Exquisite, expensive, exclusive — these are the words most often used to describe luxury assets. Luxury assets have been an integral part of the human experience since the dawn of civilization, with the earliest gold jewellery traced to the peoples that inhabited the Mediterranean and Middle East around 3,000 BC.
While the production of luxury assets certainly evolved with time, following the development of various production technologies and new materials, the industry itself remained more or less the same for centuries.
On the other hand, the appeal of owning luxury assets has only increased over time, with the rise in purchasing power and global mobility pushing more consumers towards the higher end of the price spectrum. The global middle and upper-middle-class is now able to travel internationally with ease and has enough cash to spend on jewellery, handbags, and watches.
This has led to significant growth in the size of the luxury assets industry, which has surprisingly remained impervious to the most market crashes and financial crises we’ve seen in the past several decades.
Why Do People Want to Own Luxury Assets?
To the more cost-conscious and rational consumer, luxury assets may seem like a waste of both time and money. However, as numerous behavioural psychology studies have shown, a significant chunk of consumers prioritize owning luxury assets.
A perfectly accurate, good quality, durable watch can be purchased for as little as $50, yet millions of people choose to spend tens and even hundreds of thousands of dollars on chronographs that perform exactly the same function. Why?
One of the most obvious answers to this question is status. Owning a luxury watch or a designer handbag is considered to be a status symbol globally, indicating that the person owning it is better off than most.
However, this applies only to a small fraction of the population, as most consumers that own luxury assets do so on a middle-class or upper-middle-class paycheck.
A more realistic explanation behind this phenomenon is that the vast majority of people see luxury assets as investments. They have moved past seeing clothes, handbags, watches, and jewellery as just items in closets, and now consider them as commodities that will either retain their value or have their value increase over time.
This theory is further corroborated with market data — a report from CCP Luxury showed that secondhand apparel, footwear, and accessories represent a market worth between $30 and $40 billion. A market that huge has certainly attracted more consumers, with many Millenials and even GenZers spending most of their savings on luxury assets. A rare piece of designer clothing or a luxury handbag is more easily available than any other investment asset and can promise higher and more instant returns.
How NFT and Blockchain are Changing the Luxury Asset Game
Based on distributed ledgers technology63, digital assets provide a free-for-all financial system that doesn’t require an intermediary to function. It was only a matter of time before the fast-growing and fast-developing luxury asset industry took notice of this and put it to good use.
However, what caused the biggest revolution in the luxury asset industry are non-fungible tokens (NFTs), a relatively new type of token used to represent digital ownership. With its uniqueness and authenticity guaranteed by the blockchain it was issued on, an NFT can be used to tokenize various types of assets and provide immutable and digital proof of ownership.
Plagued by counterfeiting issue and a general lack of transparency and traceability, the luxury industry was quick to adopt NFTs. Not only do NFT has the potential to solve almost all of the pain points in the traditional luxury asset industry, but they also provide it with ways to create innovative new products.
LuxFi is one of the first companies to realize the potential of NFT in bringing more use cases for luxury assets and will launch an innovative platform to support them. The company is quick to embrace the change in mentality among consumers and will offer them solutions to existing issues in the industry.
Aside from providing users with a way to authenticate and digitize their luxury purchases, LuxFi also transforms luxury assets from idle assets into profit-generating financial instruments. Namely, the company enables users to use their luxury asset-backed NFTs as collateral for loans. This has the potential to bring financial freedom to thousands and millions of people who would have otherwise been unable to access loan banking services due to their age, geographical restrictions, or low credit scores.
LuxFi NFT platform will tremendously revolutionize the luxury industry, transforming personal luxury goods from normal consumption items into valuable investment assets.
LuxFi is the world’s first asset-backed NFT marketplace for luxury assets, where people can buy, sell and invest in luxury assets using cryptocurrencies and traditional payment methods. Leveraging on our big data intelligence system and unique algorithm for automated data collecting and data processing, we eliminate counterfeiting while minting an NFT on our multi-chain blockchain network. As we focus on luxury assets that hold value well and have a high reselling value, we also provide an accurate NFT pricing that is backed by real-world data.
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