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Why Web3 and Blockchain Gaming?
The emergence of Non-Fungible Tokens (NFTs) has created a paradigm shift in the way we think about digital asset ownership. NFTs are digital tokens that represent ownership of unique digital assets such as art, music, videos, or in-game items. The value of NFTs lies in their uniqueness, scarcity, and immutability, making them ideal for use in various industries such as gaming, music, art, and more.
In recent years, the blockchain landscape has undergone a remarkable transformation, with an increasing number of projects and ecosystems pivoting towards the dynamic realm of gaming. This strategic shift signifies a growing realization within the crypto community of the profound utility and boundless potential inherent in the gaming industry.
NFTs have the potential to revolutionize the way artists and brands monetize their creations. Mainstream artists such as Grimes, Kings of Leon, and Steve Aoki have already launched NFT projects, allowing fans to purchase ownership of exclusive digital content (2). The ability to sell unique digital assets directly to consumers provides a new revenue stream for creators and allows them to maintain control over their creations.
In addition to artists, brands are also recognizing the potential of NFTs. Nike, for example, has filed a trademark application for the term "Cryptokicks," suggesting that the company may be planning to launch its own NFT project (3). This demonstrates that NFTs are not limited to the art and music industries but have the potential to impact a wide range of sectors.
Bored Ape Yacht Club (BAYC) is an NFT success story. A collection featuring a series of 10,000 unique hand-drawn apes with different characteristics and accessories, each ape is an NFT on the Ethereum blockchain, each a unique digital asset that can be bought, sold, and traded.
What sets BAYC apart isn’t limited to the uniqueness of each ape, but also the creation of a strong community around the collection, one that not only collects the apes but also participates in various events and activities organized by the creators. This community has also established a decentralized autonomous organization (DAO) called the Bored Ape Kennel Club. The DAO is responsible for the management and development of the BAYC community, including organizing events, creating merchandise, and developing new utilities for the NFTs.
The DAO utilities created by BAYC and similar NFT collections are part of a larger trend in the blockchain space towards exploring the potential for digital asset ownership beyond simply buying, selling, and trading. With the help of smart contracts, NFTs can be used to represent ownership of real-world assets, facilitate access to exclusive content or experiences, and even grant voting rights in a decentralized organization.
In the case of BAYC, the DAO utilities include access to a members-only online forum, the ability to participate in exclusive events and giveaways, and even the possibility of governance rights in the future (4)(5). While the current utilities may seem limited, they are a demonstration of the potential for NFTs and blockchain technology to reshape how we think about ownership and participation in online communities.
NFTs also have the potential to be integrated into DeFi products, creating new opportunities for digital asset ownership. For example, NFTs can be used as collateral for loans, allowing owners to retain ownership of their digital assets while accessing capital (6). This creates a more efficient and decentralized way to access liquidity, which is currently lacking in the traditional finance industry.
Web1, 2, and 3? What do we mean? The distinction between Web1, Web2, and Web3 gaming is not a strict chronological progression, but rather a way of categorizing different eras of online gaming based on technological advancements and changes in user behavior. Web1 gaming refers to the early days of online gaming, where games were primarily played entirely offline or on dial-up internet connections and featured basic graphics and limited interactivity. Web1 games were often single-player and required players to buy a physical cartridge or CD, or download software to their computers to play.
Web2 gaming emerged in the mid-2000s with the rise of social networks and mobile devices. These games were designed to be played in a web browser or on a mobile app, and often featured multiplayer functionality and social elements. Web2 games are typically free-to-play, but generate revenue through in-game purchases and advertisements.
Web3 gaming is the next generation of online gaming, built on decentralized blockchain technology, whereas Web2 gaming is the current centralized model of online gaming that is built on traditional client-server architectures.
Web2 gaming relies on central servers to manage gameplay, store data, and enforce rules, with players often having limited control over the game's mechanics and economy. In contrast, Web3 gaming is designed to give players more ownership and control over their in-game assets, economy, and communities through the use of decentralized networks and blockchain technology.
In Web3 gaming, players can own unique digital assets, such as NFTs, that are stored on a decentralized blockchain and can be traded or used in different games and platforms. This ownership and interoperability enable players to have more control over their gaming experience and even monetize their in-game activities. Web3 gaming also offers more transparency, security, and trust through the use of smart contracts and consensus mechanisms that ensure fair gameplay and prevent fraud or cheating.
The gaming industry is a prime target for NFT adoption, with massive potential for Web3 growth based on projected market size. The global gaming market was valued at $183.3 billion in 2022 with an expected growth at a CAGR of 9.3% from 2021 to 2028 (7)(8). The global gaming market is expected to reach approximately $545 billion in revenue by 2028 (9), and the introduction of blockchain technology and NFTs has the potential to unlock even greater value in the space. The use of NFTs in gaming can provide players with true ownership of in-game items, allowing them to trade, sell, or use them across different games or platforms. This creates a new level of interoperability between games and provides a new revenue stream for game developers, whilst increasing the potential to attract an entirely new audience to gaming, as well as capturing the attention of traditional gamers.
Further to this, new technological breakthroughs offer limitless opportunities for Web3 growth. The Apple Vision Pro, Apple’s recently demoed AR/VR headset (June 2023) could revolutionize how we interact with the virtual world; for example its video passthrough feature allows users to view their real-world surroundings while wearing the headset, enabling users to interact with physical objects, take notes, and engage in real-world activities without the need to remove the headset. This seamless integration between the virtual and real worlds should enhance user convenience and facilitate a smoother transition between the two realms of experience. With the metaverse in mind, the Vision Pro's array of cameras, LIDAR sensor, and TrueDepth camera, along with the IR flood illuminators, enable hand and gesture tracking as well as spatial awareness. These capabilities can contribute to more natural and intuitive interactions within the metaverse, allowing users to manipulate objects, communicate with gestures, and navigate virtual environments more easily. Its appliance to all sectors, from education and business to support and reablement for those managing physical issues, even at this early stage, seems promising.
NFTs represent what seems to be the future of digital asset ownership, offering a unique and decentralized way to monetize digital creations. The potential for NFTs in the gaming industry is immense, with the ability to create new revenue streams for developers and provide players with true ownership of in-game items. As the adoption of NFTs continues to grow, we expect to see more industries and use cases emerge, creating a new era of digital asset ownership. Technological breakthrough, when accepted en masse, raises the possibility of changing how we live in a positive way - if managed correctly. The likes of the Apple Vision Pro, in combination with metaverse projects such as Vulcan Forged’s MetaScapes, smooths the transition between the real and virtual worlds. The future has the potential to be engaging and boundless for all.