Gamers are Paving the Way for Broader NFT Adoption

Non-fungible tokens, or NFTs, as they have come to be more widely known, are currently the most predominant and innovative disruptors to the state of the global gaming industry today. Historically, the gaming industry’s traditional business model has been one that includes three primary parties: developers who design and create games, production studios that market and sell them, and the consumer markets of gamers who purchase and play them. In this model, however, developers do not retain full ownership or control over the games they create; rather, the rights of ownership are held by the production studios that release them. This also means that when players purchase these games — especially digital copies via platforms such as Steam, Xbox Live, or Sony’s Playstation marketplace — they do not actually own the products they purchased but instead purchase them on a consumer license from the game’s producers.

Furthermore, many production companies within the gaming industry have come under fire more than once in recent memory due to their widespread adoption of the concept of microtransactions, or purchases made by players to acquire additional downloadable content (DLC) and other items for certain games such as avatars, items, and in-game currency. The concept of in-game microtransactions has only been exacerbated by the rise of the gaming-adjacent industry of eSports, as the ability to purchase rarer or more powerful items within a game often gives its players an edge when gaming competitively against their peers.

But much like the pitfalls regarding ownership rights of the game itself, the historical business model of the gaming industry likewise means that any DLC or in-game assets purchased by players using their own hard-earned money are still officially owned by the game’s producers. However, with the introduction of NFTs into games developed for use with blockchain technology over the past few years, gamers have begun to realize that this poses a unique opportunity for them — an opportunity to truly own the games and in-game assets they purchase using cryptocurrency in their blockchain wallets — and other industries have started taking notice.

A History of NFT Inclusion in Games Built on Blockchain

In November of 2017, the release of the digital pet game CryptoKitties — a decentralized application (Dapp) built upon blockchain technology within the Ethereum (ETH) cryptocurrency network in which players can buy, sell, and trade virtual cats using ETH within their blockchain wallets — experienced a near-immediate explosion of user activity. In less than two weeks following the game’s release, nearly 5,000 individual ETH transactions were made in (and around) the game by some 14,000 separate users. By April of 2018, less than six months after CryptoKitties’s launch, the total value of these transactions, which had grown to nearly 44,000, equated to roughly $32 million.

Later in 2018, another Dapp title, MyCryptoHeroes, was released by developers Double Jump Tokyo. By January of the following year, this title’s weekly active users ballooned from barely 1,000 at its launch to over 9,000 before going on to achieve the number-one rank for total ETH transaction volumes in April of 2020 and 8th in all-time NFT collectible sales volumes in April of 2021.

The concept of NFTs was rooted heavily within both of these titles. For CryptoKitties, each separate acquirable cat is designated as its own asset token, making each virtual kitten an indivisible and unique NFT. Additionally, because CryptoKitties operates as a Dapp built upon the blockchain technology within ETH’s crypto ecosystem, each cat’s accessibility, rarity, and value can be tracked to verify its ownership and distribution via ETH transactions and sales.

Similarly, the inclusion of NFTs within the Dapp of MyCryptoHeroes comes in the form of “ original extensions:” items and equipment that players can acquire for their in-game characters through the titles PvE-style Dungeon Explorer. These items — along with the characters that wear them — are each counted as a separate NFT asset, meaning that players can acquire an item, increase its stats to make it more powerful (and thus, rarer), and then trade or sell them to other players using the ETH crypto contained within their wallet on the blockchain.

While these titles present only two examples of how NFTs have become more widespread as a concept within the gaming industry and amongst global gaming and cryptocurrency communities alike, they served as proverbial rocket fuel for the broader adoption of NFTs across other industries and consumer markets.

The Spreading Interest Around NFTs in Other Industries

Gaming is far from the only industry that has taken advantage of the advent of NFTs as quantifiable digital assets. Virtually every industry in which consumer markets possess intrinsic feelings of value around unique and collectible items has begun more broadly adopting and more deeply integrating NFTs into transactions using blockchain technology.

For instance, the NBA’s Top Shot marketplace allows basketball fans and collectors alike to collect, own, trade, and sell NFTs officially licensed by both the NBA and WNBA. For those of us that grew up collecting baseball cards and other collectible sports memorabilia, think of this marketplace as the modern era’s digital equivalent of this, albeit one specifically designed by (and for) the W/NBA.

Another example of an industry where NFTs have become increasingly popular (as well as the one to which the emergence of NFTs are commonly attributed) is the art industry. In 2017, creators Matt Hall and John Watkinson designed a series of 10,000 digital pixelated portraits called “ CryptoPunks.” Though originally released for free, by 2018, some individual portraits from this collection were selling for upwards of $1–10 million or more.

The formal “breakthrough” of NFTs in the art world, however, wouldn’t come for another three years when digital artist Mike Winkelmann (a.k.a., “Beeple”) auctioned off his NFT entitled Everydays: The First 5,000 Days to Christie’s for the astronomical, jaw-dropping price of $69 million in March of 2021. The sale of Winkelmann’s NFT for such an astronomical price not only designated him as one of the most valued artists in the world but proved that NFTs were a valid market for creators, investors, and consumers, so long as their sale on blockchain platforms remains as seamless and secure as possible for all parties involved.

NFTs Present a Path to Full Ownership of Decentralized Assets

While there is still much to learn regarding the full potential of NFTs and their deeper integration into consumer transactions across global industries and markets, the past few years have served as nothing less than a pilot study on their efficacy to act as an emerging form of owning and selling decentralized assets via blockchain technology.

NFTs are no longer merely another hobby for those interested in learning more about blockchain or an innovative method for investors to bolster their wealth. With so many different industries and markets around the world adopting the utilization of NFTs, they serve as a means to not only push more everyday consumers to learn as much as possible about their concept — and that of blockchain technology in general — but also to push the brands and companies they purchase from to adopt NFTs as a viable form of acquiring full ownership of assets in a decentralized transaction system.

The art and gaming industries are simply two of the earliest adopters of NFTs, but their integration into others where consumer products are centric has yet to be fully actualized and likely won’t be for some time. Although, an increasing number of brands, businesses, and consumers continue to recognize the widespread proliferation and positive reception of NFTs as a way to truly own the products, goods, or other assets they purchase using cryptocurrency. This is not to say that every consumer product in existence today inherently possesses the capability to act as an NFT, but rather that perhaps, in the future, a greater percentage of those products could.

What I can safely say, nevertheless, is that this broader adoption of NFTs across worldwide industries and consumer markets is likely to be spurred by a surge of more widespread NFT adoption stemming from the gaming industry.

Whatever Comes Next for NFTs, It Starts With Gamers

Perhaps the reason why NFTs have become such a teeming topic of discussion in the gaming industry is that this industry is where further integration of NFTs is currently in greater demand by its consumers. The inclusion of NFTs in games designed for and released on blockchain technology allows these consumers to completely own the assets they purchase with cryptocurrency without needing to worry about that asset depreciating in value over time.

For instance, a new game released on Microsoft’s Xbox Series X or Sony’s Playstation 5 console costs consumers some $60–70 per title. Any additional content, such as DLC expansion passes or in-game items, is not included in that purchase price, meaning that one individual gamer may end up dishing out upwards of $100 or more in total per game. All the while, they are unable to claim full ownership over those items. Furthermore, these assets cannot be traded or sold without risking a significant cash loss on behalf of the original purchaser.

But if those games and their additional contents are able to be purchased (and later potentially traded or sold) as NFTs, their value does not depreciate over time. Instead, it appreciates increasing in value as the uniqueness of the asset as an NFT makes it inherently rarer and more valuable to other members within the gaming community. For this reason alone, there is no other industry today that holds as much hidden potential to unlock the objective value of NFTs as the gaming industry, as well as the players and other consumers who comprise it.

Originally published at https://modernprofessional.co on February 20, 2022.