In The Aftershock Of The NFT Collapse, Fashion Has A Lot To Discover About Digital Ownership

[Featured image created using RTFKT assets.]

In 2021, at the peak of the NFT boom, some fashion brands were seduced by what looked, from some angles, like a slam-dunk alternative business model and an  infinitely scalable future. Here was a product category that seemed to check every strategic box: no inventory, no supply chain delays, no seasonal markdown cycles, and a lesser looming environmental impact. 

Digital goods, minted on private or public blockchains and traded freely across decentralised (and later, centralised) platforms, were heralded as the antidote to fashion’s oldest operational problems. Infinite margins. Boundless creativity. Cultural capital unbound from physical stockrooms. And, crucially, the chance to translate business models built on top of physical scarcity and FOMO into digital counterparts.

While several major brands embraced that vision, no-one made big strategic bets with anything close to the same fanfare as Nike. In December of that year, it acquired RTFKT, a buzzy crypto-native brand best known for digital sneakers and virtual collectibles, for an undisclosed amount that insiders peg in the hundreds of millions. And Nike didn’t treat RTFKT as a side project: in a now-infamous press release graphic, RTFKT was positioned right next to its iconic Swoosh, Converse and Jordan “jumpman” logos as a major pillar of its future brand architecture. 

The message was clear. Nike wasn’t just participating in Web3; it was leading it. This was further substantiated by the November 2022 launch of the Web3-centric .SWOOSH platform.

Fast forward to 2025, and some big parts of that  future have  crumbled – and in the process of examining why, the wider industry has the chance to learn the right lessons about digital goods and digital ownership, if it’s willing to listen. 

First the catalysing incident for this week: a multinational group of consumers filed a class-action lawsuit against Nike in the US, alleging that NFTs purchased through the brand’s RTFKT business unit were improperly marketed as investment-grade assets without proper disclosures. 

(We should note that the .SWOOSH platform remains operational. After launching an NFT collection in spring of 2023, the website now de-emphasises NFTS and is billed instead  as “Nike’s home for gaming,” acting as a reference point for digital sneakers sold in Fortnite’s new “kicks” category, as well as community “adventures” and a lab concept for physical sneakers. As we’ll see shortly, this pivot should be emblematic of a wider industry shift.)

In the RTFKT case, the plaintiffs claim Nike misrepresented the NFTs’ status, and that the company’s  abrupt wind-down of certain blockchain-linked operations caused financial harm to buyers left holding now-devalued digital goods. At the heart of the lawsuit is a broader claim: that Nike failed to deliver on its implicit and explicit promises around the future value, utility, cultural cachet, and exclusivity of digital goods. .

In a lot of ways, a lawsuit like this one has been a long time coming.  NFT trading volumes have cratered by more than 97% from their 2022 peak. Consumer trust, once the lifeblood of the NFT economy, has all but evaporated. What began as a speculative gold rush has been reduced to a trickle of transactions, mostly among diehard enthusiasts. Meanwhile regulatory scrutiny around digital assets has hardened, with agencies around the world moving to impose stricter compliance frameworks on crypto and NFT markets.

So, dissatisfied-but-still-hopeful communities were always destined to deplete that reservoir of hope and go after creators and platform owners. In Nike’s case, the brand was effectively both of these things, since it not only owned the RTKFT brand and the branding on other digital goods, but also operated at least the frontend framework that consumers and speculators used to acquire those assets. In practice, this means the world’s most recognisable brand was perhaps destined to become a lightning rod for a much wider groundswell of anger from people who saw themselves as early adopters of a novel model of acquiring, holding, and benefitting from the ownership of digital goods.. 

The reputational damage to Nike’s core business is likely to be minimal, when we consider the sheer scale and loyalty its footwear and apparel products have earned, but the fallout could cast a long shadow over the wider industry’s future digital initiatives, eroding confidence in anyone’s ability to innovate credibly in the same space. 

But is that space actually where fashion should be aiming? Or is the fundamental lesson not that digital ownership is an inherently faulty idea, but that the mechanisms of delivery, the platforms for utility, and the link between digital goods and real-world cultural clout are far more important than value speculation?

In that sense, RTFKT’s trajectory offers some hard truths. After being acquired, RTKFT saw anticipated product drops delayed, secondary market values for key NFTs plummeted, and community engagement fragmented. Without steady new incentives to keep holders invested – such as exclusive experiences, physical redemptions, or metaverse activations – the NFTs lost both their cultural cachet and their economic value. As much as it made sense on paper (Nike does very successful business in selling limited quantities of new sneakers, for which the secondary market is buoyant, making it reasonably logical that deriving royalties from a stream of analogous transactions in scarce digital goods would also turn into a reliable revenue stream), scarcity alone, it turned out, wasn’t enough. 

This reality punctures a much larger myth that had taken hold during the NFT boom: that digital goods could offer brands an “evergreen” revenue stream immune to traditional retail risk. As Modern Retail reports, the entire retail sector is bracing for a turbulent summer. Slower consumer spending, margin pressures, and cautious inventories are defining the new normal. Digital goods were, at least in theory, supposed to offer a shelter from this volatility. 

And what brand wouldn’t, right now, want a completely separate, digital-only business unit to hedge against the unpredictability of their physical business? Instead, the Web3-based approach to digital goods  revealed itself to be just as vulnerable, and in most cases, even more fragile than physical ones. 

Against this backdrop, Nike’s leadership transition feels emblematic. John Donahoe, who brought Silicon Valley sensibility to Nikle after leading Ebay and ServiceNow, had championed the company’s aggressive push into digital innovation. His replacement, Elliott Hill, a Nike veteran with over three decades at the brand, signals a return to more traditional priorities. Hill made it clear in internal communications and public remarks that Nike’s new “North Star” would be a refocus on performance gear, core brand storytelling, and revitalised wholesale partnerships. 

Digital innovation remains important – but speculative ventures like NFTs have been de-prioritised in favour of more pragmatic avenues towards reaching new consumers through digital goods, especially in partnership with cultural juggernauts like Epic Games’ Fortnite, which are demonstrating that the platform, the delivery mechanism, and the ability to actually wear your digital sneaks where people can see them matter more than the underlying architecture.

In Fortnite, Nike’s digital offerings are not mere marketing stunts; they became functional, aesthetic extensions of the gaming experience, enriching player identity and participation.The lesson is clear: digital extensions succeed when they offer lasting experiential and aesthetic value – not when they are reduced to scarcity driven speculation that serves no purpose beyond collectability. 

The cautionary tale here isn’t simply that “NFTs failed”. It’s a deeper recognition: many brands fundamentally misunderstood where digital brand value lives, and miscalculated what people actually wanted from digital ownership. 

While The Interline can sympathise with the decision-makers who saw a through-line from sneakerheads, sports memorabilia collectors, trading card games and other well-established cultural touchstones to a new model for fashion, the reality is that there was no 1:1 correlation between these things.

Scarcity enforced by blockchain code was, we now know, never going to be a substitute for emotional connection, cultural participation, or storytelling. Brands imagined that digital ownership alone could inspire loyalty and belonging, and that their slice of the pie would come from either owning a centralised platform where people bought and traded those things, or earning royalties from a decentralised one. 

But meaning, it turns out, isn’t something you can mint, and authenticity, usability, and cultural cachet aren’t things you can manufacture.