Three images of the LUKSO app showing items in a user’s digital closet.
There’s nothing sexy about blockchain, the record-keeping technology that supports Bitcoin, among other networks. Even the name sounds clunky, utilitarian. But women are disrupting blockchain and creating use cases across creative industries, including fashion, digital fashion and lifestyle.
Marjorie Hernandez de Vogelsteller, who cofounded German startup LUKSO Blockchain with her husband Fabian Vogelsteller, recognized the technology’s potential for designers and brands. Fashion is obsessed with everything new, and requires interactions between users who don’t always trust one another. Besides, the sector has already been upended by everything virtual, from runways and events to prototypes and showrooms.
Counterfeiting costs the fashion industry more than $450 billion per year, according to some estimates. With blockchain, a product’s lifespan can be followed from creation through distribution, making authenticity completely verifiable. Digital identities or certificates, interoperable across the network, enable continuous record-keeping.
With cultural currencies providing access, a particular status or token with real measurable and transferable value across the network, items such as luxury handbags, for example, could have their own digital identities listing information about materials and ownership, and authenticating and establishing the value of the item.
“As a shared data base with transparency, blockchain’s efficiency and trustworthiness are paramount in today’s world.” Hernandez de Volgensteller said. “The idea of digital certificates and cultural currencies are essential in today’s environment. Consumption is moving away from brick and mortar. Blockchain supports new forms of responsible consumption and production. It’s absolutely the way of the future.”
Physical garments, which are now produced in full factory runs or on a made-to-order or pre-order basis, could remain purely virtual with blockchain, entering an online resale market for digital products or returning into virtual circulation as part of a different collection at a later date.
“A new wave of economies is being created around blockchain, catering to consumers who don’t just want to buy products,” Hernandez de Vongelsteller said. “They want to buy immersive experiences. Instead of simply owning products, they want their purchases to give them access to communities.”
“With its decentralized and transparent ecosystem, LUKSO makes it possible to create digital lives for real-life products,” said Andrea A. Abrams, an international retail and brand advisor, founder of Abrams Global, cofounder of Interconnected LLC, and LUKSO board advisor. “The digital twin of a physical fashion item uncovers and preserves its unique history and value. This includes knowledge about its producers, authenticity, provenance, previous owners and/or order in a batch of production.
“As brands are thinking of creating content to keep people engaged, think of how much more exciting it would be to have people discover a virtual collection, for example,” Abrams added. “That would allow the brand to test the product penetration without manufacturing. If customers love the products they’re experiencing in the virtual world, the brands will then know how much of it to manufacture.”
An architect, who’s worked with globally-renowned artists and established and led EY’s innovation lab in Berlin, Hernandez de Vogelsteller and her husband have impressive blockchain pedigrees. She and Vogelsteller were part of the team that created Ethereum, and Fabian Vogelsteller is the author of Ethereum Wallet, and ERC20 and ERC 725 tokens.
“I got inspired and started talking to all my friends,” Hernandez de Vogelsteller said. “I said, ‘Why don’t we implement this for the fashion industry. It has similar issues to Big Pharma, including transparency, authenticity, counterfeit and licensing, etc. Within a couple of months, we had a startup. I had a couple of people on my advisory board, and everyone understood the need. We see it more around consumer goods. We want to take care of everything you can finance. LUKSO is an infrastructure and provides a series of standards and a couple of solutions for digital and consumer goods.
Marjorie de Vogelsteller’s digital avatar.
“One of the first people to join our advisory board was the president of Chanel Europe,” Hernandez de Vogelsteller said of Dr. Bernt Hauptkorn. “He was fascinated by this very smart, very visionary technology. He said ‘[LUKSO] might be a bit too early for Chanel, but I’m 100 percent on board and want to help you in any way I can.’
“When it comes to adoption, at this point there’s a lot of assumptions,” Hernandez de Vogelsteller said. “The digital goods and digtial fashion industry will be a trillion dollar market. We draw analogies from the gaming world and the blockchain world. Someone bought a picture of a rose for $1 million. We believe this is going to start migrating to other sectors of life.”
A digital style from The Fabricant’s DEEP collection.
LUKSO is working on an improved version of its universal profile website with new features. The fully owned, pseudonymous profiles created on the network are universal logins across applications built on LUKSO. Users have control over their digital profiles and the attached reputations they’ve accrued over time. “The universal profile is a gateway for designers and fashion houses to register on the blockchain,” Hernandez de Vogelsteller said. “It will be the first time ordinary users can talk to the blockchain. Before, it was highly technical and cumbersome.”
“It’s hard to parse the economic value of digital fashion,” Hernandez de Vongelsteller said. “When we listen to consumers, the number one reason for interacting with a physical garment is they want to decide whether they want to buy it. We’re seeing disparate behaviors among fashion consumers. Those in digital fashion hubs such as Amsterdam, Ukraine, Korea, China and Japan, have a propensity to buy virtual goods. The beauty of a blockchain business is that it’s not limited by any geography. We are by default, absolutely global. ”
“In January, LUKSO will launch a mobile app. “It will be a digital wardrobe, like your vault, where you’ll collect digital assets. You’ll be able to collect, transfer, buy, and re-sale digital goods, and our users will be able to wear these assets in real-time.”
An example of a LUKSO digital certificate for a luxury handbag.
The Dematerialized, a digital store billed as the web’s first 3.0 marketplace for digital assets will bow in December for a four-week engagement, created by Hernandez de Vongelsteller and Karinna Nobbs, a futurist and educator. The two women met at last summer at a fashion sustainability conference when Nobbs was developing Hot:Second, a three-day digital fashion pop-up with unique proposition.
“We asked consumers to exchange physical garments they no longer wanted for the ability to try on four digital garments in a magic mirror type of experience,” Nobbs said. “It was really successful. The notion of intellectual property and fashion is a new area. Authentication is will be what make digital fashion go from niche to mainstream.”
Nobbs worked with innovation studio Holition and 3D artist Emily Switzer to allow users to imersively experience digital fashion garments from pioneering brands such as The Fabricant, Carlings and RÆBURN.
Hernandez de Vogelsteller and Nobbs said The Dematerialized will bridge the gap between the physical and digital worlds, challenging the notion of clothing ownership, and exploring a potentially more sustainable and conscious cycle of production and consumption, while introducing as many people as possible to digital fashion garments for the first time.
“A lot of brands are at different levels in their digital advancement,” Hernandez de Vogelsteller said. “Some are looking for us to bring together this different skill set, while others may already have people within their teams with digital expertise. There’s going be quite a lot of hand holding.
“We’ll go from fast fashion to couture, and basically test the market and test different price mechanisms,” Hernandez de Vogelsteller said of The Dematerialized. “One formula is that if a product costs ‘X’ in the real world, then a digital product costs one percent of that. There’s definitely a way of dropping a couple of digital products and seeing the supply and demand. Or, you can simply pre-order products. We’ll get a lot of data out of the experiment.”
Debra Langley, a venture partner at Lyra Ventures, a Singapore-based global fund, which focuses on fashion companies that are reinventing the industry, and an advisor to The Dematerialized, said there’s a commercial imperative for brands to use LUKSO.
“It protects the value of the creative output, enables designers to correctly monetize their products and provides insight into the ownership, geolocations, value and product life,” Langley said. “The not so great alternative, which is what we have now, is losing sight of the product after it’s sold at retail and having no idea about its lifecycle, as well as lost revenue and [negative] brand impact from fake products.”