The Economy of Collectibles
The value of the global collectible economy is estimated to be $370 billion. As the collectibles are bending to take a digital form how likely will the market growth continue?
Sir Tim Berners-Lee invented the web in 1989 | Sotheby’s
The original source code for the World Wide Web that was written by its inventor Tim Berners-Lee is up for sale at Sotheby’s as part of a non-fungible token, with bids starting at just $1,000.
Berners-Lee, a London-born computer scientist, invented the World Wide Web in 1989, revolutionising the sharing and creation of information in what is seen as one of the most significant inventions since the printing press appeared in Europe in 15th Century Germany.
NFTs have exploded in popularity in recent months, including at auctions.
What is the reason behind the rise of digital ownership?
Ownership is deeply human. From ancient times, our ancestors have loved to collect things for self-expression and identity. This led to the foundation of trade. Firstly, trade started with barter systems, later the concept of currency was introduced which kept evolving in different forms. Similarly, collectibles evolved from shells to pokemon cards or comic books to even toilet paper in the Covid19 pandemic!
However, digital media did not share the same path of ownership until the invention of NFTs. Before NFT, the ownership, in most cases, shifted to user-ship. For example, we don’t need to buy a CD of songs when we have memberships of music apps. Nevertheless, this did not give digital goods their identity.
With the introduction of NFTs, digital pieces have their unique ownership and identity. The digital age brings with it new forms of collectibles - Digital Assets - digital pieces of art, virtual real estate, domain names. Collectibles are not just for their value, but also for a symbol of royalty and authenticity.
How is the value for digital collectibles estimated? Does it need to be rare? Let us take a look at the examples from the past to get a better understanding.
Earlier in the pop culture, the comics of Amazing Spider-Man and Superman's first comic book appearance in Action Comics #1 have joined stamps and baseball cards as collectibles that appreciate. It is difficult to predict what the next million-dollar collectible will be, so you or your estate might get lucky.
Jim Brown’s jersey during the 1962-63 season went up for auction in 2017, bidding opened at $25,000. Fourteen bids later, the hammer dropped at $78,000.
Beeple made history in March when his NFT titled "Everydays: The First 5000 Days" sold for over $69 million at auction at Christie's.
Recently, a digital version of Gucci’s Dionysus Bag with Bee created for the Roblox marketplace has been sold for US$4,115 – more than the price tag of the physical accessory in real life. Surprising, isn’t it?
The value of a collection is fortuitous on generating a willing economy of potential buyers. If it is scanty it could limit participation leading to a reduced value of the collection. And if it is abundant, it confuses the collectors and again could lead to less value of the collection. So the optimum size for a collectible economy lies somewhere in the middle.
For instance, a collectible economy on the extremes having only one unique item is not good (imagine only 1 CryptoKitty) & having billions of unique collectible items is also poor. This is primarily because restricted availability of supply does not necessarily capture available demand. Each new collectible generates more interest in the overall collection.
The future of collectibles
No doubt, the future of collectibles is going to be digital. NFTs give the joy of ownership and are frontiers for crypto. We see the arts in digital form storming the market (Beeple) and new digital art galleries being created, we see song albums on sale before release, we see the pop kings throwing a digital concert with limited tickets and whatnot. Everything is digital in this era. Even the currency is becoming digital! This is why the belief in the metaverse is increasing and giving rise to more such trends.
Shriya Madan, an ardent learner, a digital enthusiast, aspires to make an impact in the real world with the power of technology
Pranjali Apurva, driven by curiosity, converging design principles with digital transformation