In the past year, NFTs have experienced explosive growth. In part, that rise has been due to the gaming industry. More than 21.6 million gaming NFT were sold across almost two million wallets for a combined transactional value of $4.6 billion.
Bitcoin (and crypto in general) is becoming increasingly popular, but it still has a long way to go towards unlocking mainstream adoption. Beyond financial use cases like trading, investments, and payments, there aren’t many applications to convince the average person to participate in the Bitcoin economy. Gaming NFTs provide developers with a new opportunity to attract the general public by bringing the gaming community into the Bitcoin ecosystem.
What Are Gaming NFTs?
Gaming NFTs are a subset of NFTs (non-fungible tokens), which are digital assets with verifiable uniqueness and enforceable digital scarcity. In the world of gaming, NFTs can represent unique assets in a game, such as characters, weapons, powers, cosmetic skins, and more. They help create legitimacy for gaming assets, establish ownership, and enable the transfer of these assets.
Gaming NFTs are changing the gaming industry across different gaming verticals. And some of the most NFT innovative use cases in gaming include projects like:
- Sorare: A fantasy sports game in which users create and manage virtual teams to compete in fantasy soccer leagues. Users buy trading cards representing professional soccer players and build a team to compete with other Sorare users. The cards are publicly tradable, and their value rises or falls over the course of the soccer season based on the performance of the players and their teams.
- Axie Infinity: A Pokémon-style game in which players collect, breed, and trade virtual pets called Axies. Axie Infinity is probably the most popular NFT gaming project right now and runs a play-to-earn model in which players are rewarded with SLP (the in-game token) when they win or complete quests.
- Ether Orcs: A fully on-chain play-to-earn game in which players spawn, train, and go on raids with their Orcs. Ether Orcs has a number of different NFT collections in the game, and each collection offers players unique abilities and rewards in the game.
- Moonray: A third-person action RPG game set in a futuristic sci-fi world in which players go through battle scenarios. Moonray is built on Stacks and will offer perhaps the first gaming NFTs within the Bitcoin ecosystem when it launches later this year as players upgrade weapons, skills, and gear in their quests.
How Gaming NFTs Are Transforming the Industry
On-chain decentralized gaming is still a work in progress, but gaming NFTs are already revolutionizing the gaming industry by commodifying in-game value. To understand the fundamental shift these NFTs enable, let’s take a brief look at the history of mobile gaming.
In 2008, when a new generation of mobile games made their debut alongside the iPhone 3G and the App Store, not many people thought they were a big deal. People had low expectations from mobile games because they were an unproven new category. Why play mobile games when you had gaming consoles and PCs?
However, the introduction of freemium models and in-app purchases in games such as Angry Birds, Clash of Titans, and Candy Crush established mobile games as a market segment that should be taken seriously. By 2020, mobile gaming app revenue had reached $86.9 billion, and it’s forecasted to reach $116.4 billion by 2024. Revenue from in-app purchases contributes between 54% and 81% of that total revenue to outpace ad revenue altogether in most cases. To make the market even more attractive to developers, the players who don’t make in-game purchases often spend hours playing games and earning upgrades for their character’s gear and skills.
The point is that people spend a lot of time and money earning these in-game assets. However, when users stop playing a game, all the money and time spent on acquiring special gear and items are lost. Those assets are trapped in the game. This is where gaming NFTs change the nature of the game entirely. Gaming NFTs offer a way to turn in-game assets into assets with real-life value.
Prior to gaming NFTs, if a gamer bought a magic wizard staff or spent 11 hours on a quest to acquire one, the money and time spent is lost if the user stops playing the game because the staff has no real-world value. There was nowhere you could go to sell it. The asset was trapped in the game.
However, if the wizard staff was an NFT, players can trade it for other gear, transfer it to another player, or simply sell it for crypto or fiat. Whatever choice the user makes, gaming NFTs give in-game assets utility beyond the game by enabling marketplaces for them. And because it is easy to verify the provenance of NFTs, users can verify the authenticity of an in-game asset even when they aren’t buying it directly from the game developers.
In an industry where in-app purchases are generating tens of billions of dollars for mobile app gaming companies, opening those assets up to secondary sales fundamentally changes the structure of the industry. It forces game developers to rethink how to architect the next generation of games while simultaneously adding entirely new incentives for players. This change has created a new category entirely: play-to-earn games, in which players can earn real money through playing games by selling the in-game assets they collect along the way.
3 Ways Gaming NFTs Can Accelerate Bitcoin’s Adoption
In the last few year, NFTs have become popular on second-generation blockchains such as Ethereum. However, an often-forgotten fact is that NFTs have their earliest history in Bitcoin. Now, through Stacks, developers can create use cases for gaming NFTs within the Bitcoin ecosystem. And by creating gaming NFTs for Bitcoin, developers help create new on-ramps for the gaming community to interact with the Bitcoin economy. Here’s how gaming NFTs will grow the Bitcoin economy.
Introduce Gamers to Bitcoin and Grow the User Base
There are more than 2.65 billion mobile gamers in the world. Of those, Newzoo’s gamer segmentation says 10% of gamers are “Ultimate Gamers” and 8% are “All-round Enthusiasts” — and both personas spend a lot of time and money on games. Based on these two personas alone, that’s an estimated addressable market of 18% of mobile gamers or 477 million gamers.
Gaming NFTs could make an easier and more compelling entry point to Bitcoin for these gamers. And because Bitcoin is a household name, it may make play-to-earn opportunities more interesting to gamers than opportunities to earn less well-known cryptocurrencies.
To put these numbers into perspective, Glassnode estimates the total number of active Bitcoin wallets at 16.5 million for the month of January 2022. If gaming NFTs on Bitcoin attract only 5% of these 477 million enthusiastic mobile gamers, the Bitcoin economy could potentially add 23.8 million people to its ranks, more than doubling the number of monthly active Bitcoin wallets.
Unlock New Network Effects to Drive Bitcoin’s Adoption
When gaming NFTs take off in the Bitcoin ecosystem, they could kickstart additional network effects that would, in turn, lead to deeper adoption for Bitcoin. For instance, a thriving gaming sector within the Bitcoin ecosystem may birth predictive markets and betting applications. Both gamers and non-gamers participating in the predictive markets could be rewarded in Bitcoin or other tokens in the Bitcoin ecosystem, such as STX, based on game outcomes.
Similarly, a subculture of game streaming has grown over time and could become an important part of the Bitcoin gaming ecosystem too. Today, popular games often have large communities of people who watch other people play those games. For instance, the top three most-watched games on Twitch (Grand Theft Auto, League of Legends, and VALORANT) all have more than 1 billion hours of watch time in the last year alone.
If similar cultures of betting and streaming catches on with games built on Bitcoin, those additional markets could bring more businesses to Bitcoin, including advertisers and sponsors who want to capitalize on the attention in the space. Those advertising and sponsorship dollars in turn help legitimize the space and bring money in that then attracts more game developers to continue to innovate and build new games (and of course, new games bring new players).
Enable Strategic Partnerships to Drive Adoption at Scale
Gaming NFTS could provide partnership opportunities for established brands to bring exposure to Bitcoin. We are already seeing this happen on other blockchains. For example, Sorare entered an NFT market partnership with the Spanish LaLiga. These partnerships enable LaLiga to stay at the forefront of innovation. The Spanish league can now unlock a new revenue opportunity and reach their fans through a new channel, by selling highlights of games, jersey numbers, images, and more as NFTs.
Similarly, Dapper Labs, the company behind NBA Top Shot, also signed a deal with LaLiga to create NFT collectibles. Dapper Labs’ first partnership with the NBA has already generated $589M in sales of video highlights and other digital items. And for the blockchain companies involved with bringing these partnerships to life, these partnerships are an opportunity to bring an NFT marketplace to millions of sports fans all over the world.
Beyond sports, other gaming enterprises have also started exploring partnerships that will enable them to bundle NFTs into their offerings. Ubisoft is already working on including NFTs in its Ghost Recon title, and Konami is celebrating its Castlevania 35th anniversary with a memorial NFT collection.
By facilitating strategic partnerships, gaming NFTs can help drive Bitcoin’s adoption at scale by introducing existing fans to a new collectibles medium rather than trying to create a new fan base for a new game, entirely from scratch.
Start Building Gaming NFTs for Bitcoin
Bitcoin has remained the most dominant cryptocurrency for more than a decade. Its proven security, large market capitalization, and vibrant community provide a fertile ground for gaming NFTs to thrive, and in that thriving, gaming NFTs can help grow the entire Bitcoin economy.
At Hiro, we’ve created an extensive suite of developer tooling and resources to help you build for the Bitcoin ecosystem. To start building gaming NFTs for the Bitcoin ecosystem, follow our NFT tutorial to create your own NFT in 6 steps and learn how to use NFT endpoints in the Stacks API.