GameFi NFTs Far More Than “just” Art : What to Buy?
I would assume that if you’re under 25 years old gaming shouldn’t be new to you. I know I've spent countless of hours playing games and, in some games, I even consider myself being quite the skilled player. My parents might have been angry at me for sitting inside playing video games even on sunny days but I’m sure most of you understand that that’s just how young people spend their time today. However, my parents do have a point when saying that it’s worthless playing video games and putting the time spent to something else, like reading books, which would benefit me a lot more. That’s been a fact, until now.
Because you are here, on Coin Bureau’s website, I assume you’ve heard of NFTs, GameFi, and play-to-earn. You might also be aware that these things are set to revolutionize the gaming industry by making it possible for gamers to earn money and further interact with the game by truly owning what they have achieved. In the last month this whole topic has just exploded because of a combination of NFT hype and metaverse hype, and while the hype might currently seem like a bubble, in the long run it’s just the beginning. In this article I’ll go over some developments in the gaming industry as well as the NFT industry. I’ll also be giving some of my own predictions on where we might be headed.
On July 21, 2017 the popular video game Fortnite was released (hated by some people, don’t judge me for using it as an example). Why this game is interesting is because whether you like the game or not you have to admit that it changed how video game publishers make money, and it also changed consumer behavior. They were the first to introduce a battle pass which you purchase for each new season (3.4 months) that gets you different cosmetics and can technically be purchased for free but almost everyone has used at least some money to get it. The game has made over $10 billion in revenue and that’s completely from in game purchases, since the game is free. This means that people have bought skins, pickaxes, emotes, gun-wraps, things without any value since you can’t trade them or really do anything with them, they don’t even provide you with any in game advantages. However, imagine this on the blockchain with NFTs.
A simple explanation of Fortnite is now needed before addressing my example. It’s a battle royale game where 100 people get dropped onto an island where they loot for guns and healables, and the last player standing gets the victory. After that all that's left is to press ready and enter another game. In Fortnite players can change their skins, pickaxes, gliders, emotes and even gun wraps. These can be purchased from the Fortnite store or by completing quests to advance in the Battle pass. All purchases are made using V-bucks which is the in-game currency of Fortnite.
Now, you might think it’s stupid to buy these additional things since they have no value or no in game use, but believe me, people do buy them. People simply buy them to show off, people even bought a $700 dollar phone just to get a skin when Samsung partnered with Fortnite. However, the most feared skins are those earned through the battle pass since those can’t be purchased, they are scarce. People have even paid over $3000 to get access to someone else’s account just to play with these skins. They do this even though it's against the Fortnite Terms of Service, they could lose their accounts, and they don’t even get ownership of the skins.
However, imagine these skins on the blockchain as NFTs. Those who played early, and a lot, could now sell these rare skins and earn the in-game currency V-bucks as a reward for their work. Then those V-bucks could be swapped to dollars or any other currency on an exchange. Or, maybe Epic Games finds some way you could stake V-bucks to earn additional rewards, or maybe V-bucks is the native currency on not only Fortnite but all of Epic Games’ games and you could use those funds earned from Fortnite on another game. The possibilities are endless.
If you still doubt it that anyone would buy these skins let me, just give you some numbers. Fortnite’s live active gamers is currently almost 3 million. They have hit over 80 million players a month. The Fortnite world cup sold out with 19,000 tickets sold and another 2.3 million players watching the event online, that’s as much as the NHL (biggest ice hockey league in the world) had views in their finals game year 2020. Owning some rare piece from a game this popular is something people would pay for. I bet it would even be something for youtubers to showcase in their home as regular paintings are today shown. And the best part of all of this is that everyone benefits, I can make money playing video games for fun, people who don’t have time can still get items they want without having to spend 10 hours a day grinding for it, and the game publishers can earn both from issuing new things as well as second market sales by setting their fee on whatever percentage they want.
Where’s the Value in NFTs?
With the previous example we established that gaming is massive, transforming to NFTs and blockchain would be great, and there would be demand. However, those skin NFTs still lack any fundamental value. Naturally, they would be valuable when the game is popular but eventually when the game dies out those NFTs would become worthless - or wait a minute, unless?
Epic Games is one of the largest gaming companies with an ecosystem that consists of numerous different games. As I mentioned they could make V-bucks their native currency which would ensure that the value of those would remain even if one game dies out. Why not do the same with NFTs. Making them cross game compatible would further drive-up demand. Imagine putting on that rare Fortnite skin in not only Fortnite but other games too? Awesome! Also, if Epic Games additionally issued NFTs with advantages to the game like special guns then those would certainly be in high demand.
Imagine this same with sport games. Currently EA sports release NHL, NFL and FIFA games every year. The most popular game mode here is Ultimate Team where you build your own team by opening player packs and purchasing players from others. People spend tons of money to get a good team just for a year and then buy the new game and do the same. Now imagine that these players would be rare NFTs and you could keep them from year to year. It would create huge demand for those rare cards and owning a Christiano Ronald would make you a legend. Of course, there would be tons of things that would be needed to sort out so that EA sports don’t lose any revenue but the possibility is there, and I bet you that a migration like this would be amazing.
Giving NFTs a use case and audience and making them perpetual is going to be a huge driver for both the NFT sector and the gaming one. I think the combination of these too is extremely underrated. People like the virtual world. Some people even spend more time there than in the real world, even before really owning anything or making any money. Now imagine that you could make money and your achievements would be truly yours with real-world monetization possibilities.
How Are Things Now?
Where do I even start? There’s currently so much going on, especially after Facebook announced its rebranding to Meta. Type in Metaverse to YouTube and it’ll take you weeks to watch all the content that has come out ever since Facebooks announcement.
However, Facebook, or Meta, isn’t the first one out there and there are many crypto projects already doing big things in the metaverse. I’m sure many of you have heard about The Sandbox, Decentraland, and Axie Infinity. All these are blockchain projects that make use of NFTs. In The Sandbox you can own land as well as characters and other physical stuff as NFTs, same with Decentraland. In Axie Infinity your little “pet” axie is an NFT which you own and can use to earn you tokens or alternatively sell it. And Axie Infinity recently released their own virtual world, with a single plot of land selling for over $2 million. All of these games provide value to the user in many ways.
Think of The Sandbox, it’s co-created by a big blockchain gaming study Animoca Brands. As you might remember I played around with the idea that Epic Games could allow you to use skins (NFTs) you own in different games, well, Animoca Brands is allowing that. You can take some of your characters and stuff from other games and bring them to the Sandbox to show off to your friends. Maybe you want to wear some rare character you own when visiting a Snoop Dog concert. Yes, Snoop Dog owns land in The Sandbox and will be organizing different events and concerts there.
Speaking about wearing stuff, did you know that Nike has filed for multiple trademarks to be used in the digital world, AKA metaverse. Soon you’ll be able to put on the newest Nike Air shoes and flex on your friends in the metaverse, and if you didn’t already get it those shoes will be NFTs. I know, ridiculous, why would anyone buy digital shoes? Well tell me this. Why do people buy real shoes that cost $200 when you can buy similar looking shoes from China for $5? Now you might tell me it’s not the same thing but if you’re going to spend 10 hours a day in the metaverse playing games, working, seeing friends then why wouldn't you want to put effort into your looks? That’s more time than you’re going to spend outside with your real Nike’s. And hey, the best thing about digital shoes is that they won’t start smelling, get dirty, or get broken, you can always sell them in perfect condition!
People are already spending a lot of money on stuff like this, let’s just revisit my Fortnite example and you’ll see. The most recent partnership Fortnite made was with Moncler, mostly known for its high-end skiwear. Fortnite released a character’s that’s wearing Moncler clothes, and I’ll tell you that people do spend money on that, it’s a cool looking skin. And that’s not the only partnership, they have previously released skins in partnership Balenciaga and there was a lot of hype around that. All this hype when you don’t even own the stuff? Even I could be willing to pay if I really owned that Moncler jacket or Balenciaga shirt and could use it in the next game, but that’s not the case here (yet).
Everything in the metaverse will be an NFT. Those NFTs will be just like things in the real world except that they are digital. So, if you think a pair of rare shoes are valuable in the real world then I bet you they’ll be valuable in the metaverse too. The fact that you’ll truly own everything in the digital world is going to be huge. The money you spend digitally can be spent wisely so that you can always cash out and spend the money on something else. Naturally, not every pair of shoes, or every character and skin can be valuable. I can imagine that strolling around the metaverse as a Cryptopunk or Bored Ape can however be quite valuable.
How Can I Participate Now?
As I already mentioned we have many projects that are active in the space. You could buy those projects' native tokens, although prices are extremely high. Alternatively, you could start looking for new projects in which you can buy land or other property in hopes of that project becoming valuable. However, if you do this you have to your own research, but a great way to start is by reading this amazing Coin Bureau article on projects with true potential, just a quick spoiler, there’s a game where you can buy your own planet!
Another way to gain exposure could be to stack up that avatar collection of yours. As I said I believe strolling around the metaverse with a punk or ape can be quite the sought-after thing to do so securing one of these rare pieces won’t necessarily be a bad thing to do. However, be careful and do your own research. It won’t feel so good to walk around with the ape if you pay thousands of dollars more for it than it’s actually worth.
What I think might be the best and safest way to participate is getting into the projects that power NFTs. I think that we’ve already established the fact that NFTs will be a part of our future world, however, we haven’t talked about how they’re made. Most of the projects out there are currently being minted on the Ethereum blockchain but there’s no denying that we’re seeing some hefty competition from Solana and other blockchains. So, buying into these layer 1 blockchains could be a good bet since NFTs and even whole parts of the metaverse will be created on top of these. Why am I so sure?
Well, even when watching Facebook present their idea of the metaverse they mentioned NFTs and that you need to be able to control your things. And, to really own your digital assets they need to be created on a decentralized network where everyone can participate. I can’t see this working if the NFTs are created by Meta (Facebook) and stored in their wallet since they are a centralized entity and relying on them means that they can shut you down whenever they like, that’s not true ownership if you ask me. Those NFTs need to be minted on a decentralized blockchain and stored in a wallet to which you control both the public and private keys. It can’t be that one centralized entity can seize your existence in the metaverse. Therefore, betting on a few well picked layer 1 blockchains is a good bet according to me, not financial advice of course.
Hopefully you now have a better understanding on one direction that the NFT sector might go. However, it’s important to remember that we’re still in the early stages and as you noticed from this text too a lot of what you read was me speculating on where we might be going. However, a lot of evidence from the actions of current projects seem to be in precisely the direction I just pointed out. I actually just heard a couple of hours before writing this conclusion that EA sports is a having a dispute with FIFA where one reason is that EA wants to start leveraging NFTs.
Furthermore, what I want to point out is that the GameFi concept is also much larger than what I had time and space to bring up in this article. I strongly concentrated on video games when actually GameFi can include everything that makes a project more game-like and away from traditional finance. One example is Sorare which kind of has the idea that I presented as a possibility for EA sports while Sorare is not a video game at all. Their more like a fantasy football (Soccer) game. So, the point is that if you think these ideas were great, or maybe you even came up with a few use cases yourself, then wait till you read about all the other GameFi and even broader sectors the NFTs can help and evolve. What everyone needs to understand is that buying a digital Ape is much more than just buying a picture to look at though your phone.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.