Was The NFT Mania Fuelled By Collectibles Culture?

Collectibles by definition is an item valued by collectors. As history has shown, people are collecting everything from jars, sunglasses, vinyl to baseball cards, and most recently, lines of code. With digitization in full swing, physical collectible items have converged towards the digital medium. Examples of rare in-game items being collected and traded reiterate collectibles have not lost their value.

The advance of blockchain technology created a new avenue of collectibles to be accessible to the masses. Often referred to as a “Gold Rush”, the growing demand of NFT's indicates what Siu referred to as users moving from the “rental economy towards the property ownership.” Collectibles hold both intrinsic and emotional value for owners, and collectors aim to financially capitalize on their investment and possibly their passion.

A Pre-existing Demand

Reports have argued that NFTs are a bubble; however, with the emergence of blockchain, they've shown their value beyond the asset they represent. NFTs operate similarly to physical collectibles. In the new digital landscape, digital collectibles focalize on a new way of exchanging assets that hold value. Additionally, the ease through which they showcase ownership is paramount as NFTs facilitate additional protection, thus adding value to the existing collectibles market.

As early as 2017, NFTs had entered the spotlight when Cryptokitties demand surged among blockchain investors, eventually clogging the Ethereum network. It was the first instance when the technology surrounding NFTs made an impact. While fears of a current NFT bubble are well-founded, given the astronomical prices, the value of “digital bragging rights” appeals to investors and collectors alike.

Digitization has reconstructed the cultural sector, reshaping how artists can maximize their profit margin. While streaming platforms have granted additional exposure to artists, they've failed to render a significant factor, ownership. NFTs add balance to the creator, seller dynamic by adding a new ever-important actor in the mix, the buyer. As emphasized by Justin Sun, art will drift towards the online medium, creating an additional motivation for collectors to join the NFT craze.

The unicity of a digital or physical product creates a financial incentive for purchases. A recent NRP article cites a rare 1933 baseball card is expected to “shatter all records” during an auction. Physical collectibles remain a sought-after investment after nearly a century, showing that rare assets keep their value. NFTs offer a similar sentiment while making verifiability easier. To that end, collectibles hold value for their authenticity, and blockchain revolutionizes asset verifiability as it stores data in a tamper for the network.

Sociological factors and demand for physical or digital products add inherent value for anyone wanting to own a piece of our digital history regardless of how others perceive it. In the age of data and information, the right of ownership is essential for a digital asset to be turned into financial gains. Similar to how a rare record has emotional value, NFTs in the future will hold a similar bearing to the new generation. 

Physical sporting cards have a historical surge in demand; however, hobbyists are converging towards digital assets as digital sporting reminiscences are being sold for thousands of dollars. The future is digital ownership-based digital assets will have a much more significant role to play as society converges towards a virtual landscape.