Collectibles: how blockchain is changing this $370 billion market

Over $30 millions have been spent on crypto collectibles, such as CyrptoKitties, and this market is projected to keep growing. Blockchain technology has created new opportunities for collectors and its possibilities go far beyond non-fungible tokens. For instance, it can protect owners of real-life collectibles from theft and fraud or provide us with a safer global collectibles marketplace.

World of crypto collectibles
Collecting rare items in popular online games isn’t a new thing, but blockchain-powered apps have taken this to the next level. If you were to buy unique artifacts in Diablo II or Warcraft, your items would be stored on the game developer servers. This means they are not fully owned by the player, but still belong to the company that created the game. If the servers go down or the player’s account is blocked for whatever reasons, the collector may lose all his belongings. In the decentralized world, items are fully owned by the player and stored in his personal digital coin wallet. This concept was first popularised by the CryptoKitties DApp.

Released at the end of 2017, it has quickly become a sensation in the crypto world and beyond. CryptoKitties look like virtual cards, very similar to Pokemon cards many millennials used to collect as the kids. Each kitty card is a unique visual representation of a non-fungible token that carries information about the size, color, eye shape and other specifications of the pictured animal. After a successful launch of the game, a lot of competitors have evolved. Currently, there are over 50 other crypto collectibles competing with the Kitties, such as HashPuppies, CryptoCountries or MLB Crypto Baseball tokens with famous baseball players.

Rare Bits
There are unique tokens that sell for over $100 000 and collectors who made tens of thousands of profits trading them.
Spending this much money into something that physically doesn’t exist may seem crazy for anyone far from the crypto world, but this new market is gaining the attention of serious crypto investors. Crypto collectible marketplace Rare Bits have quickly raised over $6 million in funding. Then, there are other marketplaces that aim to specialize in non-fungible tokens (NFTs). These collectibles can also be traded via opensea.io and several other platforms, but it’s Rare Bits who claims to become ‘an eBay for crypto collectibles’. Its core difference from competitors is lack of transaction fees (at least at the moment of writing), the service is free for traders, but it charges 50% of commission from crypto collectible developers. A serious advantage of Rare Bits is that it allows all kinds of NFTs and eventually it may expand to add trading of non-digital collectible assets.

Blockchain microchips
How exactly real-world collectibles could be traded through a decentralized platform is the question yet to be solved.
There is little doubt that blockchain protocol can enhance the security of the masterpieces, cars and other items.
The hobbyDB team suggests that the universal solution should match the following criteria:
- It has to be part of the collectible
- It has to be as close to being invisible to the naked eye as possible
- It needs to carry a unique identifier
- It should be not removable (and if removed destroyed leaving a trail that is was there)
- It needs cheap mechanisms to apply and read it
The author claims this can be achieved through attaching Micro Dots, whose size is under 0.2 millimeters, but the team is yet to develop the attaching mechanism. Equipped with the non-removable Micro Dots or other blockchain microchips that securely store information about the ownership, transfers and transaction history, real-life collectibles could be easily traded through decentralized crypto collectible marketplaces. This system will not only protect the masterpiece owners from theft, but it will also eliminate the possibility of trading fraudulent items.

Conclusion
People have had interest in collecting things for ages. According to Forbes capitalization of this market has equaled $370 billion worldwide in 2016. But collectibles market faced serious changes even before the introduction of blockchain. First of all, eBay has taken trading to a new level, making it a lot easier to exchange things for collectors located in different corners of the Earth. Then, online gaming has offered a new group of items to collect — digital artifacts. This was a booming market way before the introduction of crypto collectibles. So there is no surprise that once blockchain-powered games with non-fungible tokens have been introduced, game artifact collectors quickly turned their attention to this new more reliable alternative. This has created demand for a convenient marketplace where decentralized collectibles can be freely traded (obviously eBay is not suitable for that), and while some skeptics still consider crypto collectibles a fad, investors are already pouring money into the development of such marketplaces. Experts predict that these decentralized marketplaces will eventually accommodate trading of real-life collectibles too. And like everything in the crypto world, this future is approaching faster then you may think.