NFTs are digital tokens that confer ownership of digital objects. The first NFT was created in 2014, and before too long they had caught the fancy of a small but loud corner of the Internet. In March of 2021, a single NFT sold for $69mm, catalyzing a 10-fold gain in the Coinbase NFT index by the end of that year. During this time, proponents of NFTs were fond of telling of telling non-believers “Have fun staying poor.”

At that point, lovers of humility may have bristled, but a year later the poor were indeed having fun: The NFT market had collapsed, and by the end of 2022 prices were back to where they were before the run up. Each side in the NFT wars has had their day, but which will have the last laugh?

The mostly juvenile nature of NFT artwork may rankle the Never NFTers, but their main argument against the tokens is that while they convey "ownership" they don’t confer copyright. In other words, the owner of Monet’s Water Lilies painting ($70mm, 2021) has total control over what can be done with the painting, but the owner of Beeple’s Everydays: the First 5000 Days NFT ($69mm, 2021) has no control at all over what can be done with the jpeg. See? 

Many seem persuaded by this argument, or other anti-NFT arguments, since only 8% of Americans are proponents. However, NFTs would not be the first collectibles to defy expectations.

Collectibles are valuless objects upon which people place value. Unlike farmland or semiconductors, collectibles don’t produce anything other people need, and unlike the Mona Lisa or a 1959 Austin Healey 3000, they don’t inspire. True collectibles are previously worthelss things that some people decided they wanted to own. But, that's not nothing.

As the world gets wealthier, as it has since the Renaissance, the more money people have to pay more for something that is inherently worthless. Postage stamps, tulip bulbs, and too many more to name have all had their day, or year, or longer. But beer cans, matchbooks, Tonka toy trucks, and many others have not. So the question isn’t “will some useless items increase in price?” it’s “which will be the ones that do?”

A common and necessary ingredient in collectibles that have increased in value over time is that they were not created to be collectibles. The market for a collectible must arise organically, a certain number of people must independently come to want to own them, or else any price increase cannot be sustained. One can't just say to people "you will want to own my 1968 Nixon campaign button" and have it be true.

Baseball cards were created in 1865 to help sell tobacco. Over a century later, some possibly nostalgic people who had baseball cards as kids, thought some older cards would be nice to own, and the rest is history. Prices for vintage cards rose twelve-fold beween 1980 and 2008, and another twelve-fold from 2009 thru 2022. The 144-fold return trounced the US large cap market return of 40x in the same period. By contrast, the best known and most expensive NFTs, like Cryptopunk #5822 ($23mm, Feb 2022)

were created to make their owners rich. And for this reason, more than any other, they are not likely to do so over time.