The first NFT watches have been offered to collectors—will they become successful long-term investments or do they miss the mark?
It would seem that NFTs—or non-fungible tokens, verified by blockchain technology—are everywhere. Following record-smashing sales of digital artwork and virtual fashion, the first NFT watch was developed by Swiss cybersecurity company WiseKey in March 2021. The token was presented on the OpenSea NFT marketplace at an auction to raise money for the Bill & Melinda Gates Foundation, and is offered by Jean-Claude Biver, an industry veteran who emerged from retirement to collaborate with WiseKey for the sale.
When Biver was Hublot’s CEO in 2009, he worked together with the cybersecurity company to launch SmartCard, the first digital certification of a luxury watch, and the new partnership has resulted in the NFT, a digital twin of the Hublot Bigger Bang All Black Tourbillon Chronograph Special Piece, one of the most important watches in Biver’s private collection.
But why would anyone pay for a timepiece you can’t strap onto your wrist, you might ask. And what exactly is an NFT watch, anyway? Unlike other digital assets, NFTs have unique identifying codes containing built-in authentication, which serves as proof of ownership. Anyone can view the Hublot Bigger Bang All Black Tourbillon Chronograph Special Piece online for free but not everyone can own the original image.
At the most basic level, NFT watches that exist purely as digitally rendered substitutes for the real thing give bragging rights to collectors. For innovative watchmakers who want to take things further, the NFTs can act as a vehicle to resuscitate hype around ultra-rare collectibles that are otherwise unattainable, create immersive storytelling experiences, serve as wearables in the metaverse, unlock exclusive perks for users or allow them access to events.
These are just a few examples of how tokens can be applied to the watch industry. Anything digital can be traded and sold as an NFT: images, music, videos and even real estate if you’re capitalising on the metaverse. Republic Realm, a virtual real estate development company, spent a record US$4.3 million on a parcel of land in The Sandbox, one of several popular metaverse worlds where, perhaps even more surprisingly, Snoop Dogg is building a community called the Snoopverse. At the end of last year, an unnamed fan paid US$450,000 for a plot next to the digital replica of the rapper’s California mansion, which is currently being built.
Fashion houses have already started to invest in the metaverse. Last year, Nike and Ralph Lauren offered avatar accessories through game creation system Roblox. More recently, watchmaker Louis Moinet partnered with premium e-retailer Exclusible for an NFT inspired by its Space Revolution model that can be worn by characters on gaming platforms. The watchmaker collaborated with 3D digital creator Tafi to create 1,000 limited-edition digital timepieces. Breitling’s chief digital and technology officer Antonio Carriero, however, recommends watchmakers take a different approach to the NFT marketplace. “For Breitling, NFT watches aren’t [simply] fancy pixelated versions of physical timepieces made for the metaverse.”
For Breitling, NFTs can also offer hitherto unavailable security and provenance. NFTs are mostly traded through specialist auction sites on the blockchain Ethereum, a decentralised database that provides proof of transactions and ownership—although last year Sotheby’s became the first major auction house to present an NFT watch when a Ressence Spymaster was sold with a computer-generated video in Hong Kong.
The blockchain provides a digital ledger that documents every time an NFT watch exchanges hands, which provides greater transparency in the secondary market. “This is what’s most important,” says Carriero. Rather than simply replacing a physical timepiece with a digital duplicate, NFTs can also make watch transactions safer. Proof of servicing or authenticity for collectible models can also be added to the NFT’s history, which opens up new opportunities for preowned dealers offering these services.
See more: 7 Ways to Protect Your Trophy NFTs
Justin Reis, CEO of The WatchBox, revealed his e-commerce platform will soon collaborate with Origyn Luxury, the only paperless digital certification technology that formally guarantees the authenticity of luxury items using blockchain, artificial intelligence and machine learning (ML), a verification process that can even be carried out by snapping a photo of a physical object with a phone camera.
“The current system of watch authentication and provenance is dated, relying on expert physical inspection, warranties and either brand-issued papers or a guarantee from a trusted platform,” says Reis. “By linking blockchain technology with advanced computer imaging and artificial intelligence, we will be able to match a watch’s history, provenance and exact specifications with a single picture of the watch, leaving no room for human error or falsification.” The WatchBox’s partnership with Origyn Luxury will go one step further by engaging its NFT community, bringing collectors virtual benefits like exclusive access to brand representatives.
In an attempt to regulate this non-conventional marketplace, none of Breitling’s 380,000 NFTs can be acquired by collectors unless they already own the corresponding physical timepiece. For Carriero, it’s essential that an NFT is tied to a physical watch and that both are owned by the same collector. “If you can’t back up an NFT with a physical product, it won’t retain its value, even though it’s unique.”
Not all watchmakers share Carriero’s concern; in April 2021, Jacob & Co sold a 3D animation of its limited-edition Epic SF24 Tourbillon for a whopping US$100,000. Inspired by the split-flap timetable displays seen at airports, the physical watch’s patented World Time Display comprises 163 individual components, which allows the time to flip between different cities with the press of a button. In place of the city name display on the physical watch, the NFT interpretation displays cryptocurrency names like Bitcoin, Ether and Fantom during a ten-second animation.
The sale confirmed that collectors will compete for the digital rights of an otherwise unattainable model; however, acknowledging that a virtual asset can’t give collectors the same experience as purchasing the physical product, Jacob & Co presented the Epic SF24 Tourbillon with a paper certificate and storage box fitted with a hard drive to store the token. CEO Benjamin Arabov hints that the watchmaker’s next collection merges the benefits on an NFT with a physical watch.
“I think the idea of owning NFT watches is something a lot of collectors will take some getting used to,” he says, perhaps modestly given the Epic SF24 Tourbillon’s success. “Every emerging market is met with a healthy measure of skepticism.”
Arabov compares launching an NFT to a limited-edition collection. “Exclusivity and scarcity are what collectors vie for,” he explains. “Sure, anyone can download a copy of the Epic SF24 Tourbillon NFT the same way anyone can create a knockoff of one of our watches but, to an avid collector, nothing will ever be the same as the real deal.”
Arabov hopes NFT technology will also help target a younger, crypto-wealthy gaming market. “In addition to appealing to our established customer base who want to acquire our physical watches, we’re also trying to expand to a new audience of young investors who choose to grow their money through cryptocurrency.”
Reis agrees: “We [The WatchBox] also anticipate an emerging customer entering the watch community by way of crypto, as many crypto-enthusiasts have bridged the conversation from digital assets to hard assets.”
Despite Reis’s predication, the watch industry remains conservative and many manufacturers continue to avoid the metaverse. This is a mistake, says Jean-Marc Pontroué, CEO of Panerai, which recently launched a limited-edition NFT to accompany the brand’s 50-piece Radiomir Eilean Experience Edition. “I have sons who are 25 and 28 years old, who spend their days and nights telling me I’m old,” Pontroué laughs. “Nothing is better than having kids around you telling you that you have to wake up, and [that] if your thinking is limited to the Swiss watch industry, you are dead. And they are right.”
IWC Schauffhausen has also launched its debut in the metaverse, collaborating with architect Hani Rashid to build the IWC Diamond Hand Club. The digital space features immersive worlds such as the IWC Mojave Desert, IWC Woodland and IWC Lake Tahoe, and only members holding one of the 1,868 tokens released by IWC can access this club.
“Our exclusive metaverse experience will provide a modern and meaningful way to communicate with our clients… by building an inclusive community for members to enjoy and linking the physical world with its virtual counterpart,” says brand CEO Christoph Grainger-Herr.
Ulysse Nardin has also been lured by the promise of technology, having deployed blockchain certification on all its collections. “NFTs will become a common mode of consumption but they require technical configuration that can be intimidating for watchmakers,” says the watchmaker’s global head of digital, Stéphane Carlier.
The gold rush has only just begun, and there are definite benefits to NFTs when coupled with real-life watches. Nevertheless, the question remains: would you spend US$100,000 for a watch that you can’t touch?