The current climate appears to be favorable for the growth of blockchain-based digital items known as NFTs. The market for these digital items has reached sales of approximately $17 billion at its peak, while mainstream digital items have drawn in around $50 billion. It is not uncommon for even the biggest skeptics of NFTs to own digital items. The global in-game item industry is growing exponentially each year, with an estimated $77 billion potentially being spent on in-game purchases by 2025. There are even higher estimates for the consumption of digital items.
It is projected that the virtual goods market may reach $294 billion by the end of the decade, with a yearly growth rate of 20%. While some of this spending will be on cosmetic digital items, technological advancements may introduce new categories of digital items and economic models.
The selling point of NFTs may lie in the concept of real digital ownership. The digital market for mainstream games may be winning in terms of gross terms and monetary size. However, players have always faced issues with digital items stored on game servers. Reports of stolen skins or digital items that do not work in new game versions are common. The skin market alone has expanded to $50 billion annually in recent years and has become crucial for adding game variety and achieving a personalized look. Therefore, safe and guaranteed ownership is essential for securing valuable items.
The biggest challenge for supporters of NFT technology is to change the perception that digital items are primarily sold for profit rather than serving as a layer of security for ownership. So far, only a few mainstream gaming studios have introduced NFTs, and even then, they were only optional or experimental.
One area where NFTs excel is in providing a more transparent marketplace. The informal market for skins in mainstream games has developed rapidly, leading to a lack of reliable venues for changing ownership. The skin-selling market is informal, unregulated, and lacks transparency. Reselling sites set their own terms, and price settlements are often informal, with no arbitration or recourse. In contrast, the NFT market is highly transparent and well-organized. Each NFT comes with a clear history of ownership transfers, and price information is easily accessible. All items in a collection are known and searchable, with information on the highest and lowest price, rarity, and potential demand.
The success of NFT trading has led mainstream markets to adopt similar models. Projects like White Market have combined the best aspects of NFT trading and mainstream gaming. This market specializes in swapping Counter Strike 2 skins and models scarcity, price, and demand similar to OpenSea. Additionally, White Market utilizes WhiteBit Codes as a tool for digital currency payments. Skin owners can use USDT to buy or receive funds.
Conversely, the game Shrapnel, which is based on Avalanche, allows direct card purchases of its SHRAP in-game token, making it accessible to players who are not willing to pay in crypto.
There is no pressing need for game companies to establish a true ownership standard for their in-game items. Instead, blockchain startups are adding an extra layer of security. Projects like Metazero aim to tokenize existing digital assets. Users with existing Steam accounts can secure all their skins, weapons, or items through Metazero, representing their value on the blockchain. Additionally, CS2 game items can be tokenized as NFTs and traded based on their rarity, thereby becoming real-world asset (RWA) tokens.
Some game companies have been skeptical and have attempted to prevent the tokenization of their items. For example, Mojang’s Minecraft banned the creation of NFTs based on its game images, skins, land, and other items, leading to the dissolution of NFT Worlds, one of the most successful collections based on land plots on a Minecraft server. On the other hand, games like Counter Strike: Global Offensive have embraced a model similar to NFTs by assigning transparent rarity levels to their weapon skins. These skins command high values on resale markets due to their rarity, motivating resellers.
In 2024, the NFT market and the game skin industry may either collide or form a partnership. The technology behind NFTs ensures a fair and transparent market, while also tapping into rarity, visual appeal, and player preferences.
