Once a typically slow industry to innovate, luxury watchmaking has finally caught onto the plentiful opportunities offered by the digital realm. Indeed, we are already witnessing the trend of several brands using blockchain technology or Web 3.0 in various ways.
LVMH and Richemont have opted to invest in the development of blockchains, Tag Heuer announced it would now accept cryptocurrency on its website, and IWC launched its “IWC Diamond Hands Club” which allows Non-Fungible Token (NFT) holders access to their exclusive community where members can take part in token gated events and other metaverse opportunities.
It seems that the digital revolution has finally arrived. Where once, there was a layer of mystery to the rarefied world of watchmaking, now there are NFTs detailing provenance, insights, and data related to timepieces. And as a collector, I believe there are vast benefits for the consumer.
Firstly, there are inherent benefits for the entire industry to adopt such technologies. Watches are typically high-value goods with a long-life cycle and thus are frequently counterfeited. So, when an NFT is developed alongside the physical watch by the manufacturer, it has tangible real-world benefits such as adding a layer of transparency and legitimacy to the actual product. For instance, when a watch is sold or transferred, the digital item should also be transferred to validate who is the legitimate owner of the physical piece.
In the future, we will see a time where a watch sold without an NFT will have significantly less value than one sold with its digital twin. This provides greater peace of mind when purchasing highly collectable watches from other collectors, auction houses, and second-hand dealers. Having a digital twin would substantially reduce the number of stolen or counterfeited watches that make their way into collectors’ hands.
Additionally, as collectors this would enable us to verify and authenticate our personal collection, thus achieving a higher price if we wish to sell certain pieces in the future.
Digital twins are usually stored in a wallet; this allows you to own, store and transfer the twin to another individual and potentially buy and sell the watch through a marketplace. Not only do digital twins provide substantial clarity over the ownership of a physical watch, but they also enable the owners of the watch to get further insights and updates on the aftersales process of their timepieces. Real-time servicing can be updated onto the Blockchain for everyone to see; and this can be highly beneficial, especially in the case of vintage models by knowing if the watch has been polished or if original parts have been replaced.
The value of vintage watches greatly depends on the condition of the watch and knowing if a watch has its original parts or not. Additionally, knowing the provenance of the item could have dramatic variation in its value. Having this information recorded onto a global and transparent ledger would be the absolute game-changer in the world of vintage. This could refuel a return of the vintage craze and potentially set all-time high results at auction houses.
Moreover, having a digital twin can strengthen the relationship between the brands and their consumers. Brands can see what watches their collectors own and recommend more accurate models. Additionally, they could give them access to exclusive products and events through the NFT.
We are living in a time where many brands are streamlining their supply chain and are fulfilling their sales channels themselves. Up until now, consumers would only have a relationship with their retailers, it’s been almost impossible to have direct communication with the brands themselves. In many cases, retailers have lost their licenses to sell a specific brand, and in this case, your relationship with the brand comes to a dead end.
Moving forward we should be in a position where brands will have knowledge and insights about their collectors, through the Blockchain. They will have the opportunity to put a value on that relationship, as well as the time and effort, and funds spent in collecting their watches.
Clearly, there are many additional benefits and services that would typically take a watch collector a significant amount of time to execute. For instance, the ability to authenticate a timepiece through verified authenticators and then store that information onto the Blockchain. Being able to integrate with a variety of second-hand and re-seller platforms, worldwide insurance quotes in under 30 seconds with blockchain, informing the police of lost and stolen watches, and utilising a watch as bankable assets.
There are countless benefits of a digital twin for the entire industry and collecting community; however, today, we witness many cases where brands have created and sold their watches exclusively as digital NFTs.
No one would have ever thought that the Swiss watch industry, known for creating stunning artworks in the form of physical objects, would ever think of selling a digital version of a watch.
But the question remains: do digital watches provide the same amount of emotion as their physical counterparts that can be worn on your wrist?
Well, the answer is no.
In April 2021, when industry veteran Jean Claude Biver pushed to auction the first-ever NFT on OpenSea, the ‘Sothebys’ of NFTs, it didn’t sell straight away. The NFT was a “digital twin,” a photograph of an early prototype of Hublot’s Big Bang All Black Tourbillon Chronograph that Biver has in his private collection.
Whilst the digital twin of Biver’s actual watch represented a rare opportunity for someone to own something related to the unique timepiece, what was missing from the excitement for collectors was the opportunity to see, touch and feel the actual timepiece itself.
The blockchain and the digital twin, are most probably the first stepping stones a brand is considering when entering the Web 3 space. And technology is moving so quickly that brands are almost playing catch up.
But brands must remember that there is no replacement for the feeling of winding, setting the time, and wearing a mechanical watch. So, when they choose to adopt Web 3.0, it must be an equilibrium where they can embrace the new but also respect the old. Embracing all these new technologies should only be adopted if there is a direct benefit for both the brand and the consumer. We often lose sight of the reason why people buy watches when we’re rushing to keep up with the latest digital trends in a bid to stay ahead of the competition. But a mechanical watch is a thing of beauty, and we should treasure them as such.
This article is part of a special three-part series on what Web 3.0 has in store for the luxury watch industry.