Tokenization transforms physical luxury assets (watches, artworks, real estate) into digital tokens on a blockchain. This allows investors to acquire fractional shares of these assets, making the market accessible beyond wealthy elites. For example, a €500,000 watch can be divided into 10,000 tokens worth €50 each.
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Key points to remember:
- Greater accessibility: Invest in luxury assets starting from €100.
- Transparency: Blockchain ensures traceability and asset history.
- Advantages for brands and owners: Generate liquidity without fully selling the asset.
- Concrete examples:
- Dolce & Gabbana generated $5.65M through NFTs.
- St. Regis Aspen Resort raised $18M in 2018 through tokenization.
Rapid growth:
- In 2024, the value of tokenized assets exceeded $2.9 trillion.
- The tokenized luxury goods market could reach $13.53 billion by 2030, with an annual growth rate of 24.09%.
Tokenization is redefining investment in luxury assets, combining accessibility and security through blockchain technology. Discover how this technology is transforming luxury industries and its legal, tax, and technological implications.
Blockchain Technology in Luxury Asset Tokenization
How blockchain enables tokenization
Blockchain operates as a decentralized ledger that records all transactions securely and transparently. Each block includes a hash of the previous block and a timestamp, making the data immutable: once information about a luxury asset is added, it cannot be altered or falsified.
Smart contracts play a key role by automating processes such as ownership transfers, royalty payments, or regulatory compliance. This reduces reliance on intermediaries and limits human error. For example, when a token is resold, the contract can automatically distribute a percentage of the amount to the original artist or brand.
Digital Product Passports (DPP) provide a complete digital identity for each asset, including manufacturing data, sustainability certifications, and ownership history. Dior used this technology for its B33 sneakers, equipped with a cryptographic chip linked to an ERC-721 token on Ethereum. This token acts as a certificate of authenticity and provides details about the product’s manufacturing process. This leads to the distinction between fungible and non-fungible tokens.
Fungible tokens vs. non-fungible tokens (NFTs)
Fungible tokens, like banknotes, are identical and interchangeable. Each unit has the same value. In the luxury sector, they can represent shares of divisible assets. For example, CurioInvest and MERJ Exchange tokenized a Ferrari F12TDF (valued at over $1 million) by issuing fungible tokens worth $1 each, allowing multiple investors to benefit from the vehicle’s appreciation.
Non-fungible tokens (NFTs), on the other hand, are unique and non-interchangeable. Each NFT has a distinct identifier and specific metadata, acting as a digital passport for a particular item. Louis Vuitton launched the “VIA Treasure Trunks” in June 2023, Soul-Bound tokens sold for around €39,000 each. These tokens provide access to exclusive limited-edition physical products, such as the orange monogram “Speedy 40” bag released in July 2023.
| Characteristic | Fungible tokens | Non-fungible tokens (NFTs) |
|---|---|---|
| Asset type | Divisible assets (e.g., real estate) | Unique items (e.g., watches) |
| Interchangeability | Identical and interchangeable | Unique and non-interchangeable |
| Luxury use cases | Fractional ownership | Digital product passports |
| Technical standard | Often ERC-20 | Often ERC-721 or ERC-1155 |
Applications in the luxury industries
Blockchain provides strong traceability and authentication for luxury goods. In watchmaking, Breitling collaborates with the platform Arianee to provide digital passports for its watches. These passports allow customers to verify authenticity, access ownership history, and unlock services through a mobile application.
De Beers developed “Tracr”, a blockchain platform that guarantees the origin and ethical sourcing of diamonds. This immutable system ensures full transparency, tracking diamonds from the mine to the consumer.
The Aura Blockchain Consortium, founded by LVMH, Prada, and Richemont, aims to establish a global blockchain standard for luxury goods. By 2024, it included 40 premium brands, including Mercedes-Benz and Dior, and had registered more than 40 million products to guarantee authenticity and traceability.
Meanwhile, Vacheron Constantin also uses Arianee for its high-end watches, allowing owners to prove ownership, report loss or theft, and transfer the certificate during resale.
