Why work when you can make a living simply by playing games or creating art.
Axie Infinity players earned around $30 million this week.
That's right, over $4 million a day goes into the pockets of (amateur) players playing this blockchain-based game (check out the latest stats here)!
But gamers are not the only ones benefiting from the NFT revolution.
The second group of people who benefit greatly from NFTs are Artists.
This week alone, the value of digital art sold on the Art Blocks platform exceeded $200 million. This translates into more than $5 billion a year! In 2020, total sales on the art market will be close to $50 billion. One new digital art platform, responsible for 1/10th of the volume of the entire art market, is simply amazing.
Moreover, this is only the beginning and these figures pale in comparison to what is to come in the coming years.
How is this possible and how do you take advantage of this new trend, even if you are not a player or an artist?
Let's start from the beginning.
Right now, as you read these words, the reality of artists and gamers is rapidly changing. The emergence of blockchain-based non-convertible tokens (NFTs) is having a particular impact on the lives of these two groups, but its implications will have global reach and ramifications. The implementation of NFTs is crucial because:
- Allows artists to gain access and exposure to global markets and protects their property rights
- Players can take ownership of their in-game characters and objects, earning money as they play, even if they are just doing it for fun
The blockchain-driven globalisation of art and games is already making a huge difference to many people living in third world countries. The Axie Infinity game I mentioned earlier is currently the main source of income for thousands of people living in the Philippines and Venezuela.
OK, so what are these magical, world-changing NFTs?
According to Wikipedia, a non-fungible token (NFT) is a unit of data stored in a digital database, called a blockchain, that certifies that a digital resource is unique. NFTs can be used to represent items such as photos, videos, sounds, domain names, event tickets, in-game items and even usernames on social networks. Essentially, NFTs represent unique objects, including those from the digital world. By implementing blockchain technology, they facilitate seamless trading and allow for the recording of property rights and their history. Their most important features are:
- Programmability: as digital, NFTs are fully programmable, meaning that their structure and functions are only limited by our imagination and computer code. This feature opens the door for many innovations.
- Marketability: anyone in the world can trade NFT on globally accessible markets. This is a huge value for artists and players alike.
- Interoperability: because all NFTs are based on the same encryption standards, they can be available on many different platforms and markets. Anyone can buy and store them using any of the major cryptocurrency wallets.
- Rarity/non-changeability: developers can hard-code any characteristics into the NFT, making sure that there will be a certain number of them or that it will have very specific characteristics. These hard-coded properties cannot be changed. All the properties of these digital objects are intrinsic and known to all market participants and the ability to encode their rarity is crucial in creating efficient market mechanisms.
- Liquidity: anyone in the world can access NFT markets. A child in Africa can create a digital painting, upload it to the platform and be contacted by millions of potential buyers from around the world. Because NFTs allow partial ownership, art galleries are already tokenising expensive paintings and selling them in parts to multiple investors. You can now own a piece of a Rembrandt or Da Vinci painting!
The liquidity aspect is hugely important to the art world, so it should come as no surprise that the big players in this space are already using this technology.
The famous auction house Christie's held its first NFT auction in March this year. It was a huge success, with the collection selling for almost $70 million.
I am convinced that the tokenisation of physical art will be a very important innovation for all the art galleries in the world that have suffered from covid lockdowns. Thanks to it, they can now tokenise their exhibitions and sell parts of their artworks, keeping them in-house.
Another interesting trend you should be aware of is the development of virtual art galleries that display NFTs. These digital art galleries will be an interesting addition to the virtual worlds that are already being created. Many of them are already in operation (e.g. Decentraland) and this trend will also accelerate. NFTs are a very important part of these worlds and can also be used to represent land ownership. Yes, you can make money from buying, selling and owning land in a digital world.
Probably the most important factor in relation to NFT in the arts is the fact that now anyone can create a digital work of art and put it in front of millions of pairs of eyes. This globalisation of art will change the lives of millions of people (both artists and investors). The valuations of some of the first NFT collections can make one dizzy. At the time of writing, the famous CryptoPunks collection is worth almost a billion dollars!
This space is still very young and its development is simply staggering. Here are some links I've put together for you if you want to learn more about it:
https://www.cryptovoxels.com/ - The virtual world of art
https://opensea.io/ & https://artblocks.io/ - Digital art markets
https://trade.theart.exchange/nft - Platform for trading and speculation
https://boredapeyachtclub.com/#/home - One of many NFT collections
https://www.cryptoslam.io/ - A platform that brings together many interesting NFT markets
The implementation of Blockchain in the art world will have huge consequences but this is nothing compared to what awaits the gaming world.
The games industry is growing steadily and was valued at around $174 billion in 2020 (at the same time the art market was worth around $50 billion).
Blockchain technology and NFT are changing the entire revenue model in the gaming industry, allowing ordinary gamers to share in the profits previously only meant for game developers. To understand how this is possible, let's take a quick look at the evolution of the revenue model in the gaming industry. First, we had to pay for games in order to play them. This model is called pay to play and we are all familiar with it. The next big step in the evolution of games was a model called free to play, pioneered by Korean billionaire Kim Jung-ju. This model is still very popular today. Although games in this model are free, game studios make a lot of money from them. You can play the game for free, but if you want access to some cool equipment or upgrades, you have to pay. These upgrades are usually quite cheap, but when you consider the number of players who buy them, we're talking hundreds of millions of dollars. A game called Fortnite is a great example of free-to-play - the studio responsible for creating it, Epic Games, made $2.4 billion in 2018 just from selling skins to its players. The problem with this model is that players don't own the things they pay for. They can use them in the game, but they can't sell them later. And this is where blockchain comes in, introducing a new step in the evolution of games. With NFT, we are moving from a closed economy, which only rewards game studios, to an open economy, for the benefit of gamers. If you are a fan of gaming, you should be excited because you will love this new economic model. This model is called play to earn and it is the biggest innovation I have ever seen in gaming! You now own your character and everything you get and collect in the game. Equipment, weapons, digital parts and playing cards are now yours. In this model, you can sell and make money by trading on the open NFT markets. Now, when you spend hours playing the game and building your character there, you are investing your time in something that has real value. That's what thousands of people in the Philippines are doing right now, playing Ax Infinity. They earn money from the game and sell their developed characters to other people who don't have time to develop their characters.
Axie Infinity, a simple game with a fairly limited world (no offence Axie, I love your game) allows its players to earn $30 million a week and is valued at $4.5 billion. One simple game being such a wealth-building tool... Just think what will happen when the big studios understand the power of blockchain in games and join the race to build the first $100 billion game. It will be an amazing time for all gamers around the world. As of today, hundreds of smaller teams are developing NFT-based games. I'm sure there will be many great titles among them that will bring huge revenues to gamers. If you want to know more about this trend, here is an article that talks about it in more detail and a website dedicated to this new trend.
What if you're not an artist or a gamer?
You can still benefit from NFT as an investor or speculator.
Oh yes, you can make a lot of money by investing in these NFTs.
Buying popular NFT art collections, gaming tokens, first packs of cards or simply tokens from NFT platforms are great options. You can even invest in NFT index funds!
When I first wrote about Ax Infinity in 2020, their token was worth less than 50 cents, now its value is over $70, 150 times more. This means that if you invested $1,000 in AXS a year ago, now those tokens would be worth over $150,000!
This CryptoPunk was first sold in 2017 for USD 2127, with the last buyer paying USD 7 580 000 for it in March 2021. This is more than 3,500 times the ...
A paradigm shift is taking place before our eyes. This is just the beginning and it will be very interesting to watch the development and interaction of these digital worlds of art and games. The increased use of virtual and augmented reality will only accelerate the adoption of digital economies and NFTs. We can all have fun participating in this process.
Before we finish, a small warning - blockchain and NFT are highly speculative spaces, many of these projects will be lost without a trace. Make sure you do your own research before investing any money in a project. Only invest as much as you can lose. To begin with, it is best to simply play NFT-based games as there is no risk involved. The only thing you can lose in this case is time.
If you are seriously considering investing or speculating in this space, I encourage you to join a group that specialises in this. You can also get the latest news and insights from the blockchain world in our free group on Telegram, link just below this article.
Have fun!
Written by Piotr Borowiec
