Tell me who you associate with, and I’ll tell you who you are. -Johann Wolfgang von Goethe
The luxury watch industry depends a lot on credibility. Arguably, the belief in superior quality is the main reason why people are willing to give four, five or six figure sums of money to buy a watch. If the watch-buying public begins to doubt a brand’s quality claims due to a loss of credibility, the brand’s future is in serious question.
For these reasons, I have watched with some trepidation as various watch brands have started entering the cryptocurrency/blockchain/non-fungible token (NFT) world. This space is highly specialized in skills not usually associated with traditional watchmaking. A round isn’t very useful when trying to evaluate a particular public-key encryption standard, for example (and vice versa). For this reason, the entry of watchmaking into the crypto space almost always involves partnering with another person or organization already active in that space.
And this is where the industry is at risk.
Loyalty of cryptocurrency and NFT community
There are rampant frauds and intrigues in the cryptocurrency and NFT community. In a recent interview with Bloomberg, a cryptocurrency entrepreneur with an estimated net worth of $24 billion explained an emerging cryptocurrency fad called “agricultural yield.” The interviewer concluded that it was nothing more than a Ponzi scheme.
We shouldn’t equate financial success with creating value. After all, convicted Ponzi schemer Bernie Madoff had an estimated net worth of $17 billion at one point (he also had quite a decent watch collection that was sold by US Marshalls in 2009).
Software engineer Molly White runs web3isgoinggreat.com, a web page that compiles all the unseemly activities taking place in the world of cryptocurrency. The motto of the page is: “Web3 is doing great and definitely not some huge scam dumping lighter fluid on our already burning planet.” To clarify: web3 is a new buzzword for the cryptocurrency field and its adjacent business.
White’s motto also emphasizes that web3 consumes a lot of energy, a by-product that may aggravate climate change. By the way, any watch brand touting its environmental initiatives while simultaneously stepping into web3 territory is arguably hypocritical.
White’s webpage includes a running counter of funds reported lost due to fraudulent activity on the web3. To date, it stands at $9.5 billion. It’s a lot of scam. In May 2021, the United States Federal Trade Commission reported a tenfold increase in losses from cryptocurrency investment scams. The list continues.
The risk for a watch brand is that it attacks a crypto-currency “expert”, that there is a scam scandal, that the reputation of the brand is irrevocably tarnished, that the collectors doubt the brand’s claims about product quality, and that’s the end of it for this brand. While it might seem like a remote possibility, there’s already an episode that illustrates a good chunk of this pending disaster.
About a year ago, Jacob & Co. announced that it would sell the world’s first NFT of a luxury watch: the SF24 Tourbillon “unique piece.” The plan was to auction off the NFT watch on ArtGrails, a self-proclaimed “Standalone Blue Chip NFT Platform”. After the supposed closing of the auction, the the reported result was that the NFT sold for $100,000.
The problem is that the SF24 Tourbillon digital asset has never even been minted on the blockchain, or at least I can’t find it. In November 2021, the Twitter user @teeprofit describes the many failures of ArtGrails, observing, “@Jacobandco X @argrails [sic] drop, which they failed to sell to anyone but themselves lol didn’t even hit any blockchain proof. I posted these irregularities on my Instagram stories and asked if anyone could find the SF24 Tourbillon on the blockchain and DM me its address.
I was greeted by silence. I invite readers to consult 676 ArtGrails items who have actually been hitting the blockchain to see if they can find the SF24 Tourbillon.
It’s one thing to wonder if digital assets are really worth money. If the digital asset itself doesn’t even exist on the blockchain, there’s absolutely no reasonable basis to say it’s worth anything, let alone $100,000.
Indeed, when ArtGrails founder Avery Andon was asked about these events, he replied on Twitter, “These were made in the beginning and never promised any use outside of art.” Although the definition of an NFT is in some ways shrouded in mystery, it is commonly accepted that it generally involves the minting of a token on a blockchain. Unless, apparently, the seller promises no utility, whatever that means.
Ultimately, watch brands must consider whether the risk that comes with the web3 space, as well as the environmental damage, is worth any possible reward. Watch collectors should also consider whether a watch brand’s decision to participate in web3 indicates a level of risk-taking they can live with.
While complicated in-house movements see wider adoption, buying a watch involves a collector relying on the long-term viability of a manufacturer. If a risk-taking manufacturer disappears, it may be prohibitively expensive, if not impossible, to service a particular timepiece. For now, it might be reasonable to conclude that the best brand is the one that decides that NFT means “not for this” manufacturer.
Brendan M. Cunningham, PhD, is professor of economics at Eastern Connecticut State University and founder of www.horolonomics.com. He has a forthcoming book on the history of Rolex; you can find out more by visiting www.sellingthecrown.com and sign up to receive email updates on the project.
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NFTs, Cryptocurrency, Blockchain And Web3 Are Harmful To The Environment: The New Trend For Watches Is Hypocritical With Self-Proclaimed “Green” Low-Carbon Claims
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