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From Tangible to Digital: The Evolution of Collecting in the Modern Era

Rare "Golden Ape" Doodle NFT Sells For $1.1 Million on January 5, 2022, to the buyer and NFT collector Pranksy. Doodle #6914—which features one-of-a-kind gold ape traits—is just one of Pranksy’s 71 Doodles within his collection of over 30,000 NFTs as of the date of this purchase.

By Shirley M. Mueller, M.D.

Rare "Golden Ape" Doodle NFT Sells For $1.1 Million on January 5, 2022, to the buyer and NFT collector Pranksy. Doodle #6914—which features one-of-a-kind gold ape traits—is just one of Pranksy’s 71 Doodles within his collection of over 30,000 NFTs as of the date of this purchase.
Rare “Golden Ape” Doodle NFT Sells For $1.1 Million on January 5, 2022, to the buyer and NFT collector Pranksy. Doodle #6914—which features one-of-a-kind gold ape traits—is just one of Pranksy’s 71 Doodles within his collection of over 30,000 NFTs as of the date of this purchase.

Most collectors acquire their treasures through traditional methods – purchasing from dealers or at auctions that specialize in physical items within their areas of interest. Another group, often younger individuals, collects experiences instead. As one millennial put it, “If there isn’t a picture, it didn’t happen.” These collectors cherish the memories and the photographs that document these moments, viewing them as integral parts of their collections.

Now, however, a new breed of collectors is emerging, different from the previous two: those who invest in Non-Fungible Tokens (NFTs). This trend prompts a critical question: Is this merely a passing fad, or does it represent an evolving opportunity in the world of collecting?

1. “It’s a Fad.”

Recent articles regarding NFTs suggest a waning interest. David Spoelstra, Vice President & General Manager at Algaeon, Inc., a biotech company, is in tune with this concept. “NFTs are still a nascent concept. Despite providing easy access to ownership of property rights, images, and even identities, it remains a market that assigns value to virtual entities. Unlike displaying a painting or sharing original comic book art with friends, investing in NFTs only grants ownership without any physical manifestation. I don’t see the appeal, and neither do my informed friends.”

This sentiment was echoed when I asked an acquaintance if he would consider purchasing an NFT titled The Mother of Nature, auctioned in May 2022. The piece, a video depicting a Madonna-like figure with a tree sprouting from within her, failed to captivate him.

A major scientific magazine also advised caution with NFTs, reflecting a broader skepticism about their value and longevity.
Such views suggest that NFTs might be a fleeting craze and have yet to prove their long-term viability and worth.

 

2. “It’s an Evolving Opportunity”

On the other hand, some argue that NFTs may present a significant opportunity despite the uncertainties.

Research teams like Kale et al. are exploring both the risks and potential benefits of NFTs. Risks include cybersecurity threats and the potential for money laundering, given the unregulated nature of the field. However, these studies also highlight advantages such as a decentralized marketplace, easy transferability of assets, and secure copyright capabilities – making NFTs particularly suited for digital art, video games, and music.

Despite this optimism, even these researchers exercise caution. They note that while NFTs could combat issues like identity theft and expand in applications beyond the Bitcoin community, their future might also mirror the volatile paths of various cryptocurrencies – either maturing into a highly regulated, disruptive digital market or facing a decline.

3. The Fate of NFT Investors

Some who invested in NYTs won big. Others (think average investors like you and me) have not.

– One Big Win

A risk-taker known as Pranksy made a significant profit in NFTs. He entered the space with an initial investment of $600. Over time, this asset grew into a portfolio valued at more than $20 million. Pranksy is well-known for his involvement in high-volume trades and investments in a range of NFT projects. I, personally, also wonder if he was just lucky.

– Most Investors

Pranksy’s experience is hardly that of the average NFT investor. Rather, A significant number have faced financial losses, particularly those who joined the market during its peak. One survey revealed that a large majority of more recent NFT collectors had not recouped their investment costs. This scenario is attributed to high volatility and the complicated dynamics of the NFT market. While specific names of individual investors who faced losses are not often publicized in reports, this general trend indicates the risky nature of investing in NFTs.

The Personality of NFT Investors

This area has not been extensively studied to my satisfaction. Still, I can postulate what is almost certainly the most important characteristic of NFT investors. It is a preference for risk-taking. This characteristic is described as “bold, decisive, confident, courageous, creative, innovative, and comfortable with uncertainty.” Since the NFT market is so volatile this personality trait is essential. By definition, risk-taking also involves other personality traits that appear to be consistent with NFT traders.

The Future

NFTs hold significant promise in tracking stolen objects and counteracting the black market. Their ability to provide a transparent, immutable history of ownership makes them a powerful tool against the sale of illicit goods. However, for their potential to be fully realized, broader technological adoption and a more robust legal framework are necessary. As technology and its applications continue to evolve, it is likely that NFTs will become an integral part of global security measures against the trafficking of stolen goods.

Summary

We are still at the dawn of incorporating NFTs into art collections in a meaningful way. This stage requires both further information and time to assess the full potential and implications of NFT art. Key uncertainties, such as the extent of future governmental regulation, remain unresolved.

What is clear is that NFTs have captured public attention, touted as potentially “the next big thing.” Whether this promise will materialize, and reward early adopters remains to be seen, underscoring the speculative nature of this new collecting frontier.


References
Kale, Mr. Vimu Ram and Singh, Chandrani and Khilari, Dr.Sunil, Non-Fungible Tokens (NFT’s): The Future of Digital Collectibles
(July 19, 2022). Available at SSRN: https://ssrn.com/abstract=4166708 or http://dx.doi.org/10.2139/ssrn.4166708
Kaye, D.B. (2022). “NFTs and their Role in Crime Prevention.” International Journal of Digital Law.
Mueller, S. M., “The Psychology of Madonna NFT Sale Prices,” Psychology Today, October 21, 2022.


 

Shirley M. Mueller, M.D., is known for her expertise in Chinese export porcelain and neuroscience. Her unique knowledge in these two areas motivated her to explore the neuropsychological aspects of collecting, both to help herself and others as well. This guided her to write her landmark book, Inside the Head of a Collector: Neuropsychological Forces at Play. In it, she uses the new field of neuropsychology to explain the often-enigmatic behavior of collectors. Shirley is also a well-known speaker. She has shared her insights in London, Paris, Shanghai, and other major cities worldwide as well as across the United States. In these lectures, she blends art and science to unravel the mysteries of the collector’s mind.