Non-Fungible Tokens (NFTs) are becoming a very popular blockchain trend in gaming, while also being used in the sports (ticketing) industry, financial services, and as a way to sell and transfer ownership of virtual goods, as the director of Polyient Games recently pointed out in an interview with Cointelegraph.
The NFTs are generating a new market of billions of dollars every month, due to their increasing popularity within the digital world and the cypherpunk on the part of main collectors.
To get an idea of the size of this market, just look at the cost of a virtual space in the next Public LAND Sale that will take place on Opensea -a decentralized marketplace- for The Sandbox platform, one of the popular metaverse available to monetize contents (NFTs).
The concept of digital scarcity has found its greatest splendor in NFTs, which has been improved thanks to the disruptive power of Blockchain technology in different fields, especially in gaming after the successful entry of crypto-collectibles from the Ethereum network at the end of 2017, CryptoKitties.
But what is a Non-Fungible Token «NFT»?
An NFT (Non Fungible Token) token is a cryptographic token on the blockchain with unique characteristics that represents an asset in the digital world or tokenized versions of the real world.
NFTs tokens being non-fungible, they cannot be exchanged or replaced by another token, they serve as a means to demonstrate the authenticity and ownership of an asset in the Blockchain ecosystem and in turn, they are not divisible and may be scarce.
Evolution of NFTs
The incipient history of NFTs occurs from the birth of Bitcoin and the so-called “colored coins”, a series of assets that worked on the BTC blockchain and that are actually the first cryptographic tokens to tokenize the real world in the digital ecosystem.
By then, the idea of using the blockchain for more than just exchanging money was among the concerns of the most irreverent in the space. The concept of colored coins used the existing blockchain infrastructure in Bitcoin to achieve these objectives, for this the colored coins extended “colored” the bitcoins with other properties, effectively converting them into tokens that can represent anything (bonds, stocks, etc.).
Later with the arrival of Ethereum, this primitive way of creating the first NFT tokens in the crypto world had its evolution with the arrival of the ERC-721 standard in this public blockchain. His great proposal and the most mediatic one for all the milestones that he marked in the space was undoubtedly the crypto-collectibles of the popular game CryptoKitties, as the first successful case of NFT registered until now.
To date, the ERC-721 has been the value of the NFTs for all existing blockchains, what has changed is their adaptation to other existing protocols, which claim a place within the ecosystem of alternatives to Ethereum, but under the same principle of digital scarcity.
However, the need to unite both sides of fungibility in a single token standard had its repentance with the ERC-1155 standard established by Enjin together with the collaboration of Horizon Games and The Sandbox.
The ERC-1155 was a new type of token enhanced to mint real-world assets on the Enjin blockchain, which is now gradually diversifying within the blockchain ecosystem, thanks to its ability to have unique contracts containing both fungible tokens, as non-fungible, a property that is expanding the horizons for NFTs.
NFTs + Gaming = The new DeFi
With the entry into the scene of NFTs, and the need to expand the use cases of Blockchain technology, the properties of digital scarcity were implemented in everyday aspects of life such as the arts, real estate, games, identities, among others.
But without a doubt, the main use case where we can see the greatest advancement of NFTs is gaming. And the reasons are plenty. The video game sector is expected to grow according to Newzoo at an annual rate of 9.6% in the next five years, in the most conservative case.
Due to the reduction of physical spaces this year due to the pandemic situation, the need for virtual and social spaces such as the use of “Metaverse” games have accelerated, due to the growing interest in using games as platforms to host simulated activities, such as It is highlighted by the NewZoo report on the trends to observe in 2021 in the gaming sector.
Given that the creations in all these multiverse games are in demand, it was logical to think that the market need was implicit as more users used the platforms, so the minting of collectibles under the figure of NFTs has been an ideal solution for generating this new market niche, where decentralized finance sees its maximum splendor in a real application.
Centralized platforms such as Minecraft or Roblox do not allow the monetization of their users’ creations directly in decentralized markets, where the creator has all the rights to his work. On the contrary, since they are centralized entities, the one most affected by the ‘royalties’ of their creation is precisely the author of the generated collectible.
That is why, with the entry of NFTs and their base in decentralization by Blockchain technology, the transfer of direct properties without intermediaries or centralized entities, has allowed a fair reward of the income generated by the creations of objects.
This has generated a new market niche that we see grow exponentially with demand, in decentralized marketplaces such as Opensea, Known Origin, Rarible, to name a few, where the concept of decentralized finance “DeFi” shines at its best.
NFT can connect to anything with fungible characteristics, tokenize in the real world, and form a world of digital assets with an exchange of value.
With NFTs in the game, it is now possible to monetize and assign the correct intellectual property of creations generated in virtual worlds such as Decentraland, The Sandbox or Enjin, allowing a more transparent economy and equity in income from the unique and unrepeatable assets generated in every game.
NFTs and DeFi
Blockchain environments allow players to gain true ownership of their in-game items. NFTs are allowing players to earn real money while playing, creating a new market around collectibles in excess of $370,000 million, according to estimates by the Polyient Games Director Craig Russo.
NFTs are being touted as the next big thing in the world of decentralized finance. Only in the first week of December, sales in this niche market rose to 2 million dollars, doubling the value in the same period a month earlier.
It is increasingly common to observe that traditional video game companies are taking space within the Metaverse, even the great references of the cryptographic industry are taking advantage of these spaces to expose their ‘label’ in a creative way through unique NFTs, as is the case with CoinMarketCap, a leader in the cryptocurrency ecosystem as a price indicator.
CoinMarketCap recently announced the launch of an exclusive campaign called “CMC Hero NFT“, which will take place in association with The Sandbox, the blockchain-based virtual world, which will lead to five exclusive NFT ASSETS to distribute during the next public LAND sale this coming February 11.
According to experts, it is the DeFi paradigm that has helped make NFTs so important. However, we can say that both feed off each other. Because while DeFi has been able to exploit the market for NFTs, the truth here too is that non-fungible tokens help expand the collateral market is decentralized loans, for example, since many works of art or real estate are now sold they can be minted and tokenized to be used as collateral for loans.
In addition, the expansion of NFTs beyond the scope of the guarantees and digital collectibles for gaming platforms means the possibility of representing more complex financial products such as insurance, finance, among others, which will undoubtedly allow the expansion of the market decentralized finance.
As we have explained previously, the use of Blockchain technology in gaming has had its maximum expression with the entry of NFTs since it has achieved an equitable distribution of income from objects created within platforms dedicated to developing virtual game worlds.
It is no longer just about avoiding payment gateways for users to claim their won prizes quickly without intermediaries with low commissions in cryptocurrencies. Now, all the artistic creativity and graphic skills brought to light on gaming platforms unequivocally belong to their creators and therefore, you will receive the payment that you consider fair for his work, without going through third parties.
This is the true power of Blockchain technology at its finest that we are seeing on decentralized gaming platforms like The Sandbox, Axie Infinity, or Decentraland, among others.
As Tim Sweeney, Founder of Fortnite, pointed out in a tweet, the non-fungible “NFT” token technology and the “Metaverse” that it could one day enable are “coming to fruition”, creating the “most plausible path” towards a totally emergent metaverse.
There is no doubt that the union of implicit blockchain technology in NFTs together with gaming is creating a world of opportunities where we will observe in the “coming decades, a new era of virtual existence that will mark our next great milestone as a networked species”, just as Piers Kicks sentenced in his essay “Into The Void“.
For now, big brands like Samsung, Microsoft, and Somnium Space, continue to make giant strides in the nascent NFT industry. A couple of years ago, these brands would not even have been imaginable in this ecosystem. The rest is history.
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