Brian E. Murphy
7 months ago
People love uniqueness. You can tell that’s so because if there’s only one example of something in the whole world then someone, somewhere will be willing to pay a lot for it, and much more than they would compared to if it had been mass-produced. First editions of books, postage stamps, art, memorabilia from famous names, all of it can fetch high prices.
The thing that these items all have in common is their solidity. You can hold them in your hands (and lock them in your safe) but now, the desire to own something that’s unique has found a way into the digital realm too, and people want to own things that they can’t hold—crypto collectibles.
What are crypto collectibles?
They’re digital assets, and they’re a bit like regular coins in the sense that they’re usually all the same. There’s no difference between one Bitcoin or Monero and the next, but with crypto-collectibles, every one of them is different. No two are alike, which means they appeal to collectors who love to own one-of-a-kind items. Each one gets a visual identity that sets it apart from the rest and some become very desirable.
This might all sound strange when you know that one of the features of digital creations was supposed to be that they made mass-production simple. Anything inside a computer is just lines of code after all, and it can be copied however many times you like. So, how is it possible to make something digital that’s also scarce? The answer is with blockchain technology. The idea that powers Bitcoin makes it easy to ensure that crypto-collectibles are all unique, and not only that, but they can’t be limited by anyone else either.
Digital currency and products have already existed for a while within video games, but game publishers have always been in control. If they decide to shut down their servers then every digital purchase disappears. Not so with crypto though. A crypto-asset can’t be turned off.
Can you make money from digital collectibles?
It is possible to make money if you have highly sought-after collectibles and if you use a platform that has a price escalation feature. These work without consent, so you own an item until somebody pays more for it and buys it off you.
The way it works is, say you pay one ETH for a collectible. Then somebody else wants it and pays two ETH for the privilege. You then get the majority of the profits from that sale and the platform takes a cut too. The next buyer might pay Five ETH, and the one after that seven ETH.
So it is possible to make money, although it can be tricky. If you join a platform right at the start then you have a better chance of buying the rarest collectibles, because there are fewer members and less competition. But how do you know if the platform is going to generate enough interest to push prices up later? You don’t. If only a few others join the platform then your investment could end up being worthless. That’s the gamble.
Keeping them safe
You can store your collectibles in a crypto wallet, and this will usually mean choosing one which can take ERC-721 compliant tokens, which is the most common type.
Why do collectibles need blockchain?
The main benefit of blockchain is that It’s a public ledger, so it helps to establish ownership and fight counterfeiting. It’s much easier to forge a work of physical art than it is to forge a blockchain-based collectible.
ERC-20 compliant tokens are popular, but the fact that they can be divided can cause problems because you could sell a portion of a collectible, which undermines and devalues the whole uniqueness concept. ERC-721 compliant tokens can’t be divided, which makes them more useful for this purpose.
Crypto collectibles and gaming
One way that you might encounter crypto collectibles is through gaming. For example, Ether Quest is a fantasy role-playing game (RPG) with unique fighters to collect, train, and use in battles. Or in Blockchain Cuties you collect and breed cute animals and fantasy creatures that can fight each other, and they get better with more experience. The same impulse behind Fortnite players buying virtual dances for their characters encourages players in these games to invest in crypto collectibles.
MyCryptons is a platform that is not game-based. Instead, it offers virtual collectibles of famous people, and each ‘Crypton’ features a likeness of its namesake. “Gaglines” which are often satirical can be added and shared via social media.
CryptoKitties was a pioneer of this type of collectible, offering unique digital kittens. By the end of 2017, it had achieved $12 million in sales, and one rare kitten achieved the astonishing sale price of $120,000.
It’s hard to know which crypto-collectibles are going to become valuable, so your best bet might be to treat them in the same way as art dealers say you should treat buying paintings. Don’t buy them in the hope that they’ll appreciate in value. Buy them because you like them, and then hope that your good taste is rewarded later by the market.
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Brian E. Murphy