NFTs Beyond the Hype: How Digital Collectibles are Becoming the New Store of Value

NFTs are everywhere from Saturday Night Live to The New York Time’s covering the historic $69M sale of Bleep’s JPG file. In NFTs: Beyond The Hype, we break down what an NFT is and what the ecosystem looks like.

If someone asked you to buy a video clip of a LeBron James dunk for $200,000, you’d probably assume they were joking right? How about a 24×24 pixel art image of a punk character for $7M? Or maybe a digital collage for $69M? Okay, maybe they’re not joking, they’re just crazy. Welcome to the world of digital collectibles, or otherwise known as NFTs.

From Mark Cuban, to Tony Hawk, to Time Magazine, what do they all have in common? Sure, those are all recognizable names, but there’s something else. They have all released non-fungible tokens to be purchased on the blockchain.

TIME Magazine NFTs
TIME Magazine auctions off three NFTs on SuperRare inspired by most iconic covers

The NFT ecosystem has seen tremendous growth and media attention throughout the past few months. NFTs have been mentioned on Saturday Night Live, written about in Rolling Stone, and praised by celebrities, artists, professional athletes, and others alike as the world has experienced a transformation in the way we store value. But what is all the hype about? Let’s find out.

Store of Value

What’s a store of value anyways? Some answers may quickly come to your mind like Currency, Gold, Collectibles, Art… the list goes on. But generally speaking, a store of value is anything that retains purchasing power over time. Historically, these stores of value have required physical ownership as proof of existence and confirmation of scarcity. We likely have a good idea of how many of these collectibles were created and having the physical presence of that collectible is confirmation that it’s real (although fakes do exist, we typically can assume they are real).

But in recent years, Blockchain technology has completely disrupted the traditional stores of value and has provided a new foundation to transfer value from the physical world into the digital world. The creation of Bitcoin introduced the concept of trustless, digital scarcity. Before it, the cost of replicating something in the digital world was next to nothing. Blockchain has evolved to support Smart Contracts which have allowed the ability to uniquely identify digital goods, as well as the transactions associated with them. 

Because of the programmability of Smart Contracts, the possibility of applications is virtually endless. Smart contracts can contain many different rules that help define its scarcity, what happens when it’s sold, whether ownership is exchanged, or even things like royalties to original creators from secondary marketplace sales. If you can code it, a Smart Contract can execute it. 

What was once a storage consuming file on your computer has turned into a valuable digital asset. NFTs are one of the key building blocks of a new blockchain-powered digital economy. Because of the intelligence assigned, stored and maintained decentralized via the blockchain, with no one party in charge of the transaction, digital assets have now legitimately become stores of value.

What is a Non-Fungible Token

Non-fungible digital assets have existed since the dawn of the internet and are used every single day by people all over the world. Domain names, event tickets, in-game items, and much more fit into the category of non-fungible digital assets; they just vary in their tradeability, interoperability, and liquidity. And oftentimes, you only own these assets in specific contexts relative to the centralized creator, which typically makes them difficult to move around. This is where blockchain comes into play.

According to Wikipedia, a “non-fungible token (NFT) is a unit of data on a digital ledger called a blockchain where each NFT can represent a unique digital item, and thus they are not interchangeable”. But to put it simply, a NFT is used to identify something or someone in a unique way.

NFTs can be used to represent artwork, videos, in-game items, licenses, sports memorabilia, and pretty much any other forms of information that require uniqueness. With the help of blockchain technology, NFT owners benefit from these properties:

  • Standardization – By representing NFTs on public blockchains, developers can build common, reusable, inheritable standards relevant to all non-fungible tokens
  • Interoperability – NFT standards allow them to move easily across multiple ecosystems
  • Provable Scarcity – Smart contracts allow developers to place hard caps on the supply of NFTs and enforce persistent properties that cannot be modified after the NFTs are issued
  • Programmability – NFTs are fully programmable which allows for creative and complex mechanics like forging, crafting, redeeming, random generation, royalties, and much more
  • True Ownership – Digital goods can now live on even if the service that created them ceases to exist
  • Liquidity – All tokenized assets can be valued and bought by anyone around the globe
  • Visible Chain of Custody – Everything from creation to each individual owner is transparent and accessible 

At a high level, non-fungible tokens are simply a means to transfer value on a blockchain. Blockchains provide a coordination layer for digital assets, giving users ownership and management permission. This has become increasingly attractive to artists, musicians, gamers, sports collectors, businesses, and many others who are active within the digital world as they can now control and benefit from their digital assets.

Digital Art Revolution

For many years, digital artwork has been undervalued outside of a professional setting, largely because it’s so freely available. Afterall, it’s just a jpeg image right? Anyone can screenshot and save the file to their phone or computer. But, just because you can print out a picture of the Mona Lisa and hang it up on your wall doesn’t mean that it’s the Mona Lisa. One is worthless and one is worth hundreds of millions of dollars. So, what’s the difference?

Beeple’s collage, Everydays: The First 5000 Days, sold at Christie’s. Image: Beeple

Scarcity, authenticity, and verifiable ownership; three crucial NFT properties that help artists create financial value for their work. The best example of this digital art revolution is from legendary artist Beeple, who recently sold his piece “Everydays: The First 5000 Days” for a mindblowing $69M at Christie’s. This sale positions him among the top 3 most valuable living artists in the world and completely smashes the previous NFT sales record. The crazy part is that before this NFT craze, the most that Beeple had ever sold a print for was only $100.

A few factors explain why Beeple’s work has become so valuable. For one, he’s developed a large fan base, with around 3 million followers across social channels, mostly from his project called “Everydays”. He has created and published a new digital artwork every day for the past 14 years. With NFTs blowing up in recent months, collectors are looking at NFTs as the way digital art will be acquired and traded going forward.

For collectors who believe that’s true, the escalating prices are nothing compared to what NFTs could be worth down the road. With secondary markets at hand, and high royalties paid to the creator, both the artists and resellers can benefit from the continued trading of each art piece. Pablo Rodriguez-Fraile, the collector who bought a Beeple NFT for $66k resold it for $6.6M just four months later, a historic secondary marketplace sale. Beeple received a royalty.

Even Billionaire Mark Cuban is getting in on the game. He launched a one-of-a-kind digital art gallery for users to display various NFTs.

“I wanted an easy way to show off my NFTs and a way to put them in my social bios, my email signature, and any place I can stick a URL. People are curious about what other people collect. There wasn’t a super-easy way to do it before”

Mark Cuban

One Step Closer to Independence

After the pandemic hit in 2020, all live performances were brought to a halt. This left musicians stuck at home without a huge portion of their payroll coming in. To make up for lost revenue, many musicians have looked at NFTs as a way to connect with their fans once again. 

Kings of Leon NFT Album

One of the first bands to release a new album as a NFT was Kings of Leon, which grossed over $2M in sales. DJ/Producer 3LAU raised a staggering $11.7M in a three day sale of 33 NFTs. Other artists such as The Weeknd, Tory Lanez, Shawn Mendes, Grimes, Odesza, Disclosure, Steve Aoki, Tycho, and more have all released some form of NFTs over the past few months. Music Producer and crypto enthusiast RAC has even launched a creative agency specializing in NFTs that aims to help artists develop and manage their own releases.

Not only do NFTs allow for artists to connect with their fans like never before, but they also enable commission structures that allow artists to share in the value of their work in perpetuity, even after they sell it. This is really a game changer for the music industry, as it brings musicians one step closer to independent releases and provides them with full ownership over their songs. They can now start to replace institutions with code and finally get to play on a field that is fundamentally fair and open.

Projects like Cryptovoxels, a virtual world on the Ethereum blockchain, have even opened digital record stores full of NFTs. Inside this virtual store, users can browse music with complimentary art pieces. You can even go directly to an artist’s page or subscribe via music links.

Top NFT Projects

NFT applications vary greatly as there are seemingly endless possibilities to tokenize digital assets. Some of the popular categories within the ecosystem are trading cards, art, gaming, and media content. The biggest NFT project by all-time sales volume is NBA Top Shot, an officially licensed digital collectibles (trading cards) platform with over $451M in marketplace sales. Top Shot has over 272k active users, more than double the number of users than the runner up CryptoKitties who has 100k. Both of these two projects were created by Dapper Labs.

NFT Collections & Marketplaces

OpenSea, the second biggest NFT project by all-time sales volume, sits at the top of the stack as an aggregator that enables consumers to purchase NFTs from any given platform. These generalized marketplaces present a big opportunity for growth due to the various types of content available to purchase. OpenSea has done over $100M of its $264M all time sales volume in Q1 alone. NFT marketplace sales across OpenSea, Nifty Gateway, SuperRare, and Rarible have increased by over 700% so far this year.

Million Dollar Pixel Art

The first non-fungible token is one that you’ve likely seen on Twitter, more specifically you’ve probably seen these pixel art characters as people’s profile pictures. The first rare digital art with proof of ownership stored on the Ethereum blockchain and the project that inspired the modern CryptoArt movement, CryptoPunks. 

CryptoPunks are 10,000 unique collectible characters with proof of ownership stored on the Ethereum blockchain. There are no two punks that are exactly alike, and each one of them can be officially owned by a single person. Originally, they could be claimed for free by anybody with an ETH wallet, but all 10,000 were quickly claimed. Now these punks must be purchased from someone via a secondary marketplace. Below you can see an example of the top CryptoPunk sales. Six punks have been sold for over $1M, with two selling for 4200ETH, or roughly $7.6M.


CryptoPunks have been on fire for the past several months, with five-figure sales going through nearly everyday. There have been over $100M in sales over the past 50 days. Considering CryptoPunks was the first NFT of its kind, the long term value could theoretically hold up or even increase over time if NFTs continue to gain in popularity.

Digital Sports Collectibles

A new era in fandom has arrived — beyond repping your team, or loving your favorite player. Now fans can own basketball’s greatest Moments with NBA Top Shot. NBA Top Shot, an officially licensed digital collectibles product, is an online platform that allows fans to purchase, trade, and collect exciting highlights from their favorite basketball players. Each Moment (card) is marked at creation with a unique serial number, with guaranteed scarcity and protected ownership by the blockchain. When you own #23/49 of a legendary LeBron James dunk, you’re the only person in the world who does, unless you choose to trade or sell that Moment to another collector.

This means you no longer have to deal with the hassles of physical cards, like losing it somewhere or it getting damaged. No more grading costs or shipping delays. And even better, if you do actually decide to sell your Top Shot moments, there is a 24/7 marketplace with millions of dollars of liquidity where you can offload it at the click of a button.

Now one might be thinking, why would anyone buy a basketball highlight that you can watch on YouTube for free? Well, why would anyone buy a cardboard photo that they can find on the internet and print out for free? It all comes back to true ownership and efficiency for collecting. These digital collectibles have everything that regular sports cards have, but yet they are faster, more efficient, and better in almost every way.

Lebron James NBA Top Shot

NFTs/Collectibles Tokens

As more and more NFTs are minted and distributed throughout the crypto ecosystem, the harder it becomes to know which ones are long-term winners, what will hold its value, and where exactly to put your money. You may be bullish on the technology as a whole and want to put some capital behind your thesis, but can’t quite figure out what specific NFT to collect. This is where NFT tokens come into play for many investors. 

Below is a list of the top 10 NFTs/Collectibles Tokens that you can buy, sell, and trade on a variety of crypto exchanges. These tokens each have some kind of involvement with NFTs or digital collectibles.

NFTs/Collectibles Tokens

Quarterly Performance

With NFTs becoming the hottest new topic in crypto, the sector saw astonishing growth in Q1 of this year. The aggregated market cap of the top 10 NFTs/Collectibles Tokens has increased by 764% YTD, climbing from $2B to $21B. Theta, the largest asset by market cap within this group, makes up 60% of that total. Following quite far behind in 2nd place at $3B is Chiliz. At the time of writing, nearly half of this top 10 list has a market cap of $1B or more.

It is safe to say that buying up these tokens amidst the NFT craze has done extremely well this year. Every major NFTs/Collectibles token performed positively throughout Q1, with the median price return being an impressive +960%! 

NFT Quarterly Returns

Chiliz, the sports and entertainment entities company that partnered with Binance, was the clear winner in Q1. CHZ saw returns upwards of +2,340%, even reaching a peak of 3,090% in mid-March. Audius, a decentralized music and streaming protocol, finished the quarter at its peak of 1,863%.

Social Conversations

Social conversations surrounding NFTs/Collectibles Tokens have really taken off since the beginning of March. These 10 tokens were averaging just around 1k Tweets per day up until late February. Tweet volume continued to ramp up until reaching 8.7k Tweets in a single day, a new record set on March 13th. Numbers have dropped slightly since, but are still well above where things were at in January.

Not only has the number of Tweets being sent out increased, but so has the number of unique Twitter handles sending those Tweets out. Since the beginning of the year, the number of Twitter users talking about NFTs/Collectibles Tokens has surged by +206%. These 10 tokens now average a combined total of 2,295 Twitter users per day.

number of Twitter users talking about NFTS

Mainstream Interest

For the past year or so, you could hardly go online to any crypto news website or forum and not come across someone talking about decentralized finance (DeFi). It has been the hottest sector in crypto for the past 12 months. DeFi, aside from Bitcoin, has received more mainstream media attention than the likes of Ethereum, Litecoin, Chainlink and other major crypto players. While this trend is still happening, there’s a new hot buzzword that is taking the ranks. NFTs have completely taken over mainstream media mentions, blowing DeFi out of the water. NFTs have gone mainstream, while DeFi is lagging behind outside of the crypto world.

NFT Mainstream Media Mentions

What’s Real vs. Hype

With heightened demand for digital asset ownership comes increased NFT supply. The NFT market has recently been flooded with a ton of supply by various parties, running from mediocre artwork, to Logan Paul’s Pokemon pack opening videos that sold for a total of $5M, to Lindsay Lohan partnering with Justin Sun to release NFTs on Tron. Copycats ideas, blatant scams, or simply useless collectibles, the sheer number of NFTs being released is something to be aware of before making any investments. 

Simply because someone throws the letters NFT onto something doesn’t mean it suddenly has 10x the value. But while there are some questionable cash grabs being released, there are certainly many solid and useful projects out there that help to solve real world problems. The overall acceptance of NFTs at a mainstream level is a major accomplishment.

Closing Thoughts

There is a great migration from the physical world to digital. Just this past year with the global pandemic, the majority of companies and employees have started to work remotely online from home. The NFT craze has provided even more evidence that crypto and blockchain technology have the power to change the world in profound ways. NFTs serve as the backbone to the digital economy, and with enough adoption, can have a big societal impact. As everything becomes more digital, there’s a need to replicate the properties of physical items like scarcity, uniqueness, and proof of ownership. NFTs solve some of these problems that exist in the internet today.

The biggest use of NFTs today is in the digital content realm. That’s because that industry today is broken. Content creators see their profits and earning potential swallowed by platforms. An artist publishing work on a social network makes money for the platform who sells ads to the artists followers. They get exposure in return, but exposure doesn’t pay the bills. NFTs power a new creator economy where creators don’t hand ownership of their content over to the platforms they use to publicize it.

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