As the potential of non-fungible tokens became better recognized, NFTs have been applied to a growing array of industries — including financial services, art, sports, fashion, music, and events industries.
Since non-fungible digital assets can represent proof of ownership and authenticity of practically anything, NFTs have seen their demand and desirability skyrocket as developers apply their unique properties to a growing range of use cases and awareness increases.
One industry where NFTs are already making a serious impact is gaming. In the last three years, a huge number of NFT-enabled games have emerged, many of which are leveraging the technology to improve the experience for players, expand their demographics, and provide novel functionality that was previously not possible without blockchain technology.
But before we get into how NFTs are quite literally changing the game, let’s take a quick look at how they became so popular in the first place.
A Brief History of NFTs
Since the introduction of the first NFTs in 2012 with the advent of ‘colored coins’ — a type of repurposed Bitcoin associated with unique metadata — the NFT landscape has exploded with innovation, and NFTs are now being used and deployed in more creative ways.
To help you get up to speed quickly with the NFT ecosystem, we’ve whipped up a brief timeline of the most important events so far:
October 2015: The first on-chain pixel NFTs were deployed on the Ethereum blockchain. As an open world consisting of player-owned non-fungible hexagonal tiles, Etheria is widely considered to be the first game with NFT capabilities.
October 2016: Rare Pepes were issued as non-fungible assets on the Counterparty platform.
June 2017: Larva Labs released Cryptopunks, one of the first profile picture (PFP) NFT collections. Crptopunks would go on to become one of the first bluechip NFT collections.
August 2017: Decentraland completes their LAND NFT sale. Parcels of LAND were sold for approximately $20 a piece.
November 2017: CryptoKitties launches and shortly after clocks in more than 250,000 active players. Demand for the CryptoKitties NFTs climbed considerably in the weeks after the launch, at times putting significant strain on the Ethereum blockchain.
December 2017: OpenSea launches. Built on the Ethereum blockchain, OpenSea allows users to securely buy and sell NFTs. It is now the most popular NFT marketplace by trading volume.
March 2018: Axie Infinity launches and reinforces the use of NFTs in blockchain games. 2 years later, Axie Infinity would introduce the play-to-earn concept — allowing users to earn blockchain tokens for playing the game.
April 2018: One of the first metaverse platforms is developed, leveraging player-owned assets that would later be represented on the blockchain as NFTs.
April 2019: Larva Labs creates the first on-chain generative NFT art, known as Autoglyphs.
October 2020: Dapper Labs joins forces with the NBA to launch ‘NBA Top Shots’ on the Flow platform. These would soon become one of the top 10 most popular NFT collections by trading volume.
January 2021: The first Crypto Art Festival is held, known as Future Art. It was held in Sydney, Australia
March 2021: Aavegotchi launched and became one of the first major projects to overlap decentralized finance and digital art.
March 2021: Cryptopunk #7804 sold for a record-breaking $7.56 million.
March 2021: Beeple sold ‘Everydays: The First 5000 Days’ for $69.3 million. This remains by far the most expensive NFT of all time.
March 2021: Jack Dorsey sells an NFT of the first tweet for $2.9 million.
April 2021: The Bored Ape Yacht Club NFT collection launches. This became one of the first collections to allow full IP licensing and achieved a peak floor price of over 150 ETH in May 2022.
April 2021: Snoop Dogg makes an NFT collection called “A Journey with the Dogg” — one piece, titled “Death Row” sold for $108,000.
November 2021: The average price of NFTs spiked to almost $3,000.
January 2022: The Azuki collection is launched, raising $30 million in sales through an initial release of 8,700 avatars. The collection would go on to achieve a max floor price of 31.8 ETH.
March 2022: At least 950,000 unique addresses bought or sold NFTs in Q2 2022 — up more than 50% from the last quarter.
May 2022: A collection of 10,000 Goblintown NFTs launched after a free mint, and reached a peak floor price of over 7 ETH.
Why Are NFTs Desirable?
Since their inception, NFTs have seen incredible growth in both popularity and utility. More people than ever now include NFTs in their investment portfolios.
Indeed, according to data from Chainalysis, at least 491,000 wallets worldwide transacted with
NFTs in Q2 2022 alone — up more than 100-fold compared to Q2 2020.
While the majority of NFT holders initially purchased for speculative purposes, a growing portion of NFTs are beginning to offer a great deal of intrinsic value via built-in utility.
Broadly, there are a handful of different reasons why NFTs can often be considered desirable. These include:
- Rarity: NFTs that form part of a collection generally have some way to distinguish which NFTs are rarer than others. This might be due to the rarity of certain attributes, their overall visual appeal, their token ID, or their designer. In general, rare NFTs tend to attract higher values.
- Cultural significance: A small number of NFT collections are associated with a cultural shift in the perception of NFTs. These include first-of-their-kind NFT projects like CryptoPunks as well as major brand names in the space, such as Bored Ape Yacht Club (BAYC), Azuki, and NBA Top Shot. These often garner significant interest and are commonly referred to as “blue chips”.
- IP rights: In many cases, NFTs confer ownership of the intellectual property associated with any related artwork and materials. This can allow users to monetize their NFT in any way they see fit and license their IP for commercial uses.
- Royalties: A growing number of NFTs have a royalty feature built-in, which allows the original owner to receive a percentage of the sale price every time an NFT is resold. This can provide a lucrative revenue stream if the NFT changes hands often and at significant values.
- Community culture: Many NFTs have a particular community culture around them. Owning popular blue chips can allow holders to network with other high net worth and successful individuals and can be considered a status symbol.
- Perks: A growing number of NFTs come with an array of secondary benefits. This might include access to exclusive NFT-gated events, automatic whitelist access to popular NFT projects, free merch, exclusive discounts, and a variety of other opportunities.
- Utility: Besides being used to represent works of art, digital real estate, in-game items, skins, and more, NFTs are beginning to offer a wide range of utilities. This can include on-chain identity verification, NFT-based derivatives products and positions, and breedable in-game critters to name just a few use cases.
NFTs in the Gaming Landscape
In the early days of NFTs, the vast majority of NFTs centered around simple digital works of art known as PFPs (profile pictures) and digital collectibles such as sports cards, digital critters, and memes.
But more recently, NFTs have been increasingly woven into the gaming sector, with more and more games leveraging the unique properties of NFTs to deliver new functionality and experiences to players.
Most commonly, games now use NFTs to represent a wide range of in-game items, such as characters, in-game real estate, items, powerups, and skins. In doing so, they allow players to take true ownership of their items — allowing them to be bought, sold, and traded without restrictions.
This capability helped fuel the recent play-to-earn niche, whereby players could earn yields from their in-game activity, such as by breeding critter NFTs together and selling the offspring, using NFTs to participate in tournaments to win prizes, or renting out their in-game land plots — which are represented on-chain as an NFT.
There are now more than 300 games in the play-to-earn niche. Image courtesy: CoinMarketCap
Popular sandbox games like Decentraland and The Sandbox now allow players to build entire experiences on their NFT LAND plots. These can then be monetized as they see fit, or even leased to other players, allowing holders to generate revenue from their digital real estate.
By allowing players to truly own their in-game items, NFTs represent a paradigm shift in the way we think about in-game economies. A huge number of blockchain-powered games now feature player owner and controlled assets, and some even allow players to create their own non-fungible assets — which they can then sell, lease, or trade with other players.
A handful of games even go one step further and allow players to direct the development of the game through on-chain governance. Oftentimes, voting rights are reserved for NFT holders, who can table and vote on governance proposals that will then be enforced by smart contracts or developed by the game studio. This might include determining how the game’s internal economy works, how the gameplay mechanics are updated, and even how the game looks and plays.
An example of decentralized game governance. Image courtesy: Decentraland
With gaming heavyweights increasingly adopting NFTs into their newest titles, it’s just a matter of time before major AAA game studios begin leveraging NFTs in their major intellectual properties. Indeed, popular game studios are beginning to warm up to the new technology. This includes Ubisoft, Square Enix, Nintendo, Konami, Sega, and Peter Molyneux’s 22cans — each of which has either expressed interest in the capabilities of NFTs in gaming or is actively working to integrate NFTs into their games.
A Future Powered by GONFTY
Here at GONFTY, we are laying down the foundations for the future of the NFT industry through an array of Web3 infrastructure tools and platform services.
We believe that the future of blockchain gaming lies at the intersection of gaming and finance — to form an ecosystem of ‘GameFi’ products. These will be games that use blockchain technology to bring their in-game economy to life through the use of digital assets, including NFTs, fungible tokens, and derivatives. This will allow players to derive real-world value from their in-game efforts while unlocking new revenue streams for game studios and creators.
GONFTY will help to power this GameFi revolution through the Gamebench SDK, which developers can use to easily create novel gaming DApps and metaverse applications. This will be further supported by the GONFTY market, which developers can use to mint their in-game NFTs (e.g. avatars, land, skins, and NPCs) and place them up for auction.
As NFTs become increasingly prevalent and woven into more experiences, GONFTY will help ensure that navigating this new digital landscape is as intuitive as possible through its custom metaverse platform. This will feature a growing array of interoperable gaming elements which users can navigate in 3D. This will also open the doors for endless collaboration between GONFTY SDK users while allowing for the design of ambitious products and services built on top of NFTY Chain.
Since NFTY Chain is part of the Polkadot ecosystem, this will also allow projects built on NFTY Chain to interoperate with those built on any other Polkadot parachain — leading to essentially limitless opportunities for creators and users.
NFTs will allow many aspects of Web3 to be gamified, incentivized, and community governed, and GONFTY is building the infrastructure that developers can use to easily adhere to this new paradigm. For those that lack the time or resources to bring their products to market, it also offers the unique NFTY alchemy service — which will see its team of specialists move your idea from concept to commercial product without missing a step.
In time, GONFTY hopes to help weave NFTs and Web3 technologies into the fabric of our everyday lives — enriching it for the better.
About GONFTY
GONFTY is an infrastructure project building a multi-chain Metaverse Engine, empowering anyone to create metaverses and blockchain-based games. It will be at the core of an industry-leading infrastructure platform, integrated with our very own on-chain gaming metaverse, and will house a suite of high-quality interoperable, independent blockchain games for end-users to navigate and play.
For more information about GONFTY, have a look at our links below.
🌐 Website: https://gonfty.network/
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🌐 Medium Link: https://gonfty.medium.com/
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