Nike Acquires NFT Startup
news.nike.com
news.nike.com
I always have this question of how much does one need to know to be effective in any one of these fields? I'm thinking at least 10 years (which probably some members of the team already had prior to founding the company). Of course not sure what to make of NFT "experience" :).
Nike would gift you some Nikecoin for every purchase of Nikes you buy. You can then gift Nikecoin to your friends or buy more Nikes with them. Unlike airline miles, the ledger is openly tracked and the companies can't devalue them every year like airlines do.
At the extreme end I could see an application where Nike lets people trade Nike sneaker futures. Nike would actually store the physical Nikes in some climate controlled warehouse. Sort of like oil futures where most traders wouldn't know what to do with an actual barrel of oil.
The benefits for Nike are that its sort of like arcade/casino virtual bux - loyal consumers disassociate Nike purchases from hard earned USD and spend more. Nike traders don't have to pay taxable gains until they convert to USD. And you lock-in money into the Nike ecosystem.
I don't see any problem NFTs solve that these loyalty problems don't.
> Unlike airline miles, the ledger is openly tracked and the companies can't devalue them every year like airlines do.
Are you picturing the cryptocurrency being tied to the dollar? Otherwise, Nike could make things cost more Nikecoin than dollars over time which would effectively be the thing as devaluing Nikecoin. They still control the currency because they control the economy they can be spent into.
> At the extreme end I could see an application where Nike lets people trade Nike sneaker futures. Nike would actually store the physical Nikes in some climate controlled warehouse.
So they would store the shoes on a centralized location that they control? What problem does a decentralized system have here? Why not just have the storage warehouse keep track of who owns what and allow ownership transfer? This reminds me of the people who store their alleged decentralized currency with a centralized bank.
- Primarily the trust problem. For loyalty rewards programs its basically free money the brand provides based on miles traveled/products bought. You'd never actually convert large sums of solvent USD (>$25K) into the Nike rewards program though because then you have to start thinking about whether Nike be around in 25 years, do I trust Nike's backend unaudited IT systems to not screw up, if Nike stops making cool stuff my $25K is stuck in their rewards program.
However, with a Nikecoin if you knew multiple 3rd parties (i.e. Citibank, Coinbase, etc.) were validating the Nikecoin ledger and could convert from Nikecoin back to USD there's more trust that could be developed.
- Another scenario is transferring Nikecoin between friends without Nike having to manage the transfer
- And perhaps group/syndicate buying - i.e. Constitution DAO style?
- In-game tokens? Imagine you could wander around PokemonGo/Roblox to find Nikecoins at which point you could redeem them for sneaker coupons or jump through hoops to convert to USD.
Are you picturing the cryptocurrency being tied to the dollar? Otherwise, Nike could make things cost more Nikecoin than dollars over time which would effectively be the thing as devaluing Nikecoin. They still control the currency because they control the economy they can be spent into.
- Just spitballing but yes I'm picturing it the same way BTC/Dogecoin/Shibacoins are tied to the USD in that you as Nikecoin holder you could freely convert back and forth at the going exchange rate and the number of Nikecoins is run with a predefined supply algorithm.
- I could also picture a standard set of Nikes always tied to a set Nikecoin price so Nike can provide some stablecoin like price stability.
So they would store the shoes on a centralized location that they control? What problem does a decentralized system have here?
- Traders can trade the digital version ad naseum until the final owner is found. The final owner is the one who wants to have the physical version be shipped to their home address for actual consumption/wearing.
- There are probably more traders than final owners for most Nikes. There are also more people who would know how to bid for collector grade Nikes using virtual Nikecoin than know how to store a collector grade Nikes in a climate controlled warehouse.
I don't follow your logic here. Why would Nikecoin have any value of Nike went out of business?
> Just spitballing but yes I'm picturing it the same way BTC/Dogecoin/Shibacoins are tied to the USD in that you as Nikecoin holder you could freely convert back and forth at the going exchange rate and the number of Nikecoins is run with a predefined supply algorithm.
My bad. I should have specified I meant a fixed exchange rate but you're saying it's a floating exchange rate. This means what I said before is true. Nike will have to price their items in terms of both dollars and Nikecoin which means they could use that to manipulate the value of Nikecoin.
> I could also picture a standard set of Nikes always tied to a set Nikecoin price so Nike can provide some stablecoin like price stability.
Yeah, but now you're back to trusting Nike.
- Because it's its own coin. Just like Dogecoin/Shibacoin will still have some value even if the original developers move on, Nikecoin could potentially have some similar value to Dogecoin if some other maintainers pop up to pick up where Nike left off. Nike reward points on the other hand will go to zero if Nike ever shuts down its servers. Generally cryptocoins presumably are designed from the ground up to be maintained by multiple weakly trusted parties where as internal reward point CRUD systems are typically designed to require full trust by all maintainers at all times.
Nike will have to price their items in terms of both dollars and Nikecoin which means they could use that to manipulate the value of Nikecoin.
- Because there's less lock in with the exchange rate publicly available and you can convert to USD at any time, Nike would be motivated to maintain a healthy ecosystem. And perhaps I come from a Charlie Munger type place where I don't see as much value in crytocoins in general and this is the only potential use case I can come up with :).
How do companies not have the ability to devalue them? They have total pricing control over the only physical good you can buy with them.
And yes Nike would have the ability to devalue the Nikecoins but it'd actually not be in there best interest to do so because Nikecoin holders would then just cash out and offramp to USD. You'd then have negative PR associated with the brand versus free PR when Nikecoin increased in value.
Also if Nike itself maintains ownership of a portion of the ICO, then they'd be incentivized not to devalue the Nikecoin.
Fwiw, RTFKT is more than an "NFT startup." Their core focus is digital apparel, including AR-based augmented sneaker tech and such. NFTs are just one of several technologies they are using.
It’s not hard to see big brands wanting to get a piece of that. And if VR/AR catches up, I would expect the market to expand.
Two of my nephews are into Fortnite and how they talk about the game, the economy, and v-bucks is fascinating. They don't care how about the underlying technology or how it works, only the end result.
I suspect future relationships between brands and NFTs will work similarly--increased direct reach to customers and enhanced ownership and proof of attendance/souvenirs. But it'll appeal much more to the younger generation than the older generation.
Virtual goods don't appeal to me but they make sense. It's the decentralization that makes no sense. It wouldn't solve any problems for Fortnite.
> They don't care how about the underlying technology or how it works, only the end result.
You just admitted that decentralization doesn't matter. V bucks are not a cryptocurrency. They work just fine centralized.
Anyway, my point is that just because you think NFTs are absurd doesn't mean you think digital goods are.
With that said, I don't think this is enough incentive for major gaming platforms to adopt NFTs any time soon.
1. NFT points to Steam owned URL
2. NFT points to some decentralized storage (IPFS/Arweave)
3. NFT data stored on-chain
And the skin data itself has these options:
1. Proprietary format that only Steam can read
2. Some format that is readable by third party software
3. Established standard format like SVG (is there an SVG for 3d stuff?)
So if it was steam URL and data is in steam only format then you are mostly correct. IMO, any combination of the other options I think the decentralized skin means more than nothing. The guy didn't pay $60k to only use the skin while playing CS, he bought it as a piece of esports history.
There is a lot more to be discussed about composability with NFTs and the second and third skin data options I described, but just trying to explain the optimistic point of view.
That's where you lose me. This is what I'll never understand about NFTs. What does that even mean to own a part of esports history? There's nothing to own. Why do you feel the need to own something? What are you going to do with it if you don't use it in game? What could you do besides say "I own this URL that points to a model". Not trying to be rude but this is one of the main reasons why NFTs baffle me.
I've heard the use case of portable in-game assets over and over, and this made no sense to me from a game platform economy perspective; why would a video game company allow somebody else to participate/squeeze value out of their captive market? Why would they work with their competitor?
Your post made the light bulb go off: it will be large vendors like Nike that will push it. Rather than every brand build and run their own platform, or have the game companies form a joint venture to do the same, they will leverage the "global shared storage" (this is the first time I've written 'global' in this context and really meant it) and the game companies will individually implement blockchain clients because their customers will demand virtual sneakers.
Gary Vee was right. (sigh)
NFTs are conceptually nonsense in most cases but if you just want to cash out by selling extra little add ons and you already have a willing market it kind of makes sense.
Sneakers are physical NFTs – StockX, the largest market for trading sneakers, did $1.8b in GMV last year. OpenSea, the largest market for trading NFTs, did $3.4b.
Sneakers and NFTs are both worth way more than their input materials to the point that outsiders don’t get it
It starts as a hobby, and if people are good enough at it, it can turn into a job
etc
The fact that both are worth more than their inputs and have big markets doesnt necesarily mean that they pair together. Basically all manufactured goods meet this description.
I agree there probably is a way to join them but you have to define what that is before arguing there is a value proposition.
Shame about the energy use.
But I would say that a big, established company is completely orthogonal to making sound decisions about things. I've been baffled at how hype-driven c-suite types can be, and NFTs/etc. are a pretty great opiate for the c-suite these days.
My guess is: they have a lot of money lying around, like most companies these days. Gotta spend it on something (other than employees, of course).
Assuming they don't: Buzzwords basically pay for themselves by driving up share prices and on top they generate free advertisement (as in this case).
Couldn't an argument be made that these aspects are more than enough reason for Nike to pull something like this, even if they don't believe at any moment that there is any worth in something like NFTs. Things and technologies can generate money (or be useful for somebody) even if they are bull**.
I just hope they bake in carbon offsets, it's my only real gripe with blockchains and NFTs; the ponzis and snakeoil will sort themselves out.
Nike sees this, and wants to be well prepared for it.