The Curious Case for Crypto Collectibles
Everyone collects something or, at very least, knows someone who is a collector. Curios, memorabilia, souvenirs — you name it, someone likely has a bookcase or living room full of it.
Yet, the notion of a digital collectible is absurd. As it relates to digital media, one often refers to digital objects as infinitely reproducible, and hence why we’ve created elaborate rights management (DRM) legislation, governance, and technology. This media (photos, books, music, video, etc.) is distributed and sold to us, mostly as licenses, to use in circumscribed ways. Netflix and iTunes are but a couple examples.
Nonetheless, some digital collectibles emerged in this ecosystem: Second Life, EVE online ships, World of Warcraft mounts, CS:GO skins. Our desire to collect things is so strong that we will do it despite immateriality, scarcity, or even ownership.
The increasing importance and reliance on our digital lives may also be shaping how we view collectibles. Right now, we have two modes of accessing all our digital stuff: infinitely abundant copies or restrictive use licenses. Both, mind you, have little to no monetary or exchange value after you’ve procured them. Moreover, they hold no social capital, either. It seems unlikely that anyone would invite their friends over and wow them with their Spotify collection, or resell their lossless music to another audiophile.
This is not to say that the purpose of a reproduction of a book or song, whether digital or physical, is to hold monetary or cultural value. However, it is the dominant mode in which our physical world works. Physical objects are inherently finite. Or, to put it another way, they are scarce. This scarcity informs their value, and their histories, as well as owners’ attachment to them, further affecting this value. The things we collect — the objects we surround ourselves with — are important to us for various reasons: emotional attachment, conveying social status, and usefulness to name a few.
Wait: this article is supposed to be about crypto collectibles, right?
First, it starts with a verifiably-scarce digital object that one can truly own and a decentralized ledger that proves you own it. Thank you, Bitcoin. But, each Bitcoin spends like every other Bitcoin — they are definitely scarce, but hardly unique. The novelty, and basis for this article, is the introduction of non-fungible tokens (NFTs). These are unique digital tokens that can be verified using the same consensus mechanisms as Bitcoin or Ethereum.
What makes these tokens unique is the metadata — digital information — attached to them. For example, this info could be a baseball player’s image and their statistics. Voila! A one-of-a-kind digital baseball card is born.
Now, anyone can own a digital baseball card; prove their ownership to anyone; print thousands of copies; and trade, modify, or destroy it.
While we previously desired the physical object and devalued its digital reproductions, with crypto collectibles, this has been inverted. The NFT and the physical asset are one and the same, but the NFT is the truly valuable, and collectable, asset.
Although, I am fairly skeptical of most first generation crypto collectibles: CryptoKitties and their clones, Rare Pepes, digital art marketplaces. They, perhaps, rely too much on the frisson of cryptocurrency speculation than the psychology behind collecting. The comparisons to Beanie Babies and Pogs are apt. Yet, there will always be fads. Plush toys aren’t dead because no one collects Beanie Babies anymore.
It’s hard to predict what might become a digital collectible trend. The next iteration of trading cards and digital collectible card games might be a step in that direction. The emotions and psychology of digital collectables will perhaps remain the same. But, when the physical embodiment of an object is decoupled from the digital version, then interesting things seem to happen: different valuations of objects of desire, different ways we interact with our collections, and different means of collecting.
