A Michigan-based online marketplace is selling sneaker NFTs. What does it mean?

DETROIT — A Detroit-based online marketplace allows customers to buy and sell sneakers without ever owning the actual shoe.

Last week, StockX, a multi-billion dollar sneaker and streetwear resale company founded by Josh Luber and Quicken Loans founder Dan Gilbert, began selling NFTs tied to rare sneakers.

Here’s how it works:

NFTs, or non-fungible tokens, are unique digital collectibles like photos, videos, music, or art.

Buying an NFT is much like buying an original painting that has a certificate of authenticity. The exchange on a “blockchain”, which acts as a digital fingerprint of transactions, provides the authenticity of NFTs.

“It uses the uniqueness of the blockchain to create rare digital assets or commodities,” said Matthew Roling, professor of finance at Wayne State University.

Related: A temporary mural will be marketed as NFT at a building demonstration near Michigan Stadium

Everyone from artists to celebrities to the NBA has gotten on the NFT train.

Last year, renowned art seller Christie’s Auction House sold $150 million in NFTs, including a digital artwork for $69 million. And a popular Bored Ape Yacht Club collection sells monkey avatars for hundreds of thousands of dollars, according to CNET.

“They’re very controversial because if someone buys an NFT for $400,000, there’s literally nothing stopping you from right-clicking on it and downloading the image,” Roling said. “I don’t think these reviews are wrong, but it’s interesting to see blockchain being used for something new.”

In the case of StockX, NFTs act as proof of ownership and eliminate the middleman in sneaker trading.

Roling says it’s a smart move by StockX that enhances their existing products.

Typically, sellers ship products to StockX for authentication before they are sent to the buyer. For people who trade sneakers, this can slow down the process of buying and reselling.

“By bridging the physical and digital worlds, we are able to provide a more efficient shopping experience anchored by reduced costs and storage capacities – a buyer no longer has to wait days before they can resell a product, and they does not have to pay the fees associated with multiple shipping steps and physical authentication,” StockX CEO Scott Cutler wrote in a statement.

With StockX’s NFT service, users can purchase, for example, an Air Jordan 4 Retro White Oreo NFT for $935. After purchasing the NFT, the buyer also owns the actual Air Jordan sneakers which are stored in a temperature-controlled StockX facility. The sneakers can either stay in the vault, be shipped to the customer, or be sold to a new owner.

“It’s pretty smart,” Roling said. “You are using (NFT) to simulate an analog product governed by the laws of logistics and freight.”

StockX currently offers nine pairs of sneakers that can be purchased as NFTs, ranging from $858 to $42,069. The company plans to expand its NFT offerings, personal wallet withdrawals, and cryptocurrency payments.

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