March 11, 2021, was most likely just another day for most people in the industrialized world; however, it was on this day that a digital collectible sold through Christies for more than $69 million. No, that price is not a typo. The digital collectible that sold was created by digital artist Mike Winkelmann, who goes by the name of Beeple. The name of the digital art sold was called Everydays: The First 5,000 Days.
Are Collectors Ready For Digital Collectibles? Am I Ready For Digital Collectibles?
To be fair, if this would be a physical piece of art complete with a canvas and paint that one could hold in ones hands, that price would not be as impressive as it appears. Extremely wealthy billionaires and well-financed collectors have been entering the high-end art market for decades now, and it is not uncommon to come across sales of coveted pieces of art that have sold for $100 million or more. That said, what makes this $69 million sale so spectacular is that the piece of art is unable to be hung on any wall. It is contained in digital code known as an NFT.
For the uninitiated, NFTs, or non-fungible tokens, are a unit of data on a digital ledger called a block chain, where an NFT can represent a unique digital asset and not be interchangeable. If you are familiar with how crypto-currencies like Bitcoin work, then you are already familiar with block chain technology, only now it is being applied to the world of digital assets. This is having a unique effect on the art, antiques, and collectibles trade. This effect is not without controversy either.
NFTs, much like crypto-currencies, are being hyped in unregulated markets. Speculators along with market manipulators are attempting to ensure that these types of assets take hold. Meanwhile, collectors like myself urge caution. For instance, I can log on to any numismatic auction site and bid on a gold coin from the 1920s. I can hold the coin in my hand, connect with the time frame that existed when that coin was minted and choose to sell that coin at any time. Whether that coin goes up in value or decreases in numismatic value, I still own the coin, which is made of a precious metal. For thousands of years, collectors have valued physical collectible numismatic coins, and a lot of these kinds of collectibles have a nice track record of price appreciation as well.
When it comes to digital collectibles like NFTs, most of the items being sold as collectibles are quite new to the collectibles market. Comparing these items at present time to that of Beanie Babies may seem unfair, but both markets are extremely speculative, and when starry-eyed speculators started to pay a premium for Beanie Babies back in the 1990s, I was there cautioning them that the market was too new and speculative. As we can see from history, listening to critics and sceptics was not a strength of most of these starry-eyed speculators and collectors at the time. Today, we can see how that market played out, and it would be interesting to see what would have happened if Beanie Babies at the time were sold as digital collectibles. NFTs are the proverbial new kids in the collectibles trade. We have no idea how the overall collecting community is going to react to this market until it goes more mainstream. There are some companies already working to do this. If you want proof, just look at what some of the NBA Top Shots are selling for at present time. Imagine a digital pack of basketball cards, and you kind of have an idea as to what the concept of NBA Top Shots are.
Regardless, it is only a matter of time before more mainstream toy and electronic manufacturers take NFTs to the masses. I can easily see some of the collectible card games like Magic: The Gathering and Pokemon adopting something like this. I can also see certain video game companies exploring this brave new world as well. This is quite scary in a time when video game collectors and enthusiasts are watching as their beloved hobby goes digital with the advent of more powerful video game systems that feature digital downloads and no physical media. Both the new incarnations of the latest Xbox and the Playstation 5 video game systems have media-less digital-only versions readily available where consumers simply download digital games and dont have to worry about physical game discs. The outcry of rogue video game collectors arguing that digital downloads hurts the overall hobby is pretty much being ignored in a world where digital prices of art are selling for millions of dollars.
Personally, I hate to see what the collectibles trade holds over the next few decades if this is the direction we are heading. Make no mistake, I think that Beeple is a very talented artist, and I am quite fascinated with some of his art. That said, I would never spend any serious money on a digital collectible at present time. I am also not fully sold on crypto-currency, which is a topic that some of my critics take issue with. Still, I do recognize the potential of NFTs if done right and used to promote physical products and collectibles. My fear is that once companies realize that they can simply create a digital item with no costs to manufacture a physical item, these kinds of collectibles will be promoted en masse. This can have a serious effect on the collectibles market over the next several decades. And if I ever have to bid online in an auction for items I wont need to take personal delivery of, I honestly think that the money I have invested in the antiques and collectibles trade would be better used to invest in mutual funds. Sorry to sound so pessimistic, but as a purist in the trade, digital collectibles are just not for me, and I urge other collectors to reject them. Just my two cents, and in this case I guess my two cents is not being offered in physical form. Oh, the irony. Until next time.
Shawn Surmick has been an avid collector since the age of 12. He currently resides in his hometown of Boyertown, Pa., and is a passionate collector of antiques and collectibles. His articles focus on various topics affecting the marketplace.