Several readers have commented on prior articles about the safety of digital collecting, so I wanted to review some of the things you need to be cautious with, though I'm sure there could be more. While blockchain technology has the potential to revolutionize the way we think about ownership and authenticity, it is not without its risks. So, Let's Review!
Blockchain-based, digital collecting is gaining a lot of attention, particularly in the art world. Digital collectibles, also known as non-fungible tokens (NFTs), are unique digital assets that are stored on a blockchain. They can be anything from artwork, comics and music to virtual real estate and in-game items.
FRAUD: One of the most often-publicized or discussed risks with blockchain-based digital collecting is the potential for fraud. Digital assets have been replicated or altered, where platforms like OpenSea even come with "Stolen Item Policies."
BUT - safer options exist that mitigate fraud & why my focus has been sticking with recognized Licensed IP / Brands.
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HACKING: While blockchain technology is considered to be very secure, there have been instances where blockchain networks were hacked. In 2022, hackers made off with 119 ETH (~$185k) of actor Bill Murray's NFT charity auction funds
BUT - the hack was quickly identified & the extremely valuable NFT assets in Bill's wallet were safeguarded, pointing to why digital assets can be safer plays with their immutable ledgers. While blockchain technology can provide a way to track ownership of digital assets, risks exist - so always Do Your Own Research (DYOR) before jumping into any digital collectible platform and weigh out whether the potential benefits outweigh your risk tolerances!
ACCESS: There is also the risk of losing access to your digital assets. If you lose the private key associated with your NFT, you will not be able to access it anymore. This can be particularly problematic if your NFT is valuable and you have no way of proving that you own it. There have been instances where people have lost access to their cryptocurrency wallets and have been unable to recover their funds, so it is important to be very careful with your private keys.
BUT - using recognized platforms with trusted brands offering Officially Licensed IP like VeVe, DCNFT, or new Star Wars Lucasfilm Ltd.-Licensed Cryptoys, mean they act as the custodians of their assets, where corporations protect the rights to their IP. So, you can share in that ownership knowing the assets are protected by the brand. These are more centralized than their OpenSea-style counterparts, but for many hard-core collectors, centralization tends to help block scammers.
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REGULATORY INTERVENTION: While blockchain technology is still relatively new, governments around the world are taking notice of it. Some have already implemented blockchain technology regulations, and more will likely follow suit. This could have implications for the way that blockchain-based digital collecting is conducted, and it could even lead to certain types of digital assets being banned altogether.
BUT - this is also GOOD for digital collecting! It weeds out bad actors & sets guidelines everyone can share in or understand. Speaking of “taking notice,” the USPS (a division of the US Federal Gov’t) now ROUTINELY drops their digital stamp collectibles in the VeVe app!
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A COLLECTOR'S AGE: A touchy subject indeed, but worth mentioning that many people have collected physical assets for many years, holding many items in those collections. What if this ‘steadfast’ group simply will not adopt or try these new digital formats, continue to FUD or dump on new technologies and hurt the overall market opportunity to protect their own assets? Or, there may be those who simply will not, or cannot adapt to new technologies for whatever reason.
BUT - Today’s digital ecosystem shows NO gaps by age cohort not using digital media daily. It is ingrained in all our lives, so it could be younger, or digitally-savvy audiences will outgrow & adopt digital collecting at a faster pace, offsetting those who prefer not to engage. Of course, no one is forcing anyone to participate - collect what you love we always say!
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VOLATILE CRYPTO MARKETS: Many NFTs are bought and sold using cryptocurrency, so the value of an NFT can fluctuate wildly depending on the price of the crypto used to purchase it. This can make it difficult to determine the true value of an NFT, and it can also make it risky to hold onto an NFT for an extended period of time.
BUT - While no investment is ever guaranteed, more centralized platforms enable digital collecting of your favourite IP or brand assets in new formats, with built-in scarcity, utility, and ease of storage, transport, sharing, or selling. DCNFT, for instance, allows you to buy simply with your credit card, as does VeVe - buy their in-app 'Gems' (1 Gem = $1 USD), Apple Pay or soon, with your own Cryptocurrencies (like BTC, ETH, OMI). These apps also do not require 'gas fees' common to other platforms and remain relatively isolated from the rest of the crypto markets, allowing more 'non-crypto-techie' collectors to participate with little technical knowledge. This, in turn, could open the doors to more widespread adoption.
DROP LUCK: Many collectible apps like those mentioned, 'drop' or release their collectible assets in lottery-type formats that challenge the odds of landing a successful rarity, scarcity, or appealing mint number. This can be frustrating to many users, or those newer to these experiences, especially if, after repeated attempts this continues. With their user bases also growing significantly, this further compounds the chances of successfully winning key assets or a drop at all.
BUT - for those willing to invest a little more time, research & patience, there are often remarkable hidden gems available in the post-drop aftermarkets. Fancy and historically-relevant mints, mint-matching, birthday mints and more can be found to build fantastic collections (or sets) , many times at great prices or below the initial drop price. This stems from a current 'over-focus' just to very low mint numbers (such as the 1st 100 produced), leaving fantastic opportunities on the table for those willing to do the homework.
Despite these risks, there are also potential benefits to blockchain-based digital collecting:
- Provides proof of ownership & authenticity of digital assets, something that has been difficult to do in the past
- Provides a new way for artists and creators to monetize their work (sale + recurring sales %'s)
- Provides new asset types to be created that would not have been possible before
- Provides easy sharing, use, utility or even selling of your assets, since you own them
- Provides positive environment impacts (see https://www.veve.me/post/nft-dirty-word-or-clean-technology)
- Provides potential utility in new Metaverse & Gaming Ecosystems
- It may just become the most secure way of collecting we have ever seen**
Digital's Impact on Newspapers** For instance, what if comic book production continues down the path carved by phone books & newspapers? Consumers have abandoned them en masse, preferring digital options that “fall fewer trees” or provide more convenience. What If Marvel & DC discontinue print production based on rapidly rising costs vs declining overall sales, choosing instead to ONLY distribute their comics digitally like their newspaper & magazine counterparts have done?
BUT - It’s likely the remaining physical books (held by collectors) would surge in value, just as we see high-quality $1 & $2 bills doing so. The fact the Internet touches the entire planet also means MORE people can get into collecting!
Movie theaters are another example - sure it’s fun to go every now and then for that huge release / big theater experience, but the reality is so many of us have modernized our at-home viewing experiences that theaters have become secondary.
MetaVerse Entertainment is Almost Here!And of course, we cannot forget GAMERS. Advancements in technology have amplified this space to crazy levels from our original Atari days, where full immersive, interactive, cross-continent experiences are now the norm that replaced arcades. As new formats emerge like Metaverse gaming, where gamers can earn incomes for playing, we will likely see the ‘cartridge’ system finally come to rest (and put those old-fashioned, unopened games into big-time collecting spotlights!)
Ultimately, this means new revenues to brands like Pili Fantasy, UbiSoft, CapCom & others we all enjoy...check the great video review by clicking the 'Comics & Crypto' image below, or for a WILD RIDE with how one VeVe Artist now integrates NFTs into stunning videos & animations, check the 'MetaVerse Lyfe' image below. Impressive...Most Impressive...
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TO SUM THINGS UP:
Blockchain-based digital collecting is a relatively new and emerging field, but not without risks. However, with careful consideration and an understanding of these potential risks vs. benefits, it is possible to participate in this exciting new field while minimizing your risk exposure.
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Whether you're an artist looking to monetize your work or a collector looking for new types of assets to add to your portfolio, digital collecting has the potential to transform how we think about ownership & authenticity in the digital age.
Personally, that's one of the biggest risks for me (IMHO)...anticipating what's coming, not researching & safely participating, and missing the benefits of being early, as I have had the pleasure of doing so often throughout my collecting & investing career. Of course, by investing only what I can afford to lose, doing the homework, and enjoying the journey.
Time, of course, will certainly tell...
Thanks Again!
