Why does non-homogeneous tokens (NFT) have the opportunity to erupt in the crypto world?

Editor's note: The original title was "Why NFT has the opportunity to break out in the crypto world?

There are not many real landings in the crypto world. Currently, there are mainly Bitcoin, fiat currency-backed stablecoins, and Ethereum's DAO (currently DeFi). There will be more breakthroughs and explorations in the future, but from the past period of exploration, dApps have not found a product and market fit, and more exploration is needed.

In addition to Bitcoin, stablecoin, and DeFi, one of the directions that the crypto world may achieve breakthroughs is NFT. At present, there are not many compatible with the blockchain, NFT is one of them. Regarding what is NFT, you can refer to the previous article "What is a non-homogeneous token?" ". NFT is a non-homogeneous token, which means non-interchangeable tokens, and one of the goals pursued by ordinary cryptocurrencies is interchangeability, such as Bitcoin. Interchangeability is an important attribute of currency Without this, a commodity cannot become a currency. Although NFT is nominally called a token, it is not essentially currency, but a unique asset expressed in tokens. The reason why it is expressed in tokens is to take advantage of the unique attributes of the blockchain.

Why is NFT a chance to make a breakthrough in the crypto world? From three aspects, first of all, the attributes of NFT itself fit well with the crypto world, and there is an opportunity to achieve product and market fit by combining with applications. Second, the overall development of crypto games provides the underlying foundation for it. Third, the rise of NFT transactions has also helped NFT breakthroughs.

NFT is naturally suitable for crypto applications, especially crypto games

  • Uniqueness of NFT

NFT is a non-interchangeable asset with unique attributes. This means that if the NFT asset itself is scarce, it will also carry its value and cannot be tampered with or copied, or replaced.

  • Permanence of NFT

NFTs are generally issued based on public chains, such as Ethereum, and the common NFTs on Ethereum are ERC-721 tokens. ERC-721 is data stored on the blockchain, such as in-game items. It no longer belongs to the game operator. Even if the game stops running, the in-game items can still be stored in the Ethereum wallet, which means that NFT can be permanent. presence.

  • NFT ownership

Most of the current game items are associated with the user's game account, and all data in the account is stored on the server of the game company. In other words, the hard-to-find items or the equipment you bought are not really yours. Once the account is banned, the game assets are gone. NFT assets do not have such a problem. It is stored on the blockchain. Game companies cannot control them. As long as you have the private key, you can access and transfer them.

  • NFT cross-game attributes

NFT game assets can run across games. NFT assets are on-chain assets. They do not belong to the game, they belong to the user. It can support the seamless transfer and use of in-game items between multiple games. This is a brand new game experience for users. Currently, Enjinverse is trying to provide users with in-game items and cross-game experience. Because these NFT game props are not completely tied to the game, for example, KittyRace encrypted games can use encrypted cats from CryptoKitties for competitions.

The above attributes of NFT can help applications in games and other fields to achieve product and market fit, thereby achieving breakthroughs. However, its final outbreak depends on the overall development of areas such as crypto games.

The value support of NFT and the overall development of crypto games

At present, NFT is mainly in the game field. The value of NFT mainly comes from the value of the game itself. It depends on the design of the game itself, as well as the number of participants and the depth of participation. In other words, the value of NFT comes from the value of game interaction. The more people participate in the game, the deeper the participation, the greater the value of the game itself, and the greater the value of NFT may be. The foundation of the NFT outbreak comes from the overall development of crypto games. The overall development of crypto games depends on giving full play to the characteristics of NFT.

The core of crypto games is still fun. Without fun, crypto games are meaningless. Crypto games are first games, not blockchains. The biggest difference between crypto games and ordinary games is their NFT assets. The expansion of crypto games originates from the fun of the game itself, and on this basis makes full use of NFT features. This is the basis for its future development.

The current development of some crypto games NFT:

  • Status of crypto games

At present, crypto games are still in the early stages. From the number of daily active users, the number of dApp users in the top games is mostly 2000-3000. The 24-hour transaction value can reach hundreds of thousands of RMB, but it is generally in the range of tens of thousands of RMB. This shows that, whether it is the number of users or the transaction value, the overall encrypted game has not made breakthrough progress in the past year. However, there will be more new games launched in 2020, and if the NFT features can be fully combined, there will be opportunities to make breakthroughs.

(Game dApp transaction ranking, source dappradar)

Not only is the increase in game products, the financing of crypto games and the addition of talent have also promoted the development of exploration. For example, companies like Immutable, which developed Gods Unchained, received US $ 15 million in funding in September 2019. Through these funds, talents in the traditional gaming field, such as Riot, EA, Ubisoft, etc., were introduced. The introduction of these talents is the hope of crypto games, because crypto games must be fun first, and these talents bring more possibilities for the innovation of crypto games. At the same time, the influx of funds has led to acquisitions, such as Gods Unchained's acquisition of other card games Artifact, Faeria, and Kards.

In addition, Enjin cooperates with the Unity game engine, Cocos also has more than 1 million game developers can use its engine, and its infrastructure for publishing blockchain games also has the opportunity to bring more blockchain game developers. Loom is also trying to provide cross-chain operation games, trying to attract more developers and users.

  • Gain from game NFT

To date, more than 6.3 million cards have been sold for Gods Unchained games alone. Gods Unchained games have earned more than $ 4.5 million in revenue for more than a year. This revenue was achieved with only 13,000 users, assuming its expansion. With 1.3 million users, revenues can increase by $ 450 million year-on-year, and even half of them can reach the scale of $ 225 million. Of course, it is not clear how this will evolve. If a single encrypted game can exceed 1 million users, this is the "netscape moment" of encrypted games.

According to statistics from market research firm Newzoo, the global game market size reached USD 137 billion in 2018 and is expected to grow to USD 180 billion in 2021. Not to mention how much crypto games can gain, the space here is enough for innovators to gallop.

NFT outside the game

The NFT of art collections is also an important type of NFT, such as the Knownorigin exchange, which has a total of 6,341 NFT artworks to date and has 186 artists. These 6,341 artworks are all ERC-721 tokens, with artworks ranging from 0.001ETH to 150,000ETH, and there are more than 20 types of NFT artworks.

(The most expensive NFT on the Knownorigin exchange, priced at 150,000 ETH, valued at $ 18,778,500)

The rise of NFT trading

With the rise of a variety of crypto games, suppose that players play monsters in the game and accidentally get a rare item. TA can be used for collection or sold in the NFT trading market, and can be exchanged for legal currencies such as US dollars. It can also be exchanged for cryptocurrencies such as ETH. Users can use the exchanged ETH to purchase their favorite items in crypto games.

As long as crypto games exist, the need for transactions between different items exists. Through the combination of crypto games, NFT and cryptocurrencies, a crypto economy has been created. Through cryptocurrencies, NFT items are circulated quickly in different crypto games. This circulation has global characteristics and can transcend regional limitations.

Gods Unchained card game has sold up to 62,000 US dollars of cards, is one of the highest price cards sold in the world, and CryptoKitties sold $ 17,0000 crypto cats. So far, ERC-721 tokens have been traded more than 23 million times, and the total number of ERC-721 contracts has exceeded 3,000.

(Gods Unchained Card Trading)

A number of exchanges specializing in NFT trading have also emerged, such as OpenSea, Emoon, RareBits, Auctionity, etc. OPenSea was founded two years ago, and its transaction volume exceeded 7 million US dollars, but most of the transaction volume occurred in 2019, and there is a gradual increase trend. There are more than 200 types of NFT tokens traded on OpenSea. Among them, the most NFT token assets are Gods Unchained and CryptoKitties, with more than 6.8 million NFT and more than 1.7 million NFT respectively. The transaction scale is based on the 7-day trading volume. The largest are Gods Unchained and Decentraland, with transaction amounts of 528.97ETH and 359.73ETH, respectively, and the current transaction volume is not large. Judging from the total market value of its overall NFT (the number of tokens * the average selling price in the past week), Decentraland and Gods Unchained reached $ 1.08 million and $ 310,000, respectively.

(As of December 27, 2019, the ranking of NFT trading volume on the OpenSea exchange)

It can be seen from the OpenSea NFT exchange that although its trading volume still has a huge gap compared to the overall trading volume of cryptocurrencies, the asset class as an NFT has started well.

Conclusion

If NFT can be well combined with the field of crypto games and develop fun games, it is possible to achieve a fit between the product and the market. In turn, the overall development of crypto games will eventually promote the development of the NFT market.

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