- INVESTMENT IDEAS
How Gaming will Transform the NFT Market
- Over the next decade, people will spend more time playing video games as VR makes these worlds more immersive and engaging.
- These virtual worlds will have vibrant economies built on blockchains.
- Investing in the infrastructure for these blockchain-based economies could be very lucrative. Some opportunities are $FLOW and $RARI.
It is obvious that video gaming will only increase as VR makes games more immersive. In-game economies are already quite large. For example, Fortnite alone made more than $3bn selling character skins and other items. These items also became actively traded on third-party sites.
As people become even more invested in these ever-growing virtual worlds, their in-game economies will grow as well. And these economies will be increasingly hosted on the blockchain. This could be a major driver in the growth of NFT marketplaces.
For the same reasons an investor might want to hold their monetary wealth on the blockchain (i.e. the ability to borrow against it, earn yield, self-custody etc.), active gamers will want to hold and trade their valuable game assets on the blockchain.
So if you buy into this thesis, where should you invest? First we should look at the numbers:
Clearly, if any substantial portion of in-game spending moves to the blockchain, it will have a profound impact on NFT market volumes. As this transition happens, investing in the infrastructure that underlies this market could be very lucrative.
Flow is a layer one blockchain that aims to be the chain for NFT commerce and game economies. Their $FLOW token could be a strong investment in line with this thesis. Flow was created by Dapper Labs, who also built Crypto Kitties and Top Shot. Flow launched in October 2020. CryptoKitties will soon be migrating from Ethereum to Flow , and other gaming and NFT projects are launching on the new blockchain.
Another potential investment is $RARI, which is the token behind Rarible, one of the largest NFT marketplaces on Ethereum.
It is very difficult to imagine a world where virtual worlds do not grow in importance and there is no corresponding growth in in-game spending. The biggest uncertainty of this article’s thesis is whether these economies will move to the blockchain.
Video-game makers may want to maintain full control over these lucrative businesses. For example, games like PubG and CS:GO attempted to shut down third-party sites that allowed users to sell their in-game assets.
But more and more, players will demand control of their assets. In games like Entropia, or CS:GO, in-game assets can be worth tens or thousands of dollars. The most engaged traders and gamers in the ecosystem will demand that their valuable assets be usable on the blockchain as opposed to sitting idle on some company’s servers.
Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.