Prior to video game companies entering the market, NFTs only known to tech geeks.
Non-fungible tokens (NFTs) are digital assets whose ownership certificates stored on blockchains, the technology that powers cryptocurrencies.
The creative industries, from art to fashion, have been quick to experiment with an innovation that has sparked both excitement and skepticism in the technology sector.
And filmmaker Quentin Tarantino embroiled in a legal battle over NFTs from his cult film “Pulp Fiction.”
Now that they’ve been introduced to video games, supporters hope millions of players will grasp a concept that remains elusive.
“While NFTs remain a niche market, our industry is truly mainstream,” Nicolas Pouard, head of blockchain initiatives at gaming giant Ubisoft, told AFP.
This month, Ubisoft launched Quartz, a platform for players to acquire NFTs dubbed “Digits”—game-specific items such as weapons or vehicles.
Other industry giants like Electronic Arts, Take-Two, and Atari have expressed interest in NFTs.
To trade NFT versions of traditional football cards, investors have invested $680 million in the French start-up Sorare this year.
NFTs Three billion online players
NFTs are naturally collectible, which makes them ideal for games where the excitement comes from amassing objects or points.
The global video game industry, now worth more than the film industry, is a great place to introduce NFTs.
According to DFC Intelligence, over three billion people play video games, accounting for roughly 40% of the world’s population.
Crypto enthusiasts argue that concepts such as blockchains—publicly accessible digital ledgers of all transactions—are already familiar to millions of people.
According to a study by trading site Crypto.com, 221 million people worldwide owned cryptocurrencies in June, more than doubling the figure from January.
Analysts predict that games’ widespread popularity will significantly increase access to blockchain-based assets such as NFTs and cryptocurrencies.
According to proponents, NFT games such as Axie Infinity, which allow players to “play-to-earn” cryptocurrency and are popular in developing countries, enable ordinary people to profit from the technology.
These games have had a “beneficial social and economic impact on Asian and Latin American countries,” insisted Franklin Ovalles, a 40-year-old Miami-based NFT collector.
Is a market crash imminent?
According to blockchain research firm Chainalysis, a whopping $26.9 billion in NFT sales will occur in 2021.
Individual NFTs have fetched staggering sums, including $69.3 million for a work by digital artist Beeple.
However, the majority of traders lose money.
Chainanalysis estimates that only 28.5 percent of new-to-market NFTs are profitable, while 65.1% of resale sales are.
Additionally, investors must consider the extreme volatility of the cryptocurrencies used to trade them.
According to Jonathan Teplitsky of blockchain startup Horizen Labs, investors are taking risks in the NFT market due to low interest rates.
“With that said, the market for high-priced NFTs is about to crash,” he predicted.
However, he views this as a factor that could further democratize a market that still dominated by a select few.
“The NFT industry will reshape itself to facilitate mass adoption,” he said.
However, Teplitsky believes that it will take more than the gaming industry to make NFTs a household name.
For example, he believes McDonald’s may give away collectible digital items in the future as non-gaming companies use NFTs.
Affiliations with non-geek businesses like fast food restaurants and clothing stores will help NFTs gain mainstream acceptance.
“Let’s face it,” he admitted, “the majority of gamers are nerds.”