This article is reprinted with authorization from Automatic Detection Beating, author: Rhythm Editorial Department, copyright belongs to the original author.
In 1999, a 10-year-old boy traded his lunch sandwich for a shiny Charizard Pokémon card. At the time, it seemed like just a typical exchange among kids, much like trading marbles for gum.
Twenty years later, that card was sold at auction for over $400,000.
This story sounds like an urban legend, but it actually happened. The first edition Charizard card, released in 1998, became a holy grail in the collectibles world after being certified as a perfect 10 by the PSA grading agency.
From a child's lunch trade to a sky-high auction sale, this small piece of cardboard witnessed the rise of a phenomenal market.
And now, Web3 seems to be rewriting the rules of this market.
An Undervalued Massive Market
To understand why Pokémon cards have become so crazy, one must first grasp the true scale of this market. Many people think of it as just a toy for kids, but it has long since matured into a serious investment market.
According to data from the analysis company Card Ladder, the monthly cumulative return rate of Pokémon cards has reached an astonishing 3,821% since 2004. This figure has shocked Wall Street fund managers.
In comparison, the S&P 500 index rose by 483% during the same period, and even tech stock star Meta has only increased by 1,844% since its IPO in 2012.
Several key factors contribute to this growth, with time being the first. The Pokémon game was released in Japan in 1996, and the trading card game followed two years later. The earliest cards now have a history of 26 years, corresponding to a generation's growth trajectory; the children who bought these cards back then have now become financially capable adults.
Harris, a trader working at an investment bank in New York, founded a Pokémon card trading community called NY Crazy's Lab with friends. In an interview, he shared that after establishing this platform, he encountered diverse groups from various industries that he had not met in the investment bank.
From police officers to plumbers, from young people making millions trading Pokémon cards in high school to elderly individuals nearing the end of their lives. The popularization of the Pokémon IP has allowed his community to promote it with almost no customer restrictions.
People aged 20 to 40, from the millennial and Gen Z generations, are now the main consumer group for Pokémon cards.
According to a BBC report, the global Gen Z population now has a spending power of $450 billion, while millennials have a disposable income of $8 to $10 trillion annually. Together, their spending power accounts for over 50% of global consumer spending (35% for millennials and 17% for Gen Z), with emotional value consumption making up a significant portion.
Scarcity further amplifies this value. The early Pokémon cards had relatively low print runs, and most were used by children for play. After more than twenty years, very few cards remain in pristine condition. There may only be a few hundred PSA 10 first edition Charizard cards in the world.
In addition to the rarity levels of the cards themselves (Common, Uncommon, Rare), there are many sub-levels within each category. Different Pokémon appear in each quarter's card packs, and with special limited edition cards and unique cards from different language regions, the Pokémon Company has elevated the concept of rarity to a considerable extent through multidimensional combinations.
The celebrity effect has acted as a catalyst. During the pandemic in 2020, well-known YouTuber Logan Paul spent $6 million to buy a box of 1998 Pokémon card packs and opened them live.
This event drew global attention, transforming Pokémon cards from niche collectibles into mainstream investment targets. Traditional auction houses like Sotheby's and Christie's have gradually begun to recognize the value of the TCG industry, opening Pokémon-specific auctions one after another.
In July 2021, Logan Paul purchased a "Pikachu Illustrator" card from collector Marwan Dubsy for $5.3 million, setting a Guinness World Record, which completely ignited the Pokémon card trading market.
The investment logic of Pokémon cards has also matured as trading volumes have increased. Professional grading agencies like PSA and BGS have established standardized grading systems, where every 0.5 point difference can lead to significant price changes.
Platforms like eBay and PWCC provide transparent price discovery mechanisms, allowing investors to analyze card price trends as they would with stocks.
This has even created a huge profit margin for the card grading industry. Research data indicates that the market size in this field will be around $360 million to $400 million in 2024-2025, growing at a CAGR of 7-8%, with the overall market potentially exceeding $560 million by 2030.
Data shows that sales in the U.S. toy sector grew by 6% in the first four months of 2025, primarily due to new Pokémon releases and the increasing popularity of collectible cards.
Walmart's market report indicates that from February 2024 to June 2025, trading card sales grew by 200%, with Pokémon card sales increasing more than tenfold year-on-year.
Challenges Facing Pokémon
Despite the growing maturity of the Pokémon card market, it still faces some fundamental issues. These problems not only affect market efficiency but also limit participation from ordinary investors.
The traditional Pokémon card trading process is quite cumbersome. You need to send the cards to a grading agency and wait weeks or even months for the grading results. If you do not participate in grading, the card's price will be significantly discounted.
Most institutions charge a minimum of around $20 per card for grading, while the time taken for review and the base value of the cards being graded (including insurance services) can push this fee up to $600.
This may be relatively convenient for players close to the institutions in North America, but for participants in other regions, the costs can become quite high.
For example, in East Asia, even through collective orders or professional submission intermediaries, the cost usually starts at around 200-300 RMB per card, which is about 1.5 times the grading fees for players in North America.
After overcoming numerous difficulties, auctioning on traditional trading platforms (mostly TCGplayer and Cardmarket abroad, while in China it is more scattered with platforms like Trading Society, Card Home, or Xianyu) incurs high fees (usually 5%-10%, with some offline card shops charging even 10%-15%), not to mention the risks of damage during shipping and the information silos created by price discrepancies across different platforms.
More importantly, there is a trust issue; without third-party guarantees, it is difficult for buyers and sellers to establish trust. Issues like fake cards, swapping, and refusal to ship occur frequently.
After navigating such a complex process, the money received from trading a Pokémon card may be far less than its actual price, and the high volatility in the secondary market adds many risks to Pokémon card trading.
Harris encountered an interesting phenomenon in his Pokémon trading community: whenever the trading enthusiasm for NFTs or Bitcoin surged, so did the enthusiasm for trading Pokémon cards. During active crypto market periods, some players even directly used Bitcoin to purchase Pokémon cards.
However, various restrictions prevent Pokémon card players from promptly utilizing this market trend, and sometimes even these core traders are unaware of the bubble's fractures.
So far, the Pokémon card bubble has occurred multiple times. For instance, from the second half of 2020 to the period when Logan Paul purchased the $5.3 million "Pikachu," the market's FOMO sentiment caused many Pokémon card prices to surge by as much as 10 times, with some special cards even increasing by 30-50 times.
Afterward, prices plummeted, with the market overall correcting by more than 60%, leaving many new entrants stuck at the peak.
In 2023, some Japanese market makers collectively inflated the prices of certain female "character cards," with some cards' prices rising by thousands of dollars within a week, only to crash to just $200-300 in the following three months.
The lengthy card grading process, combined with the complexity of trading and spatial limitations, often prevents Pokémon card participants from acting promptly in a declining market, leaving them unable to escape the fate of "being zeroed out."
Tuam, the founder of the blockchain TCG trading platform Collector's Crypt, has firsthand experience with these issues.
As a seasoned collector who started playing Magic: The Gathering in 1993, he was once a semi-professional player and even wrote for the longest-running TCG magazine, Scrye.
Before college, he sold most of his card collection to pay for his undergraduate tuition. Later, the remaining Magic: The Gathering collection was worth even more than his property.
However, over the past few decades, Tuam has conducted a large number of card transactions through eBay and has personally experienced the troubles caused by trust, safety, customs, damage, and fraud.
He once sold a $10,000 Magic: The Gathering card to a buyer in Croatia, only for the card to be held up in customs for two months before being returned, resulting in a loss of shipping and insurance costs, with eBay refusing to refund seller fees, costing him 40 hours to deal with these unnecessary troubles.
He also discovered a more serious issue: the abuse of transaction settlements. During the Super Bowl, speculators would simultaneously bid on rookie player cards from two teams, and if their supported team lost, they would cancel the order or refuse to pay, while purchasing the winning team's card at the pre-game price, effectively obtaining a "free futures contract."
The storage of collectibles is also a headache for many collectors. In 2018, Tuam's parents' home was destroyed in the Thomas Fire in California, losing everything, including a 1969 Camaro.
In 2021, he himself was evacuated from his home in San Francisco due to wildfire threats, having to place a large number of Magic: The Gathering collectibles in the passenger seat of his pickup truck for 8 hours in 105°F heat, which made him realize the significant risks of traditional storage methods.
The Pokémon Company also attempted to use digital solutions to address its complex structural issues, but the results were unsatisfactory.
In 2021, the Pokémon Company launched Pokémon TCG Live, allowing players to obtain redemption codes after purchasing physical card packs to exchange for corresponding digital cards in the game. However, this system only allows for a one-way flow from "physical to digital," with digital cards unable to be exchanged back for physical ones or traded between players.
The executive producer of "Gods Unchained," Daniel Paez, who previously worked at Blizzard and participated in the development of famous card games like "Hearthstone," pointed out a fundamental issue with traditional digital card games:
Players cannot truly own their assets in the game.
When RWA Meets Pikachu
Based on these pain points, Tuam decided to establish the Collector's Crypt project. Although discussions about using NFTs to represent real-world assets began as early as 2017, there was a lack of stable infrastructure at that time, such as stablecoins and NFT trading platforms.
It wasn't until the DeFi summer and the NFT boom that the infrastructure surrounding NFTs gradually took shape, providing a viable foundation for projects like Collector's Crypt.
The operational model of Collector's Crypt is relatively simple yet extremely innovative.
First, they collaborate with professional vaults to provide secure storage for physical Pokémon cards that have been graded by PSA or BGS. These vaults have temperature and humidity control, as well as advanced fire prevention measures like the "Halon system," which fills the vault with foam and removes all oxygen to extinguish fires when sparks are detected.
Then, a unique NFT is generated for each stored card. This NFT contains all the important information about the card, including its name, rarity, grade score, serial number, and more. More importantly, an immutable correspondence is established between the NFT and the physical card.
Players can obtain these NFT cards in various ways. They can directly purchase already minted NFTs or participate in "pack opening" events. However, unlike traditional pack openings, the Collector's Crypt pack opening experience is designed as a gamified shopping experience with positive expected value.
Traditional physical card packs typically have an expected value that is negative by 60% to 70%. But in Collector's Crypt's $50 vending machine, an average investment of $50 yields cards worth $55, providing a positive expected value (10% positive EV) right from the initial draw.
After obtaining NFT cards, players have multiple options. They can trade these NFTs on the secondary market or choose to redeem the NFTs back for the corresponding physical cards. Collector's Crypt promises to securely deliver the physical cards within a certain timeframe after receiving the redemption request.
This model addresses several core pain points of the traditional market. Through NFT technology, players' ownership of cards is recorded on the blockchain, and this record is immutable and non-revocable. In the world of Web3, players can trade directly peer-to-peer without the need for centralized platforms.
Blockchain technology breaks down geographical barriers, allowing collectors worldwide to trade in a frictionless market. A player in Tokyo can instantly sell a card to a buyer in New York without worrying about exchange rates, payments, or logistics.
The one-to-one mapping technology of RWA enables the bidirectional free flow of "physical and digital" between physical cards and NFTs. After players convert physical cards into NFTs, they can redeem them back into physical cards as needed. In contrast, on the traditional Pokémon TCG Live platform, users can only achieve a one-way conversion from physical cards to digital cards.
Collector's Crypt has also innovatively introduced a buyback mechanism, promising to repurchase NFT cards from players at 85-90% of the market price. This provides a price floor for the cards, alleviating concerns about "not being able to sell." Additionally, transactions on the blockchain are almost instantaneous, and the fees are much lower than those on traditional platforms.
The significance of the Collector's Crypt project goes far beyond card collecting itself. It represents the beginning of a larger trend: the digitization of real-world assets.
In the real world, investing in high-value collectibles has always been the privilege of the wealthy. A Picasso painting, a bottle of 1947 Lafite wine, or a 1952 Mickey Mantle baseball card can be worth millions of dollars, making it impossible for ordinary investors to participate. Even with sufficient funds, the processes of purchasing, storing, insuring, and certifying these assets are fraught with complexity and risk.
Pokémon cards, as RWA, have several unique advantages:
First, they are standardized collectibles, with each card having a clear version, rarity, and condition rating, making tokenization relatively straightforward.
Second, Pokémon cards have an active secondary market and a transparent price discovery mechanism, providing reliable references for NFT pricing.
Additionally, Pokémon cards are small in size and high in value, making them ideal for physical storage and digital management. A card worth tens of thousands of dollars is only the size of a credit card and can be easily stored in a professional vault, while the corresponding NFT can circulate freely worldwide.
Tuam, the founder of Collector's Crypt, envisions that in the future, their tokens could be seen as a "Pokémon card ETF."
Pokémon cards are one of the best-performing asset classes of this century, with a compound annual growth rate of about 20% to 25% since the early 2000s, far exceeding the S&P 500 index and being uncorrelated with traditional assets. The only assets that can surpass them are a few cryptocurrencies like Bitcoin, Ethereum, and Solana.
However, high-net-worth individuals (such as family offices managing billions of dollars) have found it difficult to invest in trading cards. The entire process involves many troublesome steps, such as how to procure cards, prevent buying fakes, and the need to spend a lot of time and effort on storing and transporting these cards.
The tokens of Collector's Crypt are backed by a vault of real-world assets, and their token market value reflects the value of Pokémon cards in the vault to some extent.
This means that investors can purchase their tokens, $Cards, through decentralized exchanges, easily gaining exposure to Pokémon card assets without dealing with the complexities of physical transactions.
Users can also purchase NFTs on the platform using $Cards tokens and participate in governance voting, influencing the future development of the platform. To incentivize token holders, Collector's Crypt provides returns through the buyback mechanism, allowing them to benefit from the project's revenue growth.
The success of this model offers valuable insights for other RWA projects. High-value collectibles like art, luxury goods, and rare metals can also be tokenized in similar ways. The key lies in establishing a trustworthy custody mechanism, a transparent price discovery mechanism, and a convenient redemption process.
The Beginning of a New Era or Old Wine in New Bottles?
The success of the Collector's Crypt project is not just a business case; it is a milestone in the digital transformation of the entire collectibles industry. It demonstrates the potential application of Web3 technology in traditional industries and provides a reference model for the digitization of other collectible categories.
Tuam is optimistic about the future of the crypto industry. He believes that in the last cycle, many Web2 major brands entered the crypto space primarily driven by marketing teams, attracted by the hype surrounding NFTs. When the marketing hype faded, these projects disappeared as well.
He has observed a shift in the current trend, which is now driven more by practicality.
For example, internet payment giant Stripe acquired a payment processing company to improve the deposit and withdrawal experience for blockchain users and smart wallets, allowing users to safely use the technology without three years of crypto experience.
However, Tuam believes that true mass adoption of cryptocurrency will not come from people downloading wallets and speculating. Instead, it will be a "seamless" technological revolution hidden in the background.
For instance, Walmart might reserve Pokémon boxes for specific users through smart wallets and NFT technology, without users even knowing that blockchain technology underlies it. He believes this "revolution" will fundamentally change the game in the next five years.
That $400,000 Charizard card witnessed the transformation of Pokémon cards from children's toys to investment assets. From a sandwich trade in 1999 to the Web3 revolution in 2024, this story spans 25 years and reflects profound changes in technology, culture, and economics.
The emergence of Web3 technology has injected new vitality into this ancient collectibles market. It addresses many pain points of traditional markets and brings new possibilities to the collectibles market.
From a Charizard traded for a sandwich to a $400,000 auction item, and now to freely tradable digital assets, this story continues. And we stand at the starting point of a new era.
Related: With the strong rise of the Memecoin sector in September, Pump.fun's daily trading volume surpassed $1 billion.
Original: “Pokémon Cards Soaring 40x in Value: Can RWAs Unlock a Global Business?”
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