyers will own the token and the corresponding sneakers and may have them delivered at any time.”

So, first let’s think about what that could look like on an industry-wide level adoption, and what elements would be needed for it to work.

In Fashion, there is strong work being done by some to digitise and add more transparency to the pre-and-post-sale market of clothes.

EON Group, is a pioneer in this particular space. EON is working with a group of partners from various industries to build a digital ID system to bring every garment into the “product cloud”. This would mean each item under this protocol will have a unique barcode embedded on the item/label. So by simply scanning the code on a garment you can find out everything about it, from the basics of the garment type, to the sizing, colour, materials, etc. The post-purchase intention is that by incorporating this data, more careful & responsible action can be taken, with regard to its secondary and tertiary markets. Basically, the tool is designed to encourage circularity by “enabling resellers and recyclers to access, identify and share essential product and material information.”
It should also be mentioned, this is not a solitary effort. They are working with many partners to reach every corner of the world with this protocol, including Microsoft, PVH, Target, Waste Management Inc. (North America), RISE Research Institute of Sweden, Revolve Waste, Circ, Open Apparel Registry, Sustainable Apparel Coalition, and many more. What’s even of greater importance is that, the protocol is available to anyone as part of the Creative Commons License (CC-ND 4).

Alongside them there are several others who are employing their own methods to improve supply chain traceability and transparency. These include: Sheep Inc., a wool brand, which through the use of their own app allow you to find out extensive information about each product i.e. journey, sheep flock and health info, alongside much more; Nisolo shoes, with their own Sustainability Facts Label; and Provenance, a company which provides brands with the tools to share product journey and information with their retail customers, within their own apps.

We can see from the aforementioned examples, the future of sustainability in Fashion is in safe hands! As many more brands and organisations will certainly follow the above, in either partnering and integrating their tools, or building their own solutions. To the point that many would question the need for much else beyond this — and in turn, some would question the need for this article. However, I believe this is in fact only part of the solution for where fashion needs to move towards. As these processes are missing one glaring component… the consumer!

Some could say it’s excessive but fashion’s traceability and environmental issues don’t start and end with the brands, the ready and willing (to pay) consumers also hold responsibility in that process as well. As we know the clothes don’t jump off shelves and force themselves into the homes of unsuspecting citizens, nor do solely leave to then magically be found in rubbish heaps, somewhere on a beach, or nowhere at all.

Which of course raises the important question: how do you involve the consumer in this now data-rich process, beyond the initial point of sale, allowing them to assume partial responsibility for the lifecycle of a garment, thus closing one of the few remaining weak points in the challenge of ensuring the long-term lifecycle of a garment is protected?

The answer is NFTs. Allow me to explain.

As we’ve mentioned, NFTs are tokens which exist on a blockchain with unique identifying numbers. Each NFT has it’s own set of metadata, for pfp art this may include its: size, colour, variation, etc. Which can be easily viewed (not edited) by anyone one the network.

Meanwhile the Fashion NFT metadata could include: who made it (brand); product journey & where it was sourced from; product information; care methods (for recycling, rental, and resale); and so on, which would directly be fed in from a verified external source, such as EON’s circular data protocol (CDP) and/or any of the other aforementioned traceability tools. This would be achieved through the use of an oracle, which, basically, connects on-chain smart contracts with off-chain data and services, securely bringing it onto the blockchain, one good example of this is Chainlink.

Although, the full idea is is still a few years away from possibly being manifested in totality (5–10 years is possible). A very condensed/simplified step-by-step of what it would look like proceeds as follows:

1. Item goes through production process during which it is added to the CDP with unique id code (Here, CDP/Circular Data Protocol can be used interchangeably with any of the previously mentioned sustainability tracking tools)
2. Once production is finished. The garment is then tokenised and minted as an NFT onto the blockchain, with relevant CDP id number added
   2b. As it is minted, oracle is used to fetch relevant CDP data using the unique item code, automatically adding all necessary information (product sustainability, etc.) to the NFT meta data, which is now viewable for all to see, on chain.
3. At point of sale, the garment is directly sold as an NFT using a recognised CBDC (central bank digital currency) for payment or any other cryptocurrency that would be accepted on the blockchain being used (i.e. ETH, BTC, or other.)
   Add. We are assuming here, that with the eventual rollout of CBDC’s over the next few years, such as the Digital dollar, Digital Pound, Digital Yuan/RMB, etc. everyone will be, as a result, making direct payments onto a given blockchain, as naturally as it is today to use apple/google pay, thus resulting in one click/swipe/tap NFT purchases. I will be speaking more on CBDCs and how they will affect life in one of my next writeups
4. After sale, the garment is given (or sent) to the buyer and the relevant NFT, serving as proof of ownership, appears in their digital wallet. (Exactly how it would appear today, for example, after minting or buying digital art from Opensea, Rarible, or LooksRare)
5. From owning the buyer can either: hold onto it; sell it onto others (transferring the NFT along with it); Rent it out (more info below); Recycle the garment at which point the NFT would be sent to a burn address as proof of recycle — and in some cases the buyer/recycler would be rewarded with some type of payment/discount/other form of reward after doing so.

Renting: This would also work well for existing garments in the market. However, you wouldn’t have as much rich metadata (namely: product info and journey) as the newly made items, but it is possible to add on later!
Anyway, with rentals, it is possible to temporarily lease an NFT to someone along with the garment. One example of this is reNFT which (acting as a digital escrow) already provides this service for in-game NFTs and digital art (especially helpful, in cases where the NFT can provide access to something like hidden content, such as a film or event.)

reNFT’s rental model, which could easily be replicated for garment rentals either in a peer-to-peer approach facilitated by a third party such as Hurr, or alternatively, where you directly borrow from the brand

What type of system (app or blockchain) would this require?

Any blockchain that is capable of handling a large number of transactions at a marginal cost. It could exist as an application on an Ethereum Layer 2 rollup (scaling solution), benefitting from the size of the Ethereum network and its security, while paying an increasingly smaller fraction of the cost compared to mainnet (L1). Or taking it into their own hands, doing something similar to Reddit. Who are working with Offchain Labs/Arbitrum to produce their own Arbitrum-based rollup for its community points system. Or even building their own blockchain on the cosmos network.

For clarity, Arbitrum at full capacity will allow for, 40,000 transactions per second,

Could this (network of Fashion NFTs) instead exist across different (public and private) blockchains at the same time?

Yes, and it might satisfy more needs than a singular blockchain. In this situation, every brand could exist in some way of the following:

1. Each on their own blockchain (public or private, on Layer1/Layer2)
2. Within certain clusters, such as, a singular chain built for all the partners of the Circular Data Protocol (i.e. Target, H&M, etc.) In this example, there would be another separate chain for Sheep Inc. and their items & processes. Then another singular chain for the cluster of brands who use Provenance to map out their sustainability tracking, and this could be done infinitely, if necessary.

Is this possible to execute on the application layer instead of building blockchains for every brand or cluster of partners?

Yes. Instead of creating a unique blockchain for every brand or cluster, each brand would build their own application and either keep it on one chain or port it across various chains. This could mean brand X builds their app for minting/use through Ethereum, Near, and Celestia along with several other chains, for example. While brand Y builds their application on Algorand only.

How would rental platforms and marketplaces work across different blockchain networks?

For rental platforms and other services which would need to take on ownership of these items temporarily or indefinitely, they would need to (preferably) exist on the application layer, like reNFT highlighted earlier in this article. This would be so that they, as an app, could port themselves onto different blockchains, meaning they could facilitate renting between people on the same network or across different networks. As we know, cross chain communication isn’t developed enough yet for fluid interaction/exchange between blockchains. This could, however, be achieved with the Chainlink CCIP (cross chain interoptability protocol) when that launches soon.

A visualisation of how Chainlink CCIP (Cross Chain Interoptability Protocol) would look like in action

Conclusion

Although a few years away from full realisation. Fashion is slowly progressing to the point where every detail of every process — before, during, and after sale — is tracked and registered. As such, it is in my belief, quite natural the next stage of this should be tracking/verifying ownership of the garment, which is largely a gray area currently, and where a large part of sustainability efforts fall short.

In closing. I want you, the readers, to imagine a future where every item of stock a brand has in their possession is publicly visible on a blockchain — you’ll be able to see when they’ve sold items or transferred ownership to third parties (i.e. retailers), when they’ve sent deadstock clothing to recycling centres or otherwise. Meanwhile in that same future, every item of clothing you, as an individual, own, will be connected to your digital profile, and you can: prove ownership; lend and transfer them to others; show when an item has been sent for recycling or upcycled (which would probably involved merging NFTs if 2 or more garments are used).

In truth, even this is only scratching the surface of what is possible when thinking of how much the world around us will change during this decade.