So you’re telling me that things we all used to collect like Pokemon cards and Beanie Babies are now on the blockchain?
To keep it simple: kinda, yeah.
For as long as humans have been on this earth, people have found something to collect and put their money into. Whether that is paintings, sculptures, ancient currencies, or now focusing on “crypto-collectibles”. In theory, these collectibles are just like any other collectible, as they’re an asset that value is put on to. But the obvious difference is that crypto-collectibles are not only digital assets, but they are intertwined on the Ethereum Blockchain.
There are multiple marketplaces to buy and sell crypto collectibles
Decentraland, who is a main player in the crypto gaming world, describe crypto-collectibles like this:
“A crypto-collectibles is a cryptographically unique, non-fungible digital asset. Unlike cryptocurrencies, which require all tokens to be identical, each crypto-collectible token is unique or limited in quantity.”
“Typically, crypto-collectibles are visualized as real-life objects such as pets or avatars. Each token has variations in specific attributes and there are limits to the number of tokens that can be generated.”
While this may seem a bit different, but it’s not too hard to understand when there are paintings selling for $450m, or egg-shaped sculptures selling for $57m. This leaves loads of room in the market for the generation who grew up collecting playing cards, stuffed animals, and even digital assets (hello Neopets!).
The reason people are looking to spend thousands of dollars on these crypto collectibles is answered by the term, “digitally scare”. It’s the same as any physical collectible item such as a painting, they are valuable because they are unique. Which is common for physical items, but have become new ideas for digital items as they are basically made up of software code.
You can see the high demand for collectible items if you take a quick look at Ebay’s collectible category.
What makes digital scarcity such a unique idea is that digital items or digital assets throughout its rather short history have always been abundant in nature. Meaning that once you have one digital product (for example a spreadsheet), you can copy and paste this product as much as your heart desires. However, with crypto collectibles, this isn’t possible as each digital asset is unique.
This whole idea goes back to the beginning of Bitcoin, and the idea that there needs to be a fixed supply of currency which is resistant to change in order to help regulate the economy and keep it stable.
At the end of the day all you really need to know is that what makes crypto-collectibles unique is that there is scarcity because there are only a certain amount of each asset, and fungibility, which means that they are essentially interchangeable (for example an ounce of silver exchanged for a different ounce of silver because they have the same value because of the fixed amount of silver).
There are millions of games online that use in-game currencies such as Runescape using gold pieces to trade items with in-game players, or Fortnite using V Bucks to purchase skins and emojis for your character. But what these have in common is that at the end of the day, these currencies are controlled by the company, and they can change or alter them whenever they please.
What separates non-fungible tokens (NFTs, or a fancy way of talking about crypto-collectibles) from these other game currencies is that they are stores within the blockchain and are not at the will of the company to alter.
So now that you have a brief understanding of the background of crypto-collectibles or non-fungible tokens, we can jump into the fun stuff. Which is: How does this apply to you?
This applies to you as a consumer because this introduces the new wave of highly profitable digital assets that are cryptocurrency collectibles!
There were a few different crypto gaming projects that were in the crypto gaming 1.0 stage that got the ball rolling but never quite had everything put together. But the first project to really stand out and make headlines was the CryptoKitties Project.
The most expensive CryptoKitties have sold for as much as $114,000
CryptoKitties launched on November 28th, 2017 where it captured the interest and imagination of thousands of people while also selling millions of dollars of digital assets (in this case, your own digital cat).
Users quickly bought their own digital cat, while certain desirable cats becoming valued at hundreds of thousands of dollars. Because there was such a high demand for these digital kittens soon there were different auction websites such as Kitty Sales to help purchase the cat of your dreams.
Although some complain that the project is useless because the cats don’t do a whole lot… This project was definitely the first project to really capture the market and pave a new path for non-currency uses on the blockchain.
The short answer is that CryptoKitties are cute!
But in all seriousness, a single CryptoKitties is unique in many different ways compared to a different CryptoKitties. Each CryptoKitties token is made unique because of these different properties such as color, breed, age, or even what kind of teeth your cat have. These properties made each CryptoKitty different from another, so they can’t be evenly exchanged for different tokens like cryptocurrencies such as Ether or Bitcoin can be.
Along with the different properties, CryptoKitties are indivisible and can’t be split into separate pieces like cryptocurrencies can. It’s possible to divide 1 Bitcoin into thousands of different pieces, but the same can’t be done with CryptoKitties.
Since the early success of CryptoKitties, there have been thousands of different projects who attempted to jump on the crypto-collectibles trend. Some projects, such as Decentraland, have very bright futures, however, others have just been an attempt to make a quick buck.
Decentraland describes their project as “A virtual reality platform powered by the Ethereum blockchain. Users can create, experience, and monetize content and applications. Decentrland is the first virtual platform owned by its users. Grab a VR headset or use your web browser and become completely immersed in a 3D, interactive world.”
A replica Decentraland world from their promo video.
There are a few other projects that offer virtual reality universes, think like The Sims, however, what separates Decentraland from other projects is that it is a non-fungible token. So the company can’t completely change everything whenever they want to because the complete project is hosted on the Ethereum Blockchain.
Decentraland has created a complete virtual reality universe that instead of being owned by the Decentraland company, is actually owned by the users.
Since both of these topics are still relatively new to the world, there are only a few places where you can learn more about it. In my opinion, the best way to learn about crypto collectibles is to purchase one of your own! I would highly recommend checking out CryptoKitties or Decentraland as your first crypto collectible.If you want to learn more about crypto gaming and collectibles I would also check out different subreddits such as r/DigitalCollectibles or r/CryptoKitties or r/Decentraland
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