From coins and stamps to baseball cards and Pokemon, collecting and collectibles have been around for hundreds (if not thousands) of years. There’s just something that we, as human beings, enjoy about collecting unique and rare items that pique our interest. And with the advent of internet technology and the digital age, previously inconceivable ways of collecting all kinds of items, from virtual pets to artwork, are now becoming a reality.
Enter Crypto Collectibles. As one of the exciting, innovative trends emerging from the blockchain sector, crypto collectibles are giving birth to a whole new way of collecting, storing, and exchanging rare, digital assets. Players of certain video games, for example, might be rewarded with collectible, digital trading cards for beating a level or simply playing the game on a regular basis. And through the blockchain, these collectibles can be stored, tracked, managed, and exchanged.
In fact, crypto collectibles are already being used in this manner, with mobile games developer EverDreamSoft “blockchainizing” collectible elements of their game Spells of Genesis. You also might be surprised to know that one of the top downloaded Ethereum-based apps of 2017 was a crypto collectibles app called Crypto Kitties.
Some critics point of that crypto collectibles might actually be vulnerable to duplication, and are skeptical in general of digital collectibles having any intrinsic real world value. But the reality is that the potential applications of crypto collectible technology go far beyond digital kittens (cute as they may be), making it much more than a passing craze.
1. Securing Digital Ownership
Digital collectibles have been gaining traction for longer than most people realize, only recently hitting the mainstream with the now-infamous “Rare Pepe” craze of 2016. Fast forward to 2018, crypto collectibles have gained a substantial amount of traction. One of the biggest reasons that crypto collectibles like Crypto Kitties have reached such popularity is that, unlike previous forms of digital assets, the blockchain is able to secure unique, provable ownership for collectors.
Digital kittens aside, blockchain has enabled assets to provide collectors with the intrinsic value of having a visual representation of the item that’s all their own, as well as extrinsic value such as rare traits or a high market value. Crypto collectibles also have more utility than previous iterations of digital collectibles, such as the ability to be used in a video game or even “breeding” various Crypto Kitties or other types of pets. Whatever the purpose, value, or utility of a given crypto collectible, the fact that the blockchain is able to secure ownership for the individual is one of the main reasons that they’ve become so popular.
2. Protecting Intellectual Property
From paintings to stamps, one of the biggest issues that collectors generally face is the threat of fraud or forgery. This is also a hurdle for the creator or manufacturer, as they constantly need to find ways to make sure the product they put out is able to be authenticated and differentiated from forgeries. The blockchain and crypto collectibles is a powerful weapon against unauthorized copies of almost any type of online intellectual property, making its application potentially far broader than things like trading cards and virtual pets.
The digital art market, for example, is just one emerging area that’s leveraging blockchain to protect intellectual property. For artists, having their work linked to the blockchain gives them control over the level of scarcity they’d like certain pieces of artwork to have. And for buyers, they’re secure in knowing that they’re receiving an authentic, limited edition piece of digital artwork. This is achieved by tying each authentic “copy” of the work of art back to a specific, unique block that shows proof of ownership.
3. Tracking Digital Assets
Related to fraud and forgery is the issue of tracking the history of collectibles. Buyers optimally would like to know where the seller acquired the item, how long they’ve had it, what they paid, and who they bought it from. Because of the transparency of the blockchain ledger utilized in the crypto collectibles market, people can follow the history and path of any digital asset that’s bought or sold. No matter how many times a piece of art is bought or sold, all transactions are permanent, unalterable, and documented on the blockchain.
This ability to track digital assets creates a system of trust, otherwise known as provenance. Over time, the ability to track the history of where a digital asset has been creates a trusted ecosystem of buyers and sellers, which also facilitates the velocity of transactions. When an art buyer can quickly and easily track and trace the history of their potential purchase, the blockchain has already taken a lot of the due diligence legwork out of the process. This makes asset tracking one of the critical features of crypto collectibles that has broader potential applications across industries.
4. Creating Real World Value
One of the biggest, longest-standing critiques of digital assets and collectibles is that they simply don’t have any “real world” value. Sure, you might have a rare, one in a million Crypto Kittie that you may have purchased with Etheruem, but there’s just no monetary value to it or anything that you can really “do” with it. That’s all changing with the emergence of crypto collectibles on the blockchain. Since items can now be traced, authenticated, and verified as truly unique, real-world value is now becoming imbued into many digital collectibles and assets.
One of the most rare Crypto Kitties, for instance, recently sold for upwards of $110,00 worth of Ethereum on their crypto collectible exchange. Beyond that, blockchain enabled collectibles are also providing artists with new (and better) ways to leverage their work to create real-world monetization from digital pieces. Traditionally, an artist only cashes in on the initial sale of a painting as a “one shot” deal. But with many crypto enabled art exchanges, artists are also compensated a certain percentage each time it’s transacted down the road. In the case of artwork, the blockchain actually enables more monetary value creation than is possible in the physical world.
If this is the first time you’ve heard or read about crypto collectibles, by now you should realize that the underlying technology is about more than buying online pets or trading magic potions in a video game. Blockchain applications that are emerging in the digital collectibles space have the potential to validate ownership of online assets, prevent fraud and forgery, develop trusted networks, and even create monetary value. Authors could potentially sell “signed” limited editions of their books at a higher price.
There’s no telling where applications of crypto collectible technology will arise in the near future. But one thing’s for sure, crypto collectibles are more than just a passing fad or craze for virtual cats and dogs. The underlying blockchain has the ability to transform how we fundamentally view the relationship between digital and real-world value creation.