What Are Digital Collectibles?

What Are Digital Collectibles?

If you’re an avid tech-lover, collector, or investor then you may be familiar with digital collectibles and NFTs. While they both operate in the digital world, a digital collectible is not exactly the same thing as an NFT.

To help answer the question, “what are digital collectibles?” we’re exploring digital collectibles and how they compare with non-fungible tokens. Read on to learn more about the benefits of digital collectibles, which represent one of the most popular and earliest NFT projects.

What Are Digital Collectibles?

What are digital collectibles if they’re not the same as NFTs? A digital collectible is a limited-edition or unique copy of a virtual item. Typically, there is a visual element to digital collectibles such as digital trading cards, video clips, or digital art. 

During the pandemic, collectibles market data showed us that the industry was booming. People were seeking new interests or pursuing nostalgia while being locked indoors. At the same time, cryptocurrency was becoming more mainstream. A lot of businesses tried to ride the wave of both trends by using blockchain technology to create digital collectibles. The result of this movement was a huge boom in non-fungible tokens, called NFTs, enabling virtual products to become limited-quantity digital collectibles.

Digital collectibles leverage blockchain technology for minting NFTs that enables transfers in ownership and distribution rather than creating copies. This lets an owner transfer the ownership of their digital collectible to another person with an immutable record kept. This lets collectors ensure their investments remain rare while also setting terms for use and ownership.

Digital Collectibles vs. NFTs

Many people assume that NFTs and digital collectibles are one of the same. However, a digital collectible is one of two things you will receive when purchasing an NFT.

Your digital collectible is the digital asset you receive such as a piece of music, photo, video clip of a sports highlight, piece of digital art, or trading card. It can be pretty much anything, which is what makes these digital assets so exciting. Their versatility makes the options practically limitless.

The certificate of ownership, which is the NFT itself, is where the value lies. Without this, you lack the proof of ownership, reducing the value to nothing. It is this certificate that makes your NFT truly unique. The non-fungible token serves as a digital proof of ownership, ensuring your digital file is truly ownable and, therefore, a digital collectible.

What Is Fungible & Non-Fungible?

To get a better understanding of why so many people want to own NFTs and what makes them so valuable, we need to understand the difference between fungible and non-fungible.

Fungible refers to commodities or items that can be exchanged with other commodities or assets of the same type. For example, Bitcoin is a fungible asset. You can exchange one Bitcoin for one Bitcoin, and it will still hold the same value. The same goes for traditional currency. If Harry gives Susie $1 and Susie gives Harry a different $1, they still each have $1 worth of spending power.

A non-fungible asset is the opposite of this. It cannot be exchanged for something of equal value nor can it be broken down into small parts of a whole. These characteristics are what makes a digital collectible non-fungible.

NFTs have unique properties, with only one version of the original existing. This means if you were to have a unique piece of digital art, for example, and you traded it for another piece of art, you wouldn't end up with something of the same value.

What Are the Benefits of Owning Digital Collectibles?

Now that you’ve learned the answer to the question, “what are digital collectibles?” let’s take a look at why they’re so popular and what you can do with them. Wondering why so many people are interested in investing in digital assets at present?

et's explore some of the benefits of owning digital collectibles such as:

  • Proof of ownership and authenticity
  • Uniqueness and scarcity
  • Provenance
  • Security of digital collectibles
  • NFT and digital collectible utility

Proof of Ownership & Authenticity

With blockchain technology, digital collectibles are able to be owned and verified for authenticity. Non-fungible tokens replicate the properties that give conventional collectibles their value while boasting potential additional benefits that the physical format is unable to compete with.

The blockchain is a decentralized database, meaning any assets, value, or information cannot be replicated. All of the computers maintaining the network achieve consensus, making the digital ledger immutable.

The creation of NFTs enabled digital collectability as a concept to truly thrive, as every token was able to represent an asset that was truly unique, identified by a token ID, and guaranteed to be authentic on the public blockchain by code.

Uniqueness & Scarcity

The uniqueness and scarcity of digital collectibles is what makes an NFT rare. When something is in scarce supply, it becomes more difficult to acquire and often considered more valuable by collectors. It is all about supply and demand.

Smart contracts can be used to guarantee the maximum supply of an asset in the digital world, allowing creators to set issuance limits that cannot be broken. If the smart contract that governs the creation of a token stipulates that only 25 assets can ever be in existence, for example, then this is guaranteed, and a binding code is used to enforce it.


Provenance is another factor that contributes to the value of non-fungible items.

Since NFTs are minted using blockchain technology, provenance is one of their core features. The origin of an item can significantly impact value, whether based on the creator's reputation or the renown and fame of previous owners.

Blockchain technology allows you to see trades and ownership transfers all the way back to the digital collectible’s origin.

For example, if you are purchasing a pulse shotgun on the basis that one of your favorite eSports athletes used it to achieve a winning kill shot in a championship game, the blockchain ledger will prove its authenticity and will most certainly drive value.


People unfamiliar with digital collectibles and NFTs often worry that the digital world has gaps in terms of security. The transparency associated with this marketplace, however, is really a significant benefit towards its secure nature.

Even if an individual attempts to copy the descriptions and visuals of an existing token, a simple search on the blockchain explorer will be able to prove whether or not it was minted under the address or platform of the original creator. This makes due diligence easy, ensuring you always have peace of mind.


Finally, we also need to consider that an NFT can have a broad range of utility, including items that operate in a number of different apps and games.

For example, Ethereum is known for its tokens designed to facilitate the implementation of smart contracts. One of the most recent standards in that sense is the ERC-1155. ERC-1155 tokens do not simply exist as pictures on the internet. In fact, digital collectibles are able to become even more useful once they have been created, as any developer can include them in a project they are working on.

Utility can also be achieved through gaining access to a community of other collectors, access to exclusive events, and other benefits of holding a particular digital collectible.

As you can see, many benefits are associated with owning digital collectibles. This merely scratches the surface as well. From value recovery to the mere fact that you can carry your entire collection with you at all times, there are lots of reasons why the non-fungible market is thriving at the moment.

What Are the Risks of Owning Digital Collectibles?

As is the case with any investment, there are always going to be risks. So is the case for non-fungible digital collectibles, as well.

Understanding these risks is imperative before parting with any of your hard-earned cash, so let's take a look at a few risks including:

  • InterPlanetary File System (IPFS)
  • Theft and loss
  • Scams

InterPlanetary File System (IPFS)

As NFTs become more mainstream, it’s critical to understand how these permanent digital assets remain that way. This is where the InterPlanetary File System, commonly shortened to IPFS, comes into play.

Basically, this means that the art and metadata is not stored on the blockchain, but hosted externally on a server. However, proof of ownership is still verifiable on the blockchain.

IPFS is a protocol that many NFTs point to as their underlying asset and is considered part of the foundation or backbone of this new digital marketplace. IPFS is a distributed file system that is very similar to the BitTorrent swarm, though it does not have a central tracker. It has a DHT, or distributed hash table, which is hosted by nodes. This maintains a form of a data ledger.

To get onto the IPFS network, you can put a node up and start hosting files. When you put a file on the IPFS, you create its content ID, otherwise known as CID, which is a complex set of hashes based on where the file is situated (and any related metadata).

The file can then either be distributed among different nodes or stay hosted on the original node alone.

The risk is that there are a number of issues when it comes to using IPFS as permanent storage. Irrespective of what you do with the storage, someone has to host it somewhere physically.

While there can be incentive layers provided to make sure the storage remains up, it still needs to be connected to the Internet and stored on a hard drive somewhere. This is where the problem lies, as such an approach means that there are a lot of centralized failure points.

Theft & Loss

NFT theft has become a popular venture for the dubious among us in cyberspace over the last decade. Hackers are becoming more interested in this line of business because it’s highly profitable.

To safely store your NFTs, follow the safety guidelines to protect your digital collectible investment. While it may seem like an added hassle and expense you won’t regret it in the end when your investment is protected!


As is the case whenever anything becomes popular, there are those who attempt to run scams relating to the NFT marketplace. This means you need to be mindful whenever buying or selling. Stick to reputable marketplaces like UCOLLEX and use advanced techniques to protect your digital assets effectively like using a cold storage wallet, for example.

How Can You Protect Your Digital Collectible Investment?

NFTs are based on cryptography which, in theory, makes them inherently safe. It’s very hard to hack a private key or “the blockchain” because an attempt to get past the encrypted blockchain algorithm will require one to have enormous amounts of computational power unavailable to most individuals.

The only logical way to steal a wallet is to take advantage of the carelessness of the owner, especially newbies who are just starting out in crypto investments. To help you securely safeguard your NFTs, here are 10 security tips to adhere to in order to keep your digital assets safe from the hands of hackers and scammers:

Store Your Device Safely

Always ensure that you have your firewall and antivirus system enabled. Avoid any software installation that you are not sure about. If you want to install software to your computer, remember to research it thoroughly first! Additionally, do not download random attachments that you come across in your email (which should be a general tip regardless). 

Beware of Phishing Scams

Hackers are known to create a fake web wallet or an exchange that they use to target unsuspecting victims. These sites tend to have very compelling messages where users are trapped to fill in their login details. Once the details are submitted, hackers then use the data to access your real accounts.

To avoid this trap, always check the link you are using on the browser against the one you use on your web wallet or your exchange and confirm if they match. Also beware links being sent to you via DM on Discord or Twitter for a “new project minting” or “surprise drop.”

Use a VPN Service

You can be directed to any browsing page by Wi-Fi hosts, which in some instances can be fake wallets or exchange sites. Hackers can also collect sensitive details like your password through the network. If you want to use your wallet through a safe channel, always use a secure VPN service.

Avoid Storing NFTs on Exchanges

You might be confident enough about your efforts in securing your NFTs, but you should not be too reliant on storing your tokens on NFTs exchanges. Cases have been reported where large exchanges have lost NFTs for individuals because of hacks and technical errors. When you are not selling your NFT, always keep them in your wallet.

In case you still insist on storing them on an exchange, choose the best crypto exchanges that you can find. The topmost exchanges will most likely be trustworthy when it comes to safeguarding your coins. Otherwise, you can also choose to use NFT marketplaces like UCOLLEX, which allows you to buy NFTs with a credit card; no crypto required!

Use Two-Factor Authentication

Two-factor authentication makes it more difficult for hackers to get to your digital wallet or exchange account because the password alone is insufficient to gain access.

Most exchanges and wallets provide a two-factor authentication option you can use to protect your digital assets. Some include the use of a random PIN that is sent to you via email or text.

Use Complex Passwords

When setting up a marketplace account or digital wallet, always use complex passwords. Combine numbers, lower and uppercase letters, and even special characters to create a password that’s unlikely to be compromised. You can also use an online password generator to create a more complex password that is entirely unrelated to your personal details or history.

Once you have a password generated, store it in a safe place. If you must write it down somewhere, always ensure that you store it offline and in a secure place where no one can gain access to it. 

Purchase a Hardware Wallet

Another safe way you can store your digital assets is to use crypto hardware wallets. This is a device engineered specifically to store a user’s private keys inside an impenetrable circuit. At the same time, these wallets allow users to authorize transactions easily.

These hardware wallets have a “seed phrase” which is a list of words or characters that give access to your assets. Never store this online. It should always be written down and locked away safely. If someone gets access to this phrase, they can steal your NFTs.

Store Your Holdings Privately

Criminals are attracted to the blockchain because their exploits are hard to trace. It’s hard to steal from a bank account because trails can be sourced, but the opposite is true when it comes to crypto. Ensure you’re storing your crypto holdings privately to avoid complications or security threats.

Encrypt Your Data

Lastly, a great way to protect your digital collectible, NFT, and crypto investment is to encrypt your data. You can download a .dat backup file in your software wallet that contains your keys. Using VeraCrypt software, you can encrypt the .dat file and store it on your USB device. If a hacker manages to steal the stick, this encryption makes it harder for them to access your wallet.

Digital collectibles represent a new and exciting way to dive into digital investing. Part of the NFT market, this industry has exploded in popularity and looks to be continuing its upward trajectory. As more and more NFT marketplaces evolve to make purchasing digital collectibles and NFTs more easy, we expect the industry to continue to thrive. When you’re ready, dive right in!

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