More Singapore companies push into the NFT space

FIVE years ago, Singapore-based fashion entrepreneur James Gaubert never imagined he would be in the business of selling virtual fashion - that is, clothes that exist online and nowhere else.

When you visit his e-boutique republiqe (republiqe.co), you can purchase an outfit for anywhere between S$55 (for a chic top) and S$120 (for an extravagant futuristic dress). The store would then ask you to upload one of your photos and proceed to "dress" you in the digital garment you just purchased.

Soon after, it would email you a digitally-composed picture of you wearing the garment perfectly - no unsightly creases or ill-fitting parts - which you can then post on Instagram, Facebook and wherever else.

Launched in August 2020, republiqe has sold over 500 garments to digitally-savvy fashionistas all over the world. With a lean work-from-home staff of five, the fashion tech company has already broken even - no small feat for an enterprise born during a global lockdown.

Now with NFTs (or non-fungible tokens) breaking into mainstream attention, the company has taken to it as a new potential revenue stream. Since April 2021, it's held a few auctions of new and unique designs on the NFT platform Rarible (rarible.com/republiqe).

Some of the clothes have a starting bid of 0.1 Ether (a cryptocurrency that converts to S$446 at press time), higher than the prices of republiqe's usual offerings. But the difference with these NFTs is that the winning bidders own the entire rights to the design - meaning they can make physical copies of the design and sell them if they want.

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Mr Gaubert says: "I'm not sure if people would actually do that, but we are giving them the full rights . . . The thing about the NFT space is that it is incredibly exciting and unpredictable, because it's so far removed from anything we've ever seen before. There is a massive opportunity to try out different things and see what works or doesn't."

republiqe is tinkering as it goes along. Its first NFT offerings were feminine clothes targeted at young women, but Gaubert admits this demographic may not necessarily be the ones who have crypto wallets and buy NFTs.

NFTs, a digital collectible whose authenticity and provenance can be verified by blockchain technology, is four times more likely to be collected by men than women.

So republiqe's latest offerings are Star Wars accessories such as Stormtrooper bag and boots. It also plans to expand its digital products to male consumers, with clothing designs geared towards the tech crowd.

NFTs can revolutionise music

Meanwhile, other Singapore companies are also jumping on the NFT bandwagon. Mighty Jaxx, the popular designer toy company, auctioned its first NFT on the platform OpenSea.io in April 2021. The winning bidder won not just the physical toy called The Huntress' Gaze, but also its short digital animation. Both have the potential of being traded separately for higher prices.

In the marketing industry, Culture Group, a Singapore-based marketing agency using pop culture collaborations to boost its clients' campaigns, is going all out to convince music industry players that NFTs are the way to go.

Its founder and president Michael Patent says: "NFTs and blockchain technology have intelligent data that allows me, as an artiste, to know who you are, as my fan. I can find out what you bought from me, what you've listened to, and how you've interacted with me online. That ultimately allows me to offer you continuing benefits as we move forward in that relationship, provide special perks for you, and make you feel really special."

NFTs could solve stubborn issues which have plagued the music industry for over two decades, from digital piracy to ticket scalping. NFTs can help establish the true ownership of any piece of digital music. NFTs can also solve the problem of ticket fraud by providing the provenance of any digital ticket. In the instance where a person does wish to sell his or her genuine concert ticket to another person, NFTs can do something no prior resale transaction ever could - letting the musician earn a cut each time the ticket changes hands.

Mr Patent says: "Top musicians don't view themselves as performing artists but media companies. They see NFTs as a new asset class and revenue stream. They can have a more direct relationship with their fans and capture more of the secondary market related to their concerts and memorabilia through NFTs. They can circumvent the middle men if they want to."

In March 2021, Kings of Leon became the first band to sell its album as an NFT. Grimes, Shawn Mendes, Ja Rule and Mike Shinoda have also capitalised on the NFT craze.

Mr Patent says that record labels are scrambling to identify how to operate in the NFT space: "The last time the record labels felt this way was about 20 years ago, with the advent of Napster, and, you know, that didn't end very well for the record labels. So I would say that if they don't move quickly on this, it's not going to end well for them this time either."

Marketplaces are mushrooming

By all accounts, the NFT world has exploded in numbers. According to a new report from Nonfungible.com, a site which tracks a variety of NFT marketplaces, over US$2 billion was spent on NFTs during the first quarter of 2021, an increase of 2,100 per cent from the last quarter of 2020.

OpenSea, a leading NFT platform, recorded US$82 million in transaction volumes in Q1 2021 - a whopping 14,000 per cent growth for the year so far. Raribles, another NFT platform, saw a 634 per cent increase in the same period, which amounts to US$24.2 million worth of transactions.

Ethereum - the cryptocurrency that supports the sale of NFTs - has been rising steadily in value, while Bitcoin saw its total crypto market value drop from 70 per cent at the start of 2021 to 46 per cent today. Observers say the current frenzy for NFTs is one factor helping push up Ether's price past its US$3,000 milestone.

It's no wonder that Binance, the world's largest cryptocurrency exchange platform, is also launching its own NFT marketplace in June 2021. Binance is backed by Vertex Ventures, the venture capital arm of Temasek Holdings, and its entry into the NFT marketplace may upend the entire landscape.

A Binance spokesperson says: "The Binance NFT marketplace will have some similarities to other NFT platforms as it supports both first-launch markets and secondary (P2P trading) markets. The Binance NFT marketplace will consist of two main parts: a premium event and a trading market. Premium events will feature select works through high-end exhibitions and global auctions, whereas the trading market allows every user to be a creator and craft their own NFTs at minimal cost."

The spokesperson says that Binance NFT marketplace has certain advantages compared to its rivals, including "the largest user base in the crypto world (currently over 24 million users, an increase of 232 per cent in the last 90 days alone); the BSC ecosystem, which has huge communities and projects, as the main blockchain network; and the highest liquidity and minimal fees for users."

The spokesperson did not reveal details of the fees at press time, but if Binance's crypto exchange rates are anything to go by, they will be competitive.

Saturation inevitable

Back in the art world, where the global NFT mania was first ignited with the US$69 million sale of a Beeple digital artwork, artists are quickly seeing the market getting saturated.

The artist who calls himself "The Next Most Famous Artist" (@thenextmostfamousartist) is possibly Singapore's bestselling NFT artist. Since March 2021, he has put up for sale over 100 NFT artworks on OpenSea (opensea.io/accounts/TheNextMostFamousArtist).

Most of them feature characters lifted from famous classical paintings and plonked into a Singapore scene. (Think Botticelli's Three Graces dancing in an MRT train and Vermeer's Milkmaid working in a local café.)

About 60 of the artworks have been sold for 0.1 Ether each (approximately S$446). And when the buyer of any of those works resells the work to another buyer, the artist automatically receives a 10 per cent cut of the transaction price.

So far, the artist - whose real name is Hafiiz Karim - has made 6.4 Ether (approximately S$29,000) from direct sales and royalties. "That money I made in March and April 2021 from selling digital NFTs is easily more than what I made in all of 2020 selling physical prints of my art," he says.

But the 29-year-old adds a note of caution. Of the 60 NFT artworks sold, 55 were sold in March - just after the historic sale of Beeple's artwork. In contrast, he sold only five works in April - a vertiginous drop of over 90 per cent. He says: "The NFT market has gotten much more saturated and competitive in just two months. Buyers have limitless choices."

Nonfungible.com reports that the average price of an NFT has dropped almost 70 per cent from a peak of US$4,000 in February to about US$1,400 in April - even if the overall market is booming. Oversupply has forced most NFT sellers to reduce the price of their wares. Hafiiz, seeing demand taper, has brought down the price of some of his works from 0.1 Ether to 0.08 Ether.

When will it go mainstream?

The NFT mania has forced every industry in Singapore dealing with digital wares and collectibles to pay attention to the very brisk developments.

June Yap, Director of Curatorial, Collections, and Programmes at the Singapore Art Museum (SAM), says: "As a museum, we are certainly watching how artists in Singapore and the region adopt and adapt NFT for their creative practices. SAM has not acquired NFT artworks yet, but we may in the future.

"From the perspective of a collecting museum, NFT provides unique identification and thus provenance, which is useful for digital artworks and any artwork which might find a way to utilise its technology. It does, however, mean that the museum would need to become familiar with cryptocurrencies and their markets."

Fittingly, Singapore Art Museum's latest exhibition (housed at National Gallery Singapore) is titled Wikiclicki and showcases works at the intersection of art and technology.

Meanwhile, the new Julius Baer Next Generation Art Prize given out by the Swiss private banking group has focused its attention on digital art only, ditching traditional categories such as painting and sculpture. Some of its shortlisted artists are already selling NFTs.

The world's biggest auction houses - Christie's, Sotheby's and Phillips - are all charging ahead with new NFT sales.

While some observers are calling NFTs the latest "tulip mania" - one that might dissipate and leave some collectors staring ruefully at their overpriced GIFs and JPEGs - many others are convinced that the technology, at least, is here to stay.

Culture Group's Mr Patent says: "Right now, most people don't even have crypto wallets to buy NFTs. But if there's anything I know about the foundation of Culture Group's business, it is that consumers who are driven by passion are driven to act. So if musicians decide to sell tickets and memorabilias as NFTs, their fans will most certainly be getting cryptocurrencies to buy them, as well as other goods in the NFT marketplace.

"I think we're going to see a shift in mainstream behaviour, and I think we're going to see it soon."

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