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Earlier this year, Tesla announced that not only were they making a billion-dollar Bitcoin purchase, but they would also be accepting the cryptocurrency as a payment method for their vehicles, adding validity that the cryptocurrency has been needing for years.
Considering the massive boom in the world of crypto, some industries have adopted it fast, while others have been really slow, or not even adopting it at all. This post will look at which luxury brands have jumped onto the crypto train.
Elon Musk and Tesla have sort of set themselves up to be the guinea pigs to test if wide scale acceptance of cryptocurrencies, in exchange for goods, can work. While in theory it should work just fine, obviously there will be skeptics.
As mentioned already, Tesla taking this very, very big step into accepting cryptocurrency as a legitimate form of payment should signal to other companies and brands that crypto is something that they should finally be taking seriously.
Crypto for Communities
While many experts don’t think that crypto’s will become the sole trading asset in the world of luxury brands, many do believe that there is a way to tie crypto’s in with current business, with some brands already taking advantage of it.
Franck Muller, luxury watch makers, have already started selling watches that are only available for purchase by using Bitcoin. Once again, while they haven’t completely shifted their business model like Tesla did, they are taking advantage of the fact that so many people have Bitcoin, and people who may not be able to afford their watches in regular fiat currency, most likely have enough Bitcoin.
There have also been a number of websites that reward shoppers with Bitcoin if you do your shopping through them. Once again, pivoting on the fact that people want more crypto, rewarding customers in crypto is clearly a great idea.
Luxury Brand with Their Own Coins
An interesting change that is happening is the idea of brands and creators making their own tokens that their fans can use to purchase whatever they are selling, get discounts, or be the first in line for pre-orders.
An American musician is already doing this, with fans being able to purchase his EP using his own coins that fans have to buy. This is clearly a direction that big brands can very easily go in the future.
There is nothing ridiculous about the idea of Louis Vuitton, Gucci, Tag Heuer, or any other brand releasing their own coin and customers using that coin to get discounts or purchase items.
Brands can also take advantage of the new NFT trend, creating limited edition products, art, or anything they like really, all digitally. NFT’s use the Ethereum blockchain, and it’s another way for brands to use the crypto world.
Brands also should be aware coins can be used as “air miles” per se, as they can be used within the company to obtain benefits and discounts. This means that companies don’t need their own coin, just allow customers to receive benefits from using cryptos.
While the idea of having their own coins is actually very appealing, it is important to remember that there is still a lot of volatility and price spikes and drops in the crypto world, and people will have to be ok with the idea that there is a chance they can lose their money.
Risks and Rewards
The main risk that brands would pt at the forefront, is how volatile Bitcoin and cryptocurrencies are as a whole. While they have seen serious gains in the past couple of years and months, they have also dropped significantly, something a business wouldn’t be too fond of if they are wanting to make money.
However, more and more people, brands and companies are jumping on board with the idea of accepting crypto’s as a valid form of payment, as well as the idea of creating their own coins for customers to use.
Further rewards would include an increase in spending on the brand. Studies have shown that cryptocurrency buyers have an average order value of $400, compared to the $200 of regular fiat currency buyers. Brands also have to pay fewer fees when trading with cryptos, adding another level of appeal.
At this point, it really is just a matter of time before more and more brands start incorporating cryptocurrencies into their business. It may be a slow process, but the world is moving away from fiat currencies, and to keep up with what consumers are using and investing in, brands have to adapt.
Cryptocurrencies have also quickly gone mainstream, with everyone from big time investors, to someone’s grandparents all having some level of investment. As more and more people move away from fiat currency and the traditional investment methods, once again, businesses need to adapt or miss out.
Either way, you look at it, Tesla is only the start when it comes to mainstream acceptance of cryptocurrencies. It really is only a matter of time until we see a full-scale adoption, and luxury brands could very easily be the ones leading the charge.