Why Collectors Are Turning to the Digital World for Investments

Why Collectors Are Turning to the Digital World for Investments

One of the most popular trends in gaming today is the rise of digital collectibles. You can buy, trade, and even sell them for serious money — but what exactly are they?

And why do collectors choose to invest in this new invention? Well, as it turns out, digital collectibles aren’t just random photos or pixels on a screen. They’re more like digital trading cards, except they take up less space and are generated by computers instead of artists.

Anyone with a decent computer and an internet connection can generate these kinds of items themselves. Here’s a closer look at digital collectibles:

Digital collectibles aren’t just random photos

Digital collectibles aren't just random photos

Digital collectibles are more like digital trading cards than they are photos. They’re generated by a computer but represent a real thing in the digital world. For example, one of the most popular NFTs on the blockchain is CryptoKitties, which lets users collect and breed cartoon cats that live on the Ethereum blockchain.

The game’s popularity has helped make it easier for ordinary people to understand how cryptocurrency works and what it can do for them beyond just making money.

Another example of this kind of investment is “the metaverse,” or virtual reality (VR) worlds such as Second Life and High Fidelity, allowing users to create avatars that can be used for anything from chatting with friends online to exploring different countries without leaving home.

In these gaming environments, anything that is an in-game item you can earn or create is also an NFT and considered a unique digital collectible that definitively belongs to that gamer. In these games, you might use your avatar’s appearance to show off your personality or express yourself creatively through fashion choices—but why not also use it as an investment vehicle?

What’s an NFT?

NFTs stand for non-fungible tokens. They are unique digital assets that are digitally scarce, meaning they can’t be copied or counterfeited. NFTs are immutable and nearly impossible to tamper with because they are secured and encrypted on blockchain networks, just like cryptocurrencies.

NFTs can represent digital or real-world assets, but always the provenance of that asset is recorded throughout its lifetime of the asset. This means that every owner since the original creator of the NFT is recorded on the exchange ledger for anyone to see. This provides legitimacy to the asset and helps to determine the value for that asset as well.

You can purchase NFTs or mint your own through an exchange like FTX that offers access to the Ethereum blockchain, the NFT marketplace,  and an easy process for creators to mint and sell NFTs.

What’s the big deal?

What's the big deal

NFTs are a new way to buy and sell digital art. They’re also a way to own it, invest in it, or transfer ownership of it. In addition to the ability to buy and sell digital art, NFTs can be used as collateral for loans, they can be traded on secondary markets, and they can even be used in place of cash in some cases. This all means that NFTs have enormous potential as a new form of property ownership.

But, there are also some issues with NFTs. For one thing, they can be hard to understand for those who don’t have a background in crypto or digital art. This can make it difficult for people to figure out what they need to use NFTs.

The other problem is that NFTs can be hard to value. For example, if you’re trying to sell an NFT, how do you know what price it should sell for? How do you determine if the work has appreciated or depreciated since its creation?

The collector space has always been niche, but it has grown in popularity over the last decade and a half. NFTs are poised to change the landscape of collecting and value exchange forever. In time, they could become more than just a new type of digital art: they could be an entirely new way to invest in the future—and they’re already changing how collectors think about what makes art valuable.

To discover the compelling reasons why collectors are turning to the digital world for investments, learn more here.

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