NFTs, esports and the hype value of digital currency

NFTs and esports go hand-in-hand. Just as sports memorabilia like cards, stamps and comics has been a huge market for decades, NFTs are fast becoming the most traded and sought after digital souvenir assets.

But is this all just a bit of hype and in reality do these non fungible tokens have any real value? Daniel Miller, Business Development Director at Odds.Group was speaking at the Esports Arena at ICE London.

“NFTs have been around for a long time. They aren’t new. They have always been defined as a way for creators to monetise their digital assets. It started with CS:GO back in 2013 and continues today.”

An NFT is a unique digital token that cannot be replaced or copied. They are recorded on a blockchain which is used to certify authenticity and ownership.

The entire NFT market in 2020 was worth $250 million. In 2021 it was worth $41 billion! 2022 has seen a drop alongside the cryptocurrency market but the overall value is still around 25 billion. A monumental rise and one that cannot be ignored.

In 2021, a piece of digital art called, The Merge, was sold on NFT marketplace, Nifty Gateway and fetched a record sum of almost 92 million dollars. There is no individual owner but rather it is owned by 28,983 collectors who each own a unit or ‘mass’. Each mass cost $575 when the sale began and went up by $25 every six hours.

In esports, NFTs could be anything from digital land, in-game weapons and skins or loot boxes but fall widely under the category of anything created that is unique and digitized. Games like CS:GO and Fifa have created entire ecosystems worth tens to hundreds of millions of dollars.

Why is the value so high? Because gamers love a unique look or a unique weapon. Loading up on a unique kit, speccing your character like no other, gives you value to other players - you stand out, you have identity. You’re not just another generic piece of artwork running around the screen.

Therefore, the scope for businesses is huge. Hitting a trend and monetising that can literally create tens of millions of income for a gaming publisher.

Miller explained, “NFTs are cyclical. They are a speculative asset, just like seashells once were, or tulips as far back as the 1630s. But of course, hype increases value. And the market will always determine the true value of an NFT. So, is it hype? Yes. Do they have value? Yes.”

With a growth rate in excess of 16000% this is a hype run that cannot be ignored. And one that is making gambling regulators nervous.

In 2019, Belgium banned all sales of in-game FIFA Ultimate Team player packs because regulators saw it as a form of gambling. EA Sports argued against this, stating that they are not “an illegal game of chance” but worked in a similar way to buying a pack of player cards from a land based shop.

Whichever side of the argument you sit, it’s clear that NFTs are here to stay. Indeed, Meta recently doubled down on their investment into the digital space of the Metaverse. If the largest global companies are spending in the digital space then monetisation is a necessity. Mass adoption isn’t here yet but it also isn’t too far away.

The biggest obstacle? You might argue that without proper regulation there can never be mass adoption but as with cryptocurrency, we are seeing more and more companies finding solutions.

It feels like we are being driven into a world of pixels and gamification. And why shouldn’t my unique collection of pixels be worth something?