The terms non-fungible token (NFT) and digital collectible are increasingly used interchangeably. This is not only wrong, but also reductive. The term “digital collectible” downplays the potential of NFTs as an architectural software primitive, that is, as a set of code that can be reused to create more sophisticated programs or interfaces.
For a reasonably simple analogy, think of NFTs as websites. Anyone with a bit of coding knowledge can create a website. They are “hosted” using a unique identifier (URL vs. contract addresses), can store and display data (text, images, video), and can execute code to achieve desired results.
Now, think of digital collectibles like blogs. Blogs are a small and distinct part of a website. They store basic information and are not interactive; they are actually read-only sections. Blogs don’t even begin to capture all of the potential applications and advanced functionality contained in websites, from eCommerce capabilities and chat features to search bars, dynamic pricing, and more.
With this comparison in mind, let’s dig a little deeper.
Definition of digital collectibles
As described above, digital collectibles are just one use case for NFT technologies. Most of the time, a digital collectible is an NFT that contains some type of media file (such as a digital image, video, or song) that has some properties that distinguish it from other digital collectibles.
For example, collectible avatars usually come in different colors and shapes. These unique features increase the rarity of the digital collectible. By doing so, they typically increase both their collectibility and their economic value.
In recent years, we have witnessed the meteoric rise of digital collectible NFTs. they generated tens of billions in trading volume only in 2022, almost matching the NFT frenzy of 2021 despite the so-called “crypto winter”.
There’s NBA TopShot, Cryptopunks, Bored Apes, and dozens of other hugely popular projects that use NFTs to create digital collectibles. The popularity of these high-profile projects is the driving force behind the misconception that the terms “NFT” and “digital collectible” are synonymous: they top the market charts and drive news cycles.
But NFTs are more than digital collectibles.
NFTs are a technology, not a simple use case
NFTs are a new fundamental software primitive for decentralized ecosystems. In essence, they are unique digital capsules that contain data and programmable logic specified by the creator. Like websites, these pods can be used to run large-scale applications or simply display an image with some text describing the image.
The true power and potential of NFTs stems from their ability to be used, traded and transferred freely and securely around the world instantly using any supported platform. Ownership of these powerful (NFT) pods can be granted, traded, and sold at the discretion of the current owner, providing the next owner with all of the exclusive capabilities and value enjoyed by the original owner.
One of the key premises of all major innovations (society, law, network, internet, cryptography, etc.) is fundamentally respecting property rights, and NFTs are a huge technological advance in the world of respecting property rights. . This is especially true in the vast digital worlds we now live in.
This distinctive feature of NFT-enabled sovereignty is what gives this new technology almost unlimited potential in terms of application. NFTs give creators, consumers, and businesses all the capabilities and powers of a website with the added benefit of complete autonomy in the form of property rights.
Potential applications for NFTs will range from digital collectibles and in-game items to legally binding property rights to real-world assets like cars and yachts, and everything in between. At Dibbs, we recently compared the all-time trade volumes of the top 100 OpenSea collections to the top collections over a 30-day period in Q4. We then look at each collection to determine how utility types are evolving. He The data revealed that access to exclusive content (eg comics) was the fastest growing utility for NFTs.
Sounds like more than a collectible, right?
Anything of value that a human wants to display, use, transfer or transact online could soon be found inside one of these new digital capsules in the not too distant future.
However, the terms “NFT” and “digital collectible” will ideally one day fall quietly into the background of conversations. After all, people aren’t glorifying streaming technology when reviewing the latest Netflix hit. Rather, they focus on the movie itself. In the same way, we must let the use cases and experiences enabled by NFT technologies speak for themselves.
Evan Vandenberg He is co-founder and CEO of dibbs. Evan has been working in the NFT space full-time since 2018. He is based out of Los Angeles, CA.
