Smart Collectibles: Unlocking The Value of Non-Fungible Tokens (NFTs)

NFT-based art is at the forefront of a new wave of digital ownership that enables creators to retain control of their work and create and sell ownership rights for their digital media. But digital art is just the tip of the iceberg: this same technology can unlock access to any unique physical or digital resource, including products, services, and event access. We call these NFTs used to access and determine ownership of resources off the blockchain ‘Smart Collectibles.’ Smart Collectibles have applications that range from digital gaming and media to finance and property. They are also a key enabler of Web 3.01 and the Metaverse, an always-on shared digital universe where people can work, play, and hang out. By creating this document, we aim to inspire and encourage creators, communities, and businesses to continue to innovate in this space. With Smart Collectibles, artists and organizations can enable access to value in a way that is traceable and highly secure and even stack access to multiple forms of value onto the primary non-fungible tokens themselves.

In comparison to these, Smart Collectibles have many improvements and benefits. Each Smart Collectible has the potential to unlock access to many types of value, and this value can be added without limit by both the creator of the token and others. Because the Smart Collectible is made on the blockchain, it is nearly impossible to tamper with.
Selling a Smart Collectible is easy and secure; NFT standards and marketplaces mean they can be bought and sold freely in a liquid market. Access automatically transfers to the new owner 8 Blockchain is a decentralized digital ledger, or database, technology that tracks transactions. In this paper, we assume that the blockchain refers to the Ethereum blockchain, but any blockchain that supports smart contracts could be used for Smart Collectibles. after a sale, and because the information is stored on a publicly verifiable ledger (the blockchain), there is no need for third-party verification.
Let's take a look at the difference. See Figure 1. Creation: Each unique ticket is a Smart Collectible, which when sold is transferred to the purchaser's digital wallet 9 . The owner of that wallet is then given access to the event by proving their ticket ownership using an NFC-enabled device, like a smartphone. Because the Smart Collectible 'ticket' is held on the blockchain, it is nearly impossible to tamper with it 10 .
If the owner chooses to resell the ticket before the event, this can be done simply and securely without the aid of an expensive intermediary. Additionally, the Smart Collectible can be programmed so that part of the transaction fee goes to the creator of the event, ensuring the event benefits from any resales that happen.
Added Value: After the event, the event organizer adds value to the Smart Collectible by enabling the owner to access an exclusive video of the concert. They also allow ticket holders access to exclusive discounts for an online store where they can purchase merchandise related to 9 A digital wallet is an app used to store digital tokens and cryptocurrency. 10 It is nearly impossible to steal a Smart Collectible cryptographically, however there is still a vulnerability to social engineering techniques where someone tricks you into sending them the Smart Collectible or to providing access to your Digital Wallet, or by stealing your private keys (if you have stored them somewhere). the event. The creator can stack any amount of value on the same Smart Collectible. This does not need to be added all at once; creators can continue to add value to a Smart Collectible indefinitely.
Sale: Over time, the band who gave the concert grows in fame, and the Smart Collectible ticket continues to accrue value due to the unique bonuses it enables access to and as a collectible item itself. The holder decides they want to sell it and lists it on a popular NFT marketplace, enabling collectors to bid for it in an auction. After a competitive auction, the ticket and its associated benefits sell as a collector's item for the equivalent of $1,000. The band that issued the Smart Collectible receives a percentage of the sale, in this case, 10%. They will continue to receive this every time the Smart Collectible is sold, enabling them to continue to benefit from the value they provide. As you can see from Figure 2, when creators begin to use NFTs to provide access to more value than can be held in metadata, a plethora of functionality is unlocked. When creators make NFTs like this (which we categorize as Smart Collectibles), they access many benefits: • Create and sell secure digital 'keys' for accessing almost any type of value • Mix different types of value on the same Smart Collectible, enabling them to create unique value propositions tailored to their customer's needs and business model.
• Add additional value after creating it, perhaps months or even years later • Include code in the metadata so that they automatically receive a percentage of the sale price when the Smart Collectible is resold on a secondary market

• Add value to Smart Collectibles made by other creators
For Smart Collectible owners, this enables them to: • Securely purchase assets that continue to accrue value • Benefit from multiple forms of value through just one Smart Collectible • Easily access the value by having all their Smart Collectibles in their digital wallet without having to remember multiple usernames and passwords • Securely sell or trade their Smart Collectibles whenever they wish

Smart Collectibles Use Cases
Smart Collectibles enable creators to limit access to digital or physical items or functionality securely, and as such, have a wide range of use cases. In addition to the ticketing and events example above, use cases are detailed below and illustrated in Figure 3.

Gaming & Digital Collectibles
Collect, use and sell unique digital collectibles that enable users to access unique gameplay or abilities within one or many games. These include digital Collectible Card Games (CCGs) and unique items and resources (weapons, apparel, items) in online multiplayer games.
A single Smart Collectible could unlock access in one or many games. For example, a publisher may enable one collectible to unlock the same clothing style in multiple games, enabling users to better define their own digital identity.
Additionally, NFTs and Smart Collectibles could also replace user accounts and passwords. In this scenario, selling an account is as easy as trading the Smart Collectible: whoever holds the Smart Collectible can access the account.
This can also be beneficial for publishers, who currently do not benefit when accounts are sold on a secondary market: the Smart Collectible can be coded to reward game publishers with a percentage of the price every time an account is sold on.

Finance
A Smart Collectible can be assigned rights or deeds to dividends, securities, properties, businesses, and more. Furthermore, Smart Collectibles can be used to reassign value. For example, a Smart Collectible can be assigned as a beneficiary in a will, enabling someone to pass on their estate to another person, or multiple persons in the case of multiple NFT owners.

Credentials & Identity
A Smart Collectible could be used as a unique and secure method of authenticating a person's identity or other credentials and using that information to enable or disable access to specific resources or actions. In this case, the Smart Collectible would not be tradable to prevent identity fraud. Potential uses include voting, identity cards, and access to financial accounts. One project working on this is IdToken 11 .

Voting
NFTs and Smart Collectibles can provide voting rights for owners that enable them to have their say in how a platform, business, community organization, DAO (see below), or even country is run.
Each voting token (smart collectible) enables the owner to take a vote. Depending on the setup, owners may be able to own multiple voting tokens or just one, and tokens may be tradable or non-tradable. In some cases, users may assign their voting rights to another individual to enable them to vote on their behalf (while still retaining ownership of their Smart Collectible).
Many DAOs currently use ERC-20 tokens (cryptocurrencies) as voting tokens, enabling people to vote according to how many tokens they hold and to split their vote if they wish (quadratic voting 12 ). Smart Collectibles can be used similarly but could also enable other voting options.
For example, rarer Smart Collectibles may offer a greater voting weight (more votes) than more common ones.
11 IdToken uses biometric data to create the private key, ensuring users are able to access their data even if they lose their digital wallet. Read more in the whitepaper by Eduardo Talamo and Alma Pennacchi, IdToken: the new decentralized approach to digital identity, https://dblp.org/rec/conf/openidentity/TalamoP20 12 Quadratic voting allows someone to allocate votes according to how strongly they prefer one option. For example, a person may have 5 votes and allocate 3 to one option and 2 to another, to express a slight preference.  Smart Collectibles will enable this by allowing users to control how the content they generate is used and to sell or trade it using a trustless system 27 that does not rely on third parties, such as Facebook or Google. This also has the benefit that individuals will be able to transact anonymously, something that is impossible with Web 2.0 solutions.
In the future, specific accesses provided by a Smart Collectible will themselves be able to be tokenized, enabling owners to sell, lend, or duplicate parts of a Smart Collectible that they own while maintaining control of the underlying asset. The technology to do this is not available yet, but is expected to be in the future 28 .
Additionally, NFTs and Smart Collectibles are also key to the creation of the Metaverse -a long-anticipated always-on shared digital universe where people can work, play, and hang out. In the Metaverse, people will be represented by their avatars and need to own things -digital clothes, items, and even virtual land -and that's where NFTs and Smart Collectibles come in.
In a digital world where you can look however you like, the digital items you hold will become a key way of expressing your identity. While we're not at the Metaverse yet, worlds such as Decentraland, a virtual world built on the blockchain, and Fortnite, with its events and IP crossovers, are moving in that direction. It is hoped that within the next few years, many of these disparate This enables two people to enter into a transaction together even if they do not know and trust each other; the decentralized network ensures the transaction proceeds as agreed. 28 DeStation is currently producing technology to solve this problem. Visit www.destation.org for updates. online worlds will join up into one Metaverse, which people will be able to travel across freely.

Conclusion
The possibilities offered by Smart Collectibles are nearly endless, but to see these become a reality, we need to see improvements in three areas: Innovation -Businesses, communities, and creators must innovate in their use of NFTs, stacking value to create true Smart Collectibles. This functionality is available already, but is so far under-utilized. With the NFT ecosystem still at an early stage, there is a massive opportunity for businesses, communities, and creators to claim the advantage of being among the first to realize the true potential of this technology.
Participation -To encourage innovation, users must reward projects that seek to deliver more value than just metadata. Look out for creators, communities, and businesses that are stacking value and support them by purchasing their NFTs in favor of those who provide little value.
Interoperability -To achieve the true potential of the Metaverse, there must also be a solution for building interoperability between the multiple platforms that currently allow for the creation of

Acknowledgments
Many thanks to all of the proofreaders who have helped get this into a vaguely presentable shape.