The Long-Awaited Promise of NFTs and Gaming is Ramping Up
By Mik Mironov, CEO of LOCGame
When non-fungible tokens first gained initial prominence within the cryptocurrency community in 2017, they were the subject of much excitement among those advocating for blockchain adoption. The hype around collectible cats known as Cryptokitties briefly broke the Ethereum blockchain, and projects such as decentralized platform Decentraland appeared set to revolutionize the world of VR-based gaming.
The fundamental reasons behind the expectations were pretty solid. Games like Fortnite were reaping billions in revenue through sales of in-game assets. But like any lucrative market, hackers had started to swoop in, stealing accounts holding valuable assets that players had built up over time. With no actual ownership over those assets, which are centrally controlled by the game operators, many players lost out. Meanwhile, hackers earned millions from selling stolen credentials.
NFTs offer the potential to overcome this issue by giving players provable ownership of their assets on the blockchain, independently of the game environment itself. Players could trade their assets on secondary markets, and the ability to introduce items of real scarcity could level up the revenue-generating potential of the in-game asset markets.
However, like much of the blockchain hype in 2017 and 2018, it all peaked too early. Most projects aiming to merge NFTs and gaming were in their very earliest days of development. Furthermore, Cryptokitties was among the first applications to demonstrate that Ethereum wasn’t quite scalable enough to cope with the kind of mass adoption discussed at the time.
A New Era in NFT Adoption
In 2021, we seem to be reaching a new tipping point for the convergence of NFTs and gaming, and the conditions are far more favorable this time around. Not least because NFTs have been hitting the mainstream news headlines, thanks to sales by high-profile artists like Beeple, Grimes, and the Kings of Leon.
However, from the gaming perspective, there’s more going on. Blockchain technology has advanced leaps and bounds over recent years, with improvements in scalability and interoperability, both as a result of standalone platforms launching and the development of layer-two solutions designed to overcome Ethereum’s challenges.
The gaming industry itself was already a massive growth market even before the global pandemic confined everyone to their homes for nearly a year. A 2018 forecast from gaming market analytics firm Newzoo predicted a total CAGR of 11% over the decade leading up to 2021. However, according to Deloitte, over a third of U.S. consumers across all generations tried a new video gaming activity during the pandemic, rising to 43% among millennials. The firm believes that around one-third of those will continue their new activity once things return to normal, putting the gaming markets ahead of even the previously impressive market growth forecasts.
NFT Gaming is Going Mainstream
So, overall, we have a perfect storm about to hit the world of NFT-based gaming. If further proof were needed, here are just a few of the developments that have emerged over recent months.
Renowned gamer and YouTuber Pewdiepie was always one of the earliest proponents of blockchain-based gaming, but in November last year, he gave his endorsement to the blockchain AR game Wallem. He also issued a limited set of six customized skins for the game, which at the time of writing, were changing hands on OpenSea for a cool 995 ETH (around $2.1 million each.)
Enjin, the blockchain-based gaming firm that developed Ethereum’s ERC1155 non-fungible token contract, recently completed a successful funding round worth $18.9 million. The funds will be used to create a new NFT platform called “Efinity” on the interoperable Polkadot ecosystem. The launch will come with a new NFT standard called “Paratoken” that can be moved between multiple chains.
Officially licensed NFTs are also gaining traction, attracting famous franchises wanting to use the medium for digital merchandise. The BBC has officially licensed Doctor Who artwork to be used in the new trading card game Doctor Who - Worlds Apart, while Terra Virtua has unveiled a range of collectibles for the Top Gun and Godfather film franchises.
Terra Virtua also recently participated in a successful funding round for the development of the LegendsofCrypto (LOCGame) NFT card game, which mints provably rare NFT cards with characters well-known in the cryptocurrency space. It’s one of the games, along with others such as Aavegotchi and Superfarm, which fuses DeFi elements, allowing users to farm new NFTs and earn native tokens for playing.
This Time Around, It’s Reality Rather than Hype
NFTs are whipping up a storm right now, but don’t fall into the trap of thinking it’s just a bubble. The excitement is justified because the NFT market potential is only just starting to become clear. Gaming is among the most clear-cut use cases and developments in the technology, along with entirely new audiences of players, meaning that NFTs are finally poised to unlock previously untapped revenue streams for gamers and gaming companies worldwide.
About the author: A banker turned entrepreneur, Mik Mironov is Airbnb and ABN AMRO Bank Alumni. He is a founder of Rbl Labs, Blockchain Gaming Studio and a CEO at LOCGame - a blockchain-based NFT game & collectibles with recognizable characters from the crypto universe - locgame.io
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.