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New directions for fashion with blockchain-based financial products

Cryptocurrency may be ‘in fashion’, it’s also appealing to many in the fashion industry too in the form of DeFi services.

London Fashion Week. — File photo: © Tim Sandle
London Fashion Week. — File photo: © Tim Sandle

One part of the blockchain ecosystem that has become popular in the past year is the decentralized finance (DeFi) sector, as a subset within FinTech. DeFi is a collective term for financial products and services that are accessible to anyone who can access a platform via an Internet connection and it has a number of clients from within the fashion industry.

The reason for the growing popularity of DeFi is partly due to the range of financial products and services, ones that match the offerings of traditional finance, and due to the alternative approaches to privacy, flexibility, and costs, which will appeal to certain users. Transactions are carried out using a smart contract.

The rate of growth of DeFi has led some market analyst to predict that mass adoption is not a matter of if, so much as it is when. The rising popularity is appealing to niche industry sectors like fashion, as well as beginning to attract interest from governments and financial regulators.

One platform that has featured in the news, for its fashion-centric dealings, during quarter 4 of 2021 is Nimbus, which is a decentralized autonomous organization ecosystem of dApps and which is moving towards becoming a decentralized bank for its users.

Why has is there an increased take-up of this digital finance scheme by the fashion industry? Fashion may not be an obvious go-to area when it comes to cryptocurrency, but, according to Forbes, many start-up fashion companies are choosing to use cryptocurrencies in order to do business. The Retail Gazette reports that many high-end fashion brands are pushing forward with online models and hey are keen to enable purchases to be made by consumers using cryptocurrency in order to broaden their appeal to many within the GenZ demographic.

In addition, some of the fashion companies performing profitably are using any excessive profit to provide direct loans to other DeFi market participants within the art and design space. This is provided through an app that provides different lending and borrowing options based on risk-adjusted criteria and enables direct users matching per location.

A driver for this is the ease of swapping from one token to another to bring more liquidity to a company coupled with the ability to use different products and services at the same time without needing to use any centralized financial entities.  

Aside from the company-to-company lending model, DeFi has the potential to confer advantages at the everyday level. This includes the ability to eliminate “unbankedness” among the global population, offering services to those who cannot access or who are refused traditional bank accounts.

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, business, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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