Introduction

The main question for stamp collectors has always been how to attract more people to the hobby. While there may not be one specific answer, bringing new technology into the hobby would definitely help with the idea of it being outdated. These changes have already been happening in other collecting fields such as the art and numismatic world, and have been adopted by many postal organizations, so it makes sense that we are seeing them in the stamp collecting world as well. While there are still many issues and concerns from traditional collectors, there is no doubt that non-fungible tokens (NFTs) have the possibility to change the way that we think about stamps, and to bring people into the hobby who would otherwise never be interested in starting a stamp collection. So is it worth it to start collecting these new stamps? Before making a decision, it would be useful to learn more about what NFTs actually are.  

What are NFTs? 

As mentioned in the introduction, NFT is an acronym for non-fungible token. Let's explain this term by breaking it down into two parts. Non-fungible means unique in the sense of not being able to be replaced for another item. Think of this as something like a diamond or a painting, each one of which is unique, as opposed to a dollar, which can easily be exchanged and recreated.

Why are NFTs unique? This is where the token part comes in. Broken down into the simplest terms, token means that you can take an image (of a stamp, painting, or anything else) and mint it as a token (a token is a digital currency that does not have its own blockchain, which is basically a system that has a record of transactions). Minting here is the same as minting a physical coin, except the maximum supply of NFTs that can be minted is 1, which is why they are unique.

An explanation of the process of viewing an NFT stamp can be found here.

It is important to note that NFTs cannot be used to pay for postage, since they exist only as digital collectibles, so in that sense they are not technically "stamps." 

So why are they important to the hobby? 

When you are buying a stamp, there is always a risk that something would happen to it (for example a flood or a fire) which would destroy it. If it is an older stamp with few examples remaining, that means there is a high chance that all examples of the stamp would eventually be gone. In addition, stamps simply degrade over time due to light, humidity, and even oxygen, as well as through regular handling. There is no way to prevent this, even if your collection is kept under perfect conditions, which is not always the case.

With NFTs, these problems would not exist since there is only one method to destroy an NFT, called NFT burning. The process involves sending a token to an un-spendable address that no one has access to. Learn more about burning NFTs here.

Additional Artifical Reality features, such as adding moving elements and music to the stamp, and even access to a virtual art gallery (such as in these stamps released this year from Lichtenstein) can make a stamp come alive, which is impossible to do with a regular physical stamp.

Another feature that is unique to NFT stamps is "gamification." A good explanation of this process, which includes a trivia game and a collection score that can be used for rewards such as a travel program, is provided by stampsdaq owner Andrii Shapovalov. Read Andrii's interviews here.

Unlike a physical stamp that requires an expert to authenticate it, the authenticity of an NFT is automatically confirmed by the blockchain network that it is on. It is important to understand that this technology does not make them immune to security issues.

Security Concerns

Since the different use cases of NFTs are not easy to identify, there is currently no specific governing body to enforce resale commissions when an NFT changes hands. This fact does not make NFTs less secure, and in fact decentralization actually has the opposite effect for NFTs since it means that there is not a single place that a hacker would need to attack to get into the database, as they would for a bank, but rather multiple points of the network. 

In addition, this also means that your NFTs are not subject to challenges that physical stamps face such as price increase due to inflation. There are other benefits explained here. 

Other major concerns in philately that are always being addressed are forgeries (both of physical stamps and the NFTs) and fraud.

One specific organization that has faced a lot of these challenges is the Austrian Post Office (PostAG), which released 4 different versions (or issues) of crypto stamps from 2019 until today. Version 4 was the first joint issue of a crypto stamp (in cooperation with the Dutch PostNL). Additional details about all of Austria's crypto stamps can be found here. 

While these crypto stamps are not NFTs in the full sense (this will be discussed more later), they are still a great illustration of the challenges that arise with selling something that can be accessed by anyone who has a password. 

PostAG philately head Patricia Liebermann explains how the organization adapted to these challenges in this interview:

"With version 1.0 there was a lot of fraud –  some people were printing their own copies and with 2.0 some customers using super-bright lights to try and read the secret word list through the paper. So with every issue we have had to increase our security.  

For example in our latest version, 4.0, there is an NFC chip which you can scan on your smartphone to check that your Crypto stamp has not been activated yet. As well as the NFC chip, on the back side there is a secure foil and when you open the foil it reacts with oxygen and so you can be sure that no one had already accessed the passwords or transferred the digital twin." 

NFT stamps are not limited to Europe, countries that have issued these stamps include Bhutan, Japan, U.A.E., Botswana, and many more. Image courtesy of stampsdaq

Attracting a New Audience

While some millennials and many Gen Zers are still skeptical of these new stamps, we can see that they can attract a lot of attention, mainly from the perspective of an investment to resell. An example of the success of NFTs using a different strategy can be seen in Japan Post's launch on the Rakuten NFT marketplace in October 2022. As the national post office, one might expect them to release a large quantity of NFTs. Instead, they decided to split the NFTs into three packs of animals, flowers and scenery, with an average of 100 units of each pack being sold for roughly $20 per pack (of five stamps). Not surprisingly, all packs sold out and are being resold at a significantly higher price ($82 resell price compared to $4 as the original price per stamp). This means there are people buying and selling these stamps who may not be collecting traditional physical stamps, helping to open up the hobby to a wider audience.

A Compromise?

For those traditional collectors who are wary about NFTs but still interested in learning more about them, there may be a way to get the best of both worlds. That is, having an NFT of a stamp along with a physical twin. Or, if you prefer, you can look at it as having a physical stamp with a digital twin. An excellent example of this is going back to PostAG, which began exploring the concept in 2019 with Crypto Stamp 1.0. Liebermann reflects that “In 2019, we invented the idea of having a physical stamp combined with an NFT. It was mind-blowing, and we were overwhelmed with all that feedback. And that’s why we said, ‘Okay, there is a target group out there who is interested in this new way of collecting.’” The NFT in this case serves as an additional way of certification that would transfer between owners of the stamp.

In Summary

Overall, while most collectors may still be skeptical about this new technology, there is no denying the success that these crypto stamp releases have had so far. In addition, these new stamps are not easy to destroy and have many use cases that physical stamps do not have, such as the ability to track the stamp as it transfers ownership when it is purchased and sold, which is proven cryptographically by a private and public key.

One important issue to note is that most of these use cases are able to be done without NFTs, so an argument can be made that currently they are not being used to their full potential. Once more people will begin to understand the value of the digital applications of NFTs and find different ways to use it, it is likely that there will be a more seamless integration of this new technology into the hobby. 

More information about NFT stamps can be found on the International Philatelic Promoters Discord Server, (learn more about Discord in this article) from where a lot of discussion points that I make have been found, as well as the references listed below: 

Additional Sources: 

Cointelegraph. (2023, February 13). The regulatory considerations of nfts in the United States. Cointelegraph. Retrieved April 13, 2023, from https://cointelegraph.com/learn/the-regulatory-considerations-of-nfts-in-the-united-states

Fortnow, M., Terry, Q. H., & Nguyen, K. (2022). The Nft handbook: How to create, sell and buy non-fungible tokens. John Wiley and Sons, Incorporated.

Gavin, J. (2022, February 9). NFT & Crypto. The Digital Philatelist. Retrieved April 13, 2023, from https://thedigitalphilatelist.com/nft-crypto/

Jenkinson, G. (2022, September 23). Post offices adopting nfts leads to a philately Renaissance. Cointelegraph. Retrieved April 13, 2023, from https://cointelegraph.com/news/post-offices-adopting-nfts-leads-to-a-philately-renaissance