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Willow Clarin

NFTs & Digital Collectables: What Are They and How Do They Work?

November 3, 2022
8min

Digital collectibles, blockchain, NFTs–these terms may all sound like buzzwords, but the concept of digital collectibles is becoming more and more relevant to our everyday lives. Nowadays, even Instagram and Facebook are in the process of launching their own digital collectible showcase features. We’ll fill you in on how you can get into this emerging investment opportunity by helping you understand the process of collecting digitally.

What are digital collectibles?

Digital collectibles are virtual items that are recorded on the blockchain. These items can be anything from art, to music, and even digital cats. The most popular form of digital collectibles is non-fungible tokens, or NFTs. Typically, NFTs are one-of-a-kind pieces of digital art.

With blockchain technology, these collectibles stay unique by having a specific identification code and metadata that signifies its identity. In other words, digital collectibles can’t be copied. However, the ownership of the asset can be transferred to someone else.

With the rising popularity of NFTs, many are realizing the potential that this technology can have when applied to physical, more traditional forms of collectibles. Nowadays, you can find digital collectibles in the form of trading cards, event tickets, and clothing items. By having these physical assets available in the digital world, the value of these collectibles become more accessible and oftentimes more affordable.

How to Buy and Sell Digital Collectibles

Digital collectibles can be purchased through marketplaces such as OpenSea and Rarible, or directly on a company’s website such as TENAMINT. 

Some sites may allow you to use a credit card, but oftentimes, you’ll need to use cryptocurrency. The most common cryptocurrency used for digital collectible transactions is Ethereum, but since there are so many types of cryptocurrencies, there’s no guaranteeing which specific one you’ll need to have. You may need to purchase a new kind of cryptocurrency depending on which website you’re buying from. In many cases, you’ll need to have a crypto wallet, which you can create through sites like Metamask.

When it comes to selling digital collectibles, you can sell through the same channels you would purchase from, whether you’re selling your own creation or reselling assets you bought. For example, if you purchase trading card tokens on TENAMINT’s website, you can sell them through the site’s own marketplace. 

The Benefits of Digital Collectibles

No Physical Damage

Since they’re digital, their value isn’t reliant on their physical condition. For physical collectibles, their value decreases if they are damaged or flawed, meaning that a lot of care needs to be taken to protect and maintain them. Digital collectibles remove this variable from the equation, so their value solely depends on how much people are willing to pay for them.

Although trading cards listed on TENAMINT are physical trading cards, they are stored in a secure vault so that their condition remains intact. This way, you can enjoy the benefits of investing in a real, physical asset without worrying about possible damage. Not only is this great for the buyer of these assets but it’s also great for anyone looking to sell their assets and turn them into a lifelong investment. When TENAMINT users list their card for sale on our marketplace, they can be confident that their investment will stay intact as long as they’d like to keep it on the platform. 

Fractionalization is Accessible

By representing a physical collectible in the digital world, these items can be fractionalized, meaning that multiple people can have ownership of the asset. The asset’s value is split into many different pieces, or “fractions”. As a result, expensive collectibles become much more obtainable to collectors as they can buy portions of an asset based on how much they can afford, and sellers can sell the percent of the asset that they feel comfortable giving up. 

At TENAMINT we give users the ability to choose how much ownership they’d like to sell when they list their card for sale on our market. Collectors can give up 100% of their ownership, 50%, even 2%–it’s up to the collector. As a buyer, this can present new opportunities as you now have the ability to buy into an asset that has other co-owners invested. This means that you could be a co-owner of a trading card with another high-end collector, or even a celebrity. How cool is that?

Should You Invest During a “Crypto Winter”?

With the value of cryptocurrencies plummeting in recent months, many are coining this period a “crypto winter”--an extended period of lower cryptocurrency prices compared to prior peaks. There’s no telling how long this will last, and those who have money in cryptocurrency and digital collectibles are worried about the effect this will have on their investments. 

However, while there are those who fear this unknown, there are also those who see a silver lining to this phenomenon. Many of those interested in digital collectibles are seeing this crypto winter as an opportunity to buy low. If the crypto market reaches its lowest point, it has nowhere to go but up. Theoretically, if you were to buy a digital collectible at a historically low price, your investment could multiply as the crypto market rises. It could be argued that a crypto winter is the best time to “buy low, sell high”.

If you would like to explore the Digital Collectibles available on our marketplace, click here