Trading football cards as a kid was awesome. You’d save up money from doing chores or washing the neighbour’s car. When you had enough, you'd jump on your bike and race to the milk bar to get another packet of footy cards. Ripping open the packet in front of the milk bar, you’d reluctantly put the chewing gum in your mouth (the chewing gum wasn't very good) and try to find the perfect card. Rifling through the cards proclaiming, ‘got it’, ‘haven't got it’, ‘got it’, ‘haven't got it’ and suddenly you’d come across the holy grail, Matthew Richardson! A sense of glee would come over you as Matty Richardson (Richmond FC) is both a great player but more importantly his card was very hard to get. That feeling of knowing that you have the card that other people want and can't get, can sometimes feel as good as winning a game on Saturday.
Wherever there is desire and scarcity, there is value.
Some people love collecting. From stamps, to coins, to Pokémon, to souvenir teaspoons, to fridge magnets and even cars. What starts as an interest in an item or a genre, can become addictive for some people as they seek to collect an entire set or the rarest item. In Australia in 2019, Coles Supermarkets released their Little Shop Minis promotion which featured 30 miniature plastic grocery products that kids could collect each week. The collectable items were given away in a sealed bag with purchase (the promotion increased sales by 5.8 percent in the first quarter) meaning you could not choose which item you wanted. Many kids wanted to collect the set (a display case was also available), so people started trading them or selling them on eBay. Some of these Minis are still available now and continue to cost more than the real product. At the height of the frenzy, the cost of a Golden Trolley was in excess of AUD$5000 (now selling for $900). You may think this is ridiculous (it is) and parents are simply caving in to the whims of children (think Veruca Salt from Charlie and the Chocolate Factory) all demanding "I want it now". Remember, where there is desire and scarcity, there is value.
Digital versions of items, known as Non Fungible Tokens or NFTs, have also become very popular collectibles. NFTs are unique digital objects that bear a certain value based on the object's uniqueness (similar to all collectibles). You may wonder why it is so unique when you can easily see another version of it by simply googling it. It can be hard to understand why you would want to purchase the original digital version of something. It’s possibly the same reason you would purchase the original version of Matthew Richardson’s football card, because you can collect it, have pride in being able to own it or get future value from it due to its uniqueness or scarcity. For some people, being able to say that you own it is also very important. Collectable items give us some form of status in a community that cares about that item. The key to any collectible is the passionate community that surrounds it.
The National Basketball Association (NBA) in America has released NFTs of different short clips (moments) of many basketball games, known as Top Shots. They are the new basketball cards for digital natives who get to own a piece of the game. The value of the clip is based on the popularity of the team, players, the moment and how many of them are available. The value of the Coles Golden Trolley was higher than other items due to its rareness. You can buy many of the Top Shot Moments for USD$2, however the current asking price of the NFT of LA Lakers LeBron James’ slam dunk in Nov 2019 against Sacramento is currently USD$225,000 (there were 32 sold). The Top Shot version includes the video of the play.
Providing you have copyright, anyone can make an NFT. The credibility of the NFT comes from the originality of the item, the copyright and the value the community places on it. The value of the originality (uniqueness) and the interest in it, is potentially more important than the creator. Taking a video off YouTube and turning it into an NFT will likely breach copyright and have no value.
An NFT can be art, music, video, memes, trading cards, photos and even virtual fashion (Gucci released its own fashion NFTs in Gucci Vault). Gucci handbags are in essence about status. Owning a Gucci NFT also provides status.
Beyond status or social capital, NFTs can also provide money – in some cases, a lot of it. For many, NFTs are the next digital gold rush (as domain names used to be), a speculative way to make money. Crypto Punks was created in 2017 as a collection of 10,000 unique collectable characters with proof of ownership. The current lowest price ‘Punk’ is around USD$189,000 and the highest sale of a Crypto Punk was USD$23.7 million (valued in Ethereum) in February 2022.
You may think this is crazy and you are probably right. However Crypto Punks have a genuine community of people interested in collecting them and a secondary market that is very active in trading them. As the authenticity of each Crypto Punk is assured, the credibility of the trading remains. The value will continue to rely on the community’s interest, which is increasingly traders and speculators. In 20 years, the value of the average Crypto Punk could either be a few dollars or millions – time will tell.
A physical Matthew Richardson football card isn’t as rare (turns out many were created!) and they currently sell for between $5 and $250 (AUD), depending on condition and whether it is signed. If the AFL produced a single football card to commemorate Matthew Richardson’s 800th goal (which happened to also be his last), it is likely that because there is only one produced, the value would be in the hundreds of thousands of dollars. The value of any collectible, including NFTs, comes from their rareness, uniqueness and people’s interest in collecting them.
While you may be able to use the office photocopier to print your own double sided football cards on heavy paper stock and spray them with chewing gum scent, it will never be the original. Purchasing a digital version of something that is readily available on the internet is similar, people want the original (verified through blockchain). And they are prepared to pay for it. NFTs are digital collectibles that for many, are as good as or better than collecting physical items. They are easier to trade and due to a global trading market, their value may be higher.
An original NFT video of Matty Richardson kicking his 800th goal is actually more interesting than an original physical picture of it. Time will tell which is more valuable and whether the AFL will get into NFTs.
The original of the Mona Lisa is more valuable than a duplicate. And this principle will guide the value of digital art and all NFTs.
The author does not own any NFTs, though does own domain names which some people claim are also NFTs. Nothing in this article constitutes financial advice. You should seek your own professional advice before investing in NFTs.
Main image: Photo taken by Marty Drill - Collectors trading coins and bottle caps in the town square off Las Ramblas, Barcelona.
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