You are not alone if you feel like it is difficult to understand the true business value behind digital, cryptographic collectibles like CryptoKitties.
Is the answer that people will buy, sell and trade just about anything?
In part, this does appear to be true and Coindesk’s most recent article on the subject would seem to lend even more evidence to this effect. At the same time, in looking at the crypto collectibles niche as a whole, the answer to its recent saturation looks to be a bit more complicated.
Coindesk begins by stating that crypto collectibles are backed by what can be called “non-fungible tokens.” What this idea boils down to is that while “fungible” tokens can be transferred amongst users as well as exchanged into other currencies, “non-fungible” tokens are unique to the point of being unable to be exchanged.
In short, NFTs can be thought of as representing items that do not exist in more than one form, in the way that each baseball card or outdated national currency is unique.
Therefore, with this, the problem arises in how to determine the real value of any NFT.
Does the act of owning a digital item that exists only on a Blockchain mean that said item has any true value?
To truly begin to understand this possibility, try starting by thinking about how physical collectibles have any real value.
It comes from their scarcity and their condition. When they are in pristine condition and few, if any copies of them exist, then the collectibles in question have more value than others.
When these items are things that you can physically interact with, then these concepts are not that hard to understand. What is truly difficult to grasp is the idea that digital collectibles can attain value in the same way. Even though digital collectibles have attained this uniqueness, according to Cryptokitties and other sources, there is little to say about them beyond this.
One industry blog on the subject suggests that this is because we have not even gotten to the point in their maturity in which we can understand how crypto collectibles attain their value.
Given the fact that most of these collectibles are digital characters that were created in the mere hope that people will want to own them and they have only been around for a few years or less, this does seem to be the case.
Unfortunately, as of now, creating any sort of coherent argument towards Crypto collectibles having value may be out of the question. With this in mind, it is logical to conclude that staying away from such projects entirely, for the time being, would be a reasonable course of action. If their value is hard to determine, then what would be your basis for investing in them?
By: BGN Editorial Staff