Non-fungible tokens (NFT) have been taking the collectible and investment world by storm. NFTs generate over billions in trading volume per quarter, just in the art sector alone. But beyond million-dollar paintings, other use cases for this blockchain technology have become growingly prevalent; and that is no more evident than within gaming.
From popular CryptoKitties selling for $300,000 AUD per piece to Axie Infinity providing full-time jobs for people in developing countries (through play-to-earn mechanics), gaming NFTs are challenging the monolithic art & collectibles sector — and they’re absolutely crushing it.
From July of this year, gaming NFTs consistently produced double or more the sales made by art & collectible NFTs on a weekly basis.
Source: The Block Crypto
Also up until June, art NFTs drastically eclipsed the trade volume of gaming NFTs by 99:1 but have since then equalised. Specifically, trade volume for the former has remained mostly static, whereas trade volume for the latter has multiplied by over a hundredfold.
Source: The Block Crypto
What’s the hype about?
NFTs are built upon the principles of social status, authenticity and proof of ownership. This is the foundation for why people spend millions on a painting that they could otherwise take a screenshot of.
That being said, ‘owning’ an NFT is almost an abstract concept in the art world. After all, art is traditionally a physical product, and so the idea of what owning an art NFT means may not always be clear. In this sense, NFTs and gaming synergise perfectly, as digital collectibles are nothing new for gamers.
In fact, the scarcity and uniqueness of digital content in video games provides a unique opportunity for NFTs. It gives players a means to authenticate and protect virtual assets acquired while playing, assets which they can eventually sell for large amounts of real-world cash thanks to the authenticated scarcity and uniqueness.
Behind the popularity of gaming NFTs
The rise of gaming NFTs boils down to a few key factors, the first of which is accessibility. The average price of gaming NFTs is a few hundred dollars, while the average for art NFTs is in the hundreds of thousands. The latter acts as a stark deterrent that can bottleneck the stream of new investors entering the art space.
Functionality also goes hand-in-hand with accessibility. For example, a pet from Axie Infinity could cost a hundred dollars but will provide more entertainment and interactability than a painting that costs thousands of times more.
To top this off is the sheer size of the video game industry. Gaming is almost three times the size of both music & film combined, and that gap will only widen more in the coming years. With billions of gamers around the world, the increasing popularity of gaming NFTs is nothing more than a natural progression, given the unique benefits that it affords the space.
What can we expect going forward?
Gaming NFTs have an incredibly bright outlook going forward. For starters, Coinbase announced back in October plans to set up an NFT marketplace. In just one month, Coinbase received 2.5 million sign-up emails. Their marketplace will allow users to purchase, store and showcase NFTs on a platform that’s more akin to a social media site like Instagram, than a traditional marketplace like eBay. The more social-oriented nature of this marketplace will spur NFT popularity and attract new users.
Polygon has recently announced a partnership with GameOn Entertainment to build new NFT games. This is part of Polygon’s plans to provide $140 million AUD in funding for game studios that seek to fuse blockchain and gaming.
This signals a dynamic shift in game development. As gaming NFTs become better understood, more game studios will join the ranks of existing blockchain-based developers (such as the numerous Australian based devs) by building new NFT-based games or even incorporating NFTs into their existing games.