When Bitcoin was launched in 2009, no one could have guessed how the story would unfold. There were certainly no indications that this event would mark the beginning of a thriving new industry that would change the way we view money forever. Like all other major innovations before them, digital currencies had a quiet and slow start and were largely ignored by the wide public for the first few years of their existence.
But then something happened and things started to take a turn for the better. Bitcoin began gaining traction and its value increased considerably year after year. Ethereum, the current leader of the altcoin pack, soon followed in its footsteps, and although both the Bitcoin and the Ethereum price suffered major variations over the years due to the market’s volatility and the successive bull and bear runs, the assets continued their appreciation journey unbothered. Traders and investors took note of crypto’s rapid rise to fame and began purchasing digital currencies. Businesses and organizations also took the leap by integrating cryptocurrency payments and services as the number of crypto users kept increasing.
And here we are today, watching crypto take another step towards mainstream acceptance as it’s carving its way into the luxury market. The evolution of the cryptocurrency industry was more of a roller-coaster adventure than a smooth ride, but in the end, the crypto phenomenon managed to take over the world.
How are crypto and the luxury market related?
Crypto may have been the talk of the town for the past few years or so, but at first glance, there isn’t much that could connect this new asset class to the luxury market, except the fact that rich people who can afford to purchase high-end products can also afford the risk that comes with crypto investing. However, the correlation runs a bit deeper than that.
Looking at the numbers, we find out that the luxury market worldwide is expected to reach approximately $1.5 trillion by 2025, and Millennials are the demographic that clearly dominates the market, making up nearly half of it. At the same time, 94% of crypto owners are Millennials or Zoomers. What’s more, Millennials and Zoomers account for nearly 72% of the luxury market purchases. When you put all these statistics side by side and connect the dots, it becomes clear there’s an inextricable connection between crypto and the luxury market.
There’s no denying that high-net-worth individuals have a soft spot for digital currencies. Also, statistics reveal that those who use crypto as a means of payment have a tendency to make bigger purchases and invest in more expensive items. This is the reason why so many luxury brands have become more open to the idea of accepting crypto payments lately.
But it’s not just crypto payments that have entered the realm of luxury goods. Blockchain, the technology that powers digital currencies, has also made its way into the market. It’s a well-known fact that counterfeits represent a longstanding problem for luxury brands, causing them to lose massive amounts of money every year. As a result, an increasing number of companies have started exploring tech solutions to address the issue, and blockchain seems to provide the answer to these concerns.
Prada and Cartier are two brands that have taken the blockchain route to protect their products and ensure consumers of their authenticity by creating the Aura Blockchain Consortium. This is a blockchain-based platform that creates virtual replicas of designer products and allocates a specific code for each of them. That way, clients can rest assured that the products they’re purchasing are original and not a well-made dupe. At the moment, the platform comprises more than 17 million products from 20 different brands.
Luxury items you can purchase with crypto
The first real-world transaction using crypto as a means of exchange happened in May 2010. That’s when Laszlo Hanyecz, a Florida-based programmer, paid 10,000 BTC for two Papa John’s pizzas worth approximately $25 at the time. Back then, Bitcoin’s value was estimated at $41, while today the price for one Bitcoin hovers around the $30,000 mark. So, it’s no wonder people are not using Bitcoin to buy pizza anymore and are leaning towards higher-end products instead.
So, if you’re curious about the luxury items that crypto owners can purchase, here’s a short list for you:
- Space flight tickets – How about paying with crypto for your next travel destination? You can do just that as long as you are flying with Virgin Galactic. Richard Branson, the founder of the Virgin Group which includes Virgin Atlantic and Virgin Galactic travel companies, and a huge crypto enthusiast, announced that his commercial space flight company will also accept Bitcoin as a form of payment. Besides Branson’s futuristic airline, there are also several platforms such as Alternative Airlines that allow travelers to pay with crypto.
- Luxury cars – if you prefer driving to flying, you’ll be happy to know that you can also use your crypto funds to purchase a luxury car; and not just any type of car, but a Lamborghini. Cryptocurrency payments and accepted in select showrooms and dealerships and many crypto users are quite fond of this idea which has led to the popularization of the Wen Lambo term. Advertisement
- Gift cards – you can now use digital currencies to buy gift cards from hundreds of brands. This is applicable to a wide range of companies, not just the ones in the luxury category, but if you’re going to pay for a gift card using crypto, chances are it’s going to be for something that’s more on the high-end, such as branded watches and jewelry pieces.
- Insurance policies – crypto payments have also made it into the insurance space as insurance companies have expanded their payment options to accommodate crypto purchases.
Crypto may be the great equalizer, as some experts have dubbed it, but there’s no denying that its bond with the luxury market and the wealthier demographic is getting droner by the day.