People have always loved to collect things, but now collectables have moved beyond physical things like stamps, and have entered the digital world. Particularly seen within fintech, with NFT’s booming in popularity and even a popular choice for investors.
Artemy Lechbinskiy is the CEO and watch expert at Ineichen Zurich AG and CHRONOFUND project. Having worked with watches for more than 10 years, he now remains involved into the everyday evaluation, repair and selection process while managing the auction house.
Here he shares his views on the current collectable craze within fintech.
Everyone is a collector.
Some people collect memories, some choose butterflies, while others who are less fortunate collect parking tickets. However, one important trend in the world of investment and fintech is the matter of collectables.
A collectable – also known as a collector’s item – can be any object that has value or interest. I like to see it as the more glamorous part of the alternative investment sector. Collectables have the potential to go up in price and will help diversify an investment portfolio. The object can be a book, toy or watch. It doesn’t have to be something incredibly expensive like fine wine or a classic car. Let’s face it, the list of collectables is a long one.
According to TechCrunch, the estimated size of the global collectables market is $370 billion. It’s a huge industry and one that needs a bit more understanding about what it has achieved – and what it can accomplish.
The difference engine
Let’s examine two contrasting concepts. If we look at something like classic cars, some companies offer a digital platform to invest in them. An element of trust is required as those firms’ experts will select the vehicles based on what they deem is the investment potential.
Interestingly, some companies offer the purchase price of a car that can be crowdfunded by selling digital asset tokens to investors on their platform. Here we can see the beauty of technology meeting the real world. While the process is digital, the classic car as a collectable isn’t.
For customers, there are some notable benefits. They have the chance to share in any profit when the vehicle is resold. It also comes back to this principle of diversification as people will be able to create a healthy portfolio mix by buying tokens in multiple cars.
Elsewhere, and over in Germany, the football club Bayern Munich unveiled blockchain-based merchandise for its fans. With the help of a partner the German team provides digital collectables of its players. The club is certainly on target and scores plenty of points for such a clever idea.
Users can build virtual line-ups with their player cards and play against the line-ups of other users, with results calculated based on real-live results or historical data. This allows users to increase the value of their player cards, which they can sell on the marketplace.
The cards will potentially go up in value anyway – as people love to collect things and get a full set.
In fact, digital football collectables have sparked a great deal of interest with one platform provider recently receiving $50 million in funding.
There are many other collectables to discuss but something close to my heart – and my wrist come to think of it – is the watch.
When compared to the stocks and bonds market, the watch market is not highly volatile and the price for the most popular investment models is steadily growing.
We launched the first-ever watch investment platform, called CHRONOFUND. As a result, we did some calculations and compared the stats with bank deposits and real estate.
For example, a bank deposit has minimal risk but will give an annual return of just 1%. Real estate generally requires a much higher entry point and offers an annual return of around 5%. But it does have moderate risk involved.
A watch investment platform provides minimal risks and an annual return of approximately 8.5%. The watch is always the actual property of the individual, so they can always resell it or keep it in a safe for whatever reason. As with the classic car and Bayern Munich examples, the whole process happens online.
Collectables, like any type of investment, will have pros and cons. An authority like the Money Advice Service in the UK mentions disadvantages. In its view, there is “no income”. It notes that shares provide dividends, yet the only way to make money from collectables is to sell them.
It also mentions that the dealer will take a cut when a collectable is sold. But a dealer has to make a profit, and in reality, everyone gets a cut of something or other. Think of governments and their desire for taxes.
On the flip side, the Money Advice Service points out the advantages. A collectable can be a possible guard against inflation. Collectables have matched inflation or increased in real value in the past. A collectable is also a way to diversify your portfolio… and “it’s fun”.
If people collect things they love, they will naturally be interested and knowledgeable about the objects. That in turn will create better choices about what to buy and provide a valuable investment.
After all, life is supposed to be fun!