NFTs, at their core, are blockchain-secured digital collectibles—unique, verifiable, and indivisible. But before diving into the technology, it’s essential to understand why people collect them. The psychology behind collecting isn’t new, and one of the most fascinating real-world parallels comes from an unlikely source: Beanie Babies.
The Psychology Behind Collecting
From stamps and Civil War relics to sneakers and vintage toys, humans have always been drawn to collecting. The desire to own something rare, exclusive, or emotionally significant transcends physical form. Enter Beanie Babies—the plush toys that took the 1990s by storm and offer a compelling lens through which to view today’s NFT phenomenon.
Launched in 1993 by Ty Warner, Beanie Babies were designed with scarcity in mind. Distributed only through small retailers and deliberately withheld from major chains, these toys were never meant to be easy to find. Warner understood the power of exclusivity.
Certain designs were “retired,” creating artificial scarcity. Others entered circulation with printing errors—like a lobster labeled “lobsta”—making them instant rarities. The company never disclosed production numbers, fueling speculation and driving up perceived value.
At the same time, eBay emerged as a global marketplace for collectors. It became the perfect engine for speculation. A $5 Beanie Baby could resell for three times its price. Rare misprints sold for over $10,000.
By the late 1990s, Beanie Baby mania reached fever pitch. Fights broke out over releases. In 1999, a security guard was fatally shot at a Hallmark store in West Virginia due to delayed shipments. Divorcing couples fought over who got custody of their collections, believing them to be life-changing assets.
Even McDonald’s joined the craze in 1997 with Teenie Beanies—mini versions included in Happy Meals. Over 100 million were sold in just ten days.
Magazines like Mary Beth’s Beanie World sold 650,000 copies a month, analyzing which designs were appreciating and how smart collectors could turn profits into college funds.
Then, the bubble burst.
Overhyped valuations led to mass sell-offs on eBay. Supply overwhelmed demand. Prices collapsed overnight. Chris Robinson Sr., who invested over $100,000, became a symbol of the crash.
The Financial Times famously dubbed Beanie Babies “dot-com stocks for soccer moms.” This isn’t to say NFTs are doomed to repeat history—but the parallel is instructive. The driving force behind both trends? Scarcity.
While investment, speculation, emotional attachment, FOMO (fear of missing out), and aesthetic appeal all play roles, the foundation of any collectible—physical or digital—is limited supply.
What Exactly Is an NFT?
An NFT—non-fungible token—is a unique digital item verified and protected by blockchain technology. It proves authenticity, ownership, and uniqueness (i.e., scarcity) of a specific asset.
Let’s break down the term.
What Is a Token?
In everyday language, a “token” can mean a keepsake or memento—fitting for digital collectibles like art by Mike Winkelmann (Beeple), digital trading cards of Rob Gronkowski, or even a fortune-telling Curly from The Three Stooges. But in the context of NFTs, “token” has a technical origin: blockchain.
You may associate blockchain with cryptocurrencies like Bitcoin or Ethereum. According to Investopedia, cryptocurrency is “a digital or virtual currency secured by cryptography.” These are digital currencies used for investment, purchases, or staking (lending to earn interest).
Every crypto transaction—buying, selling, transferring—must be verified. This verification ensures the sender has sufficient balance and prevents fraud.
Take Bitcoin: transactions are grouped into “blocks.” Each block has limited space. Once full and confirmed, it’s linked to the previous block, forming a growing chain—the blockchain.
This ledger records every transaction in a cryptocurrency’s history, from its inception. As of January 2021, Bitcoin processed around 400,000 transactions daily; Ethereum exceeded 1.1 million (Statista.com). Think of it as an ever-expanding digital ledger.
Cryptocurrency vs. Token
Though often used interchangeably, “currency” and “token” are different.
- Cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Dogecoin have their own blockchains.
Tokens, however, run on existing blockchains. For example:
- GameCredits (GAME)
- SushiSwap (SUSHI)
These are built on Ethereum’s network and follow the ERC-20 standard—a set of rules for creating fungible tokens.
GameCredits originally had its own blockchain but migrated to Ethereum for better scalability. Now, all GAME transactions are recorded on Ethereum’s blockchain—contributing to its high transaction volume.
Similarly, NFTs are tokens that exist on blockchains. Most are created on Ethereum, though others use WAX, Binance Smart Chain, or alternative networks.
What Does “Non-Fungible” Mean?
Fungibility means interchangeability. A dollar bill is fungible: five $1 bills equal one $5 bill. No matter which specific bills you use, the value remains the same.
Cryptocurrencies like Bitcoin are also fungible—one BTC equals another BTC.
Commodities like oil barrels are fungible too—as long as quality is consistent.
Non-fungible items cannot be freely exchanged because each is unique.
A diamond, for instance, has distinct characteristics—cut, color, clarity—that make it irreplaceable. You wouldn’t trade your engagement ring for just any other diamond.
NFTs work the same way. Each is one-of-a-kind.
But wait—can’t anyone download or copy a digital image?
Yes—but copying the file isn’t the same as owning the original. When you mint an image as an NFT, you’re creating a verifiable certificate of ownership on the blockchain. It’s like photographing the Mona Lisa: anyone can take a picture, but only one original exists.
Minting turns a digital file into a token—just like minting a physical coin. While cryptocurrencies may have billions in supply (coded into their protocol), NFTs are typically limited—sometimes to just one copy.
Frequently Asked Questions (FAQ)
Q: Can I copy an NFT?
A: Yes—you can screenshot or download the image linked to an NFT. But you don’t own the original or its provenance. Ownership is recorded on the blockchain and cannot be duplicated.
Q: Are all NFTs expensive?
A: No. While some sell for millions, many NFTs are affordable—ranging from under $10 to hundreds of dollars. Value depends on rarity, creator reputation, utility, and demand.
Q: Do NFTs have real-world uses beyond art?
A: Absolutely. NFTs are used in gaming (owning in-game items), music (artist royalties), identity verification, event tickets, and even real estate deeds.
Q: Is the NFT market stable?
A: Like any emerging market, it’s volatile. Prices fluctuate based on trends and adoption. However, unlike Beanie Babies, NFTs offer verifiable scarcity and utility through smart contracts.
Q: How do I buy an NFT?
A: You’ll need a digital wallet and cryptocurrency (usually ETH). Visit an NFT marketplace (like OpenSea), connect your wallet, and browse listings. Always verify authenticity before purchasing.
Q: Can NFTs lose value?
A: Yes—like any collectible or investment. Market demand drives prices. Projects with strong communities and utility tend to hold value better over time.
Why NFTs Are More Than Just a Trend
Unlike Beanie Babies, NFTs solve long-standing problems in art and collectibles: provenance tracking, counterfeit prevention, and automated royalty payments for creators via smart contracts.
They represent a shift toward true digital ownership—a concept that’s reshaping entertainment, finance, and identity in the digital age.
Whether you're drawn to digital art, gaming assets, or new forms of expression, NFTs offer a glimpse into a future where ownership is transparent, global, and user-controlled.
The era of digital collectibles isn’t just here—it’s evolving.