Cryptocurrencies Versus Crypto Collectibles

The ability to digitally assign an asset to a user is one of the guiding principles of cryptocurrency. Solving the ‘double-spend’ problem made Bitcoin a phenomena — the digital asset could only ever exist in one location, at one time. The setting of that standard opened an entire world of digital currency, and now we are seeing a branching out into other digital assets. Crypto Collectibles are an entirely new class within the crypto-sphere. Where cryptocurrencies are ideally non-fungible, each Crypto Collectible is verifiably unique. In fact, its value is dependent on that uniqueness.

Crypto Collectibles
These digital collectibles have existed since 2015 in varied forms. However, Ethereum’s ERC-721 token standard brought them into the limelight. The standard established unique, non-fungible IDs for each token on the blockchain, a necessity for verifying rarity and value. Compared with cryptocurrencies, these collectibles have the following pros and cons;

• Pro — Their value is based on rarity and uniqueness. As such, they are slightly less beholden to the whims of the market. They are worth what other collectors are willing to pay, which is generally more immutable than the significant volatility of the cryptocurrency marketplace.
• Con — A digital collectible is wholly dependent on the website that adds value. It may be virtual pets, land or trading cards, but the images and rarity associated with an item are wholly assigned by a centralised third party that could disappear at any time. Centralisation is anathema to the cryptocurrency world.

Cryptocurrency
In contrast to collectibles, cryptocurrencies are generally fungible. Each coin or token being equivalent to another is a critical part of the system as a whole. Their value is determined by the market’s demand, and the real world product behind the specific currency. Set against Crypto Collectibles, cryptocurrency shows the following pros and cons;

• Pro — Cryptocurrencies are decentralised, and their worth is consistent across multiple exchanges and private wallets. They have no dependency on a single site to add value. The currency itself is the product, and each unit of currency is interchangeable with any other unit.
• Con — As each unit is the same price, the market controls their value. There is no chance of your individual coin gaining value against the others of the same cryptocurrency. Gains are dependent on the entire blockchain’s value rising.

Crypto Collectibles versus Cryptocurrency: Which to choose?
​There is no ‘correct’ answer to the question, but rather an assessment of values. Cryptocurrency is like the stock market — potentially volatile, but historically a steady growth in value over time. Investors can diversify their portfolio and hedge their bets against a single currency’s drop in price over time. In contrast, Crypto Collectibles offer the chance to ‘hit the jackpot’ with a particularly rare collectible, while also satisfying the desire to collect that many people possess. The only real danger is that Crypto Collectibles depend on single points of failure — their websites. However, this issue will likely be solved in the future, if only out of pure necessity.

Originally published on The Crypto Collectors