The Rise of Virtual World and Digital Collectibles in a Post-Pandemic Era
The impulse of collecting is what makes us human.
Growing up, we collected ‘trophies’ of different price tags as we grew physically and financially. From shiny stickers, postal stamps, Yu-Gi-Oh cards, comics, NBA player cards, figurine, all the way to sneakers, designer bags, watches, and even art. As long as the ‘trophy’ satisfies our emotional connection or the thrill of a treasure hunt, we will do whatever it takes to make them our collection regardless of the time, money, or energy we have. Collectibles can do a lot more than just a home display, it could be a conversation starter or an item to brag about your taste for art. It helps you to socialize with people, to make lifelong friends, or even to trade with others to build up your very own collections.
Likewise, in a virtual world like ⟪ World of Warcraft ⟫, there will always be a group of hardcore gamers that pursues 100% achievements. The fandom of completing Pokedex on ⟪ Pokemon Go ⟫ or collecting exquisite furniture on ⟪ Animal Crossing ⟫ is all driven by one single human nature — the desire to collect. The reason why achievement and item-collecting systems exist in the game is nothing more than arousing the player’s collection addiction, enhancing the gaming experience, and motivating them to continue the game, all for the purpose of extending the game’s lifespan.
What is a digital collectible?
Treasures you earn in games, badges you collect in apps, or artworks you buy on different websites, these items are generally referred as digital collectibles, as long as they exist in a digital form, and they are not limited to paintings, photography, or music.
But, did you know?
There are two challenges for digital collectible from becoming a valuable asset :
Easy to copy
The invention of the internet has helped information to spread faster and easier today. In a split second, I can share my drawings on Ipad with friends from distant neighborhoods, states, or even other continents. Yet, the million-dollar question is, how can I prove that I am the creator of this work? With Cut, Copy & Paste, anyone can be the original creator/owner of such digital works, and that resulted in the problem of scarcity and loss of value for my creation.
Lack of true ownership
The biggest disadvantage of digital collectibles today is that they are controlled by others. For example, the virtual treasure that you busted your butt all night to get will be gone in a blink of an eye, if the game manufacturer decides to shut down the game. This means that your virtual treasure is tied in the game, instead of an asset that can be used freely and called your own.
Why build “digital collectibles” with blockchain?
Compared with the well-known Bitcoin and Ethereum, Non-Fungible tokens (NFT) are made to solve the two issues from above, because NFT is unique, indivisible, and irreplaceable. Personally, I prefer the name ‘encrypted certificate’ over NFT, because it comes closer to the definition of ‘goods’ or valuable assets.
With NFT acting as a digital seal, digital collectibles can truly reflect their value:
The information on the NFT can be used to prove the authenticity of a product issued by the issuer or creator because once a digital item is ‘sealed’ by NFT, nothing can be altered, and hence the scarcity of the digital item is guaranteed.
Easy to track
Anyone can track down the issuer, owner, numbers in circulation, and transaction history of the asset on the public blockchain. There is no need to argue about ownership anymore.
Today, the ERC-721 standard is the mainstream digital format and also the consensus in the Ethereum community. It bridges the applications on the blockchain and makes digital collectibles to be a cross-platform asset. ERC-721 is just like a USB flash drive, it connects and allows all hardware to read its files easily without any special modification. This way, the flash drive (ERC-721) brings tradable and exchangeable characteristics to the files (digital collectibles) stored in the drive.
In other words, blockchain creates digital assets that can exist independently and can be used in different applications without any effort.
As for how to define the “value” of digital collectibles, we have to return to the basic economic theory of supply and demand, which you can find better explanations online (hint: Google it).
Digital collectibles have become a trend
The concept of digital collectibles has been around for many years, and in recent years there has been a wave of applying blockchain technology to make NFTs. A few NFT trading platforms currently on the market, such as:
SuperRare: Gathering many well-known artists, what is so special about this platform? Only digital artworks equivalent to ‘Mona Lisa’ or ‘The Starry Night’; highly accredited and priced are allowed for sale.
Makersplace: A digital art auction house founded by early members of Pinterest. Inheriting the style of Pinterest, the most comprehensive functions for collectors or artists community.
KnownOrigin: The style of collections are hippies, and the price is relatively affordable to the public.
These three platforms use smart contracts to design the profit-sharing mechanism. 85% of the revenue from direct sales goes directly to the creator and 15% goes to the publisher (platform). Whereas in the second-hand market, the seller gets 87%, the original creator gets 10%, and the publisher (platform) gets 3%.
Imagine after a long and tiring process of selling your artwork before blockchain, it is not only saddening but also discouraging to the creators because they often receive peanuts for their labor and creativity at the end of the day. However, the time has changed with the application of blockchain, it’s a blessing for young and rising creators that the current marketplace uses an alternative and smart contracts driven marketing approach to automate the transaction of the artworks.
Of course, it’s not just artwork, even the NBA player cards that we used to collect as a kid will soon be released as digital collectibles. Through the expression of multimedia digital format, the player cards are not limited to static 2D pictures, but it can record the moments of Stephen Curry making last-minute game winning shots. Isn’t this more vivid than rigid paper cards?
There are also cases of digital collectibles in Taiwan.
In August 2019, Taiwan’s SELF team collaborated with the blockchain startup Lootex to launch NFT cards for the movie ⟪The Last Thieves⟫, and these cards can be used in real-world games designed by SELF.
In the past, the movie merchandises were at most soundtracks, postcards, or posters. But now, with the introduction of digital collectibles, film companies can actively manage their fan communities through the list of these digital collectors. Digital collectibles can be the perfect CRM (Customer Relationship Management) tool as demonstrated in the case of SELF because it leaves the audience room for imagination to tell the untold parts of the movie with NFT cards.
Note: NFT owners and transactions are recorded on the chain, and anyone can look up their blockchain address.
How to play digital collectibles?
When it comes to physical collectibles with figurines, you decorate your house, show it off on social media like Instagram or even for the sake of investment, it goes exactly the same for digital collections.
On virtual platforms like Cryptovoxels, DecentraIand, you can decorate your digital house whichever way you like with your NFT digital collections (as long as you have virtual land to build on). The following video demonstrates how Lootex decorates its virtual office with NFT artworks made from The Metropolitan Museum of Art’s open-source Levite paintings:
Now that the collection is in digital format, it is no brainer to display the advantages of multimedia. If it is made in 3D format, you can also combine AR and VR technology to show off your proudest trophy with friends and family.
International brands such as Louis Vuitton and Gucci in the fashion industry have already launched virtual designs with games such as ⟪The Sims⟫ and ⟪Animal Crossing⟫. Formula 1 in the automobile industry, Nike and NBA in the sports industry are very important leaders for adopting NFT. Not only do these brands need to sell physical merchandise, but they also stand out from social media marketing through digital collectibles. Moreover, these brands could also find new ways of NFT application with their respective business models (currently the most common usage is NFT gaming application, such as NBA team management games), perhaps it can also create another source of revenue.
What’s even better is that brand owners have a complete list of fans, which can convey brand value and messages faster and easier, dropping free gifts to VIP consumers at any time anywhere. Finally, brands can also increase fans’ brand loyalty through a combination of gamification and NFT technology.
In 2020, due to the severe impact of the epidemic, the application of the virtual world has been rapidly promoted, and the digital transformation of industries is taking place all around the world regardless of borders. The music industry started a huge wave of online concerts overnight, but I still feel live streaming artists singing in an empty stadium is way outdated.
On the other hand, I’d have to praise Travis Scott for the virtual concert held in the game ⟪Fortnite⟫ in April this year. The virtual concert was full of creativity under a collaboration between the gaming and music industry, and there were as many as 27.7 million players (unique accounts) watching!
Travis Scott was the biggest winner of this virtual concert. He received 9,478 media covers, gained 1.4 million fans in his social account within a week, and streamed more than 80 million times on Spotify.
Of course, he did not miss this golden opportunity to sell digital merchandise. ⟪Fortnite⟫ immediately launched Travis Scott themed skin for fans to purchase after the virtual concert.
When the physical concert is moved to a paid game platform, brands may be worried about being taken advantage of, and the threshold for fans to participate in the virtual concerts will also be higher, losing the meaning of reaching a larger size of the audience. In the foreseeable future, more and more physical activities will be “forced” to be held in a free virtual world.
Perhaps one day, my favorite Japanese singer Shiina Ringo no longer has to deal with her flying anxiety to hold a concert. Fans all over the world can still enjoy her live performance while sitting at home, and even purchase her NFT digital poster and decorate their virtual house, together with the one of a kind NFT ticket, stored on the blockchain for eternity.