We’re seeing new opportunities to create monetary value based on blockchain and cyber currency. Crypto mining is one way, of course, as “miners” stack computers to create block equations that are verified and confirmed, adding to the blockchain and the assets of the miners.

More recently we’ve seen the rise of NFTs, non-fungible tokens. As we’ve explored previously, these are digital representations of assets whose uniqueness imparts value and is ensured by blockchain technology.

The newest wealth-creating, blockchain-enabled wealth opportunity is the play-to-earn (P2E) phenomenon, where multiplayer gamers can earn money (cryptocurrency) and create valuable assets (NFTs) simply by playing these games. Previous versions of online multiplayer games offered points or even pseudo-currencies. But credits for lands conquered or warriors created had to stay within the confines of the game due to restrictive Terms of Service Agreements.

Much of that is changing with P2E. The multiplayer games are getting bigger and more complex, drifting into the metaverse. Some games evolve based on the actions of the users and there are fewer rules and restrictions. Not surprisingly, players are no longer satisfied with trekking around new kingdoms or galaxies or engaging in battle royales simply for the sake of recognition, self-satisfaction, or bragging rights.

Today’s multiplayer gamers want tangible rewards they can take into the “real world.” Now they have it. With P2E, the points or currency they earn in the games can be “cashed out” in the form of cryptocurrency. And the assets the gamers develop can be transformed into NFTs and then bought, sold, traded, or donated in cryptocurrency-based marketplaces and exchanges.

Two Ways to Earn

Just playing (and even better, winning) can earn someone several hundred or more dollars a month in crypto equivalents. That makes P2E a side job or a hobby in western countries. But for players in less-developed areas – Vietnam and the Philippines, for example – it can be a basic source of income.

And all bets are off for the profitability of game-based NFT deals. These sales can bring in far more – thousands of dollars even – as long as there’s a willing buyer. That’s the catch. Markets don’t go up forever. The last person holding a specific NFT who can’t find a buyer essentially is holding a token valued only for its aesthetics.

The P2E Games People Play

The market cap for gaming is projected to be $178 billion in 2021 and it’s expected to surpass $295 billion over the next five years. PlayToEarn.net currently lists hundreds of gaming sites that allow players to earn money gaming.

By far the most popular P2E game is Axie Infinity. Almost two million players have purchased, raised, sold, and even gone to battle with their Axie digital pet tokens. Players can earn the game’s “smooth love potion” (SLP) cryptocurrency for their efforts and success, as well as sell their Axie NFTs for even bigger returns. The game was launched in 2018 and as of August of this year, it had reached a sales volume of $845 million and logged 3.8 million transactions.

Other P2E games are equally imaginative.

Blankos Block Party is especially popular with kids (more on that later) as they develop and market their user-created toys that exist in a cartoon-like world. The game is expected to attract a million users before long, due in large part to the fact that all the blockchain and cyber currency aspects are hidden behind the scenes making it appear more like a typical multiplayer game.

Similarly, there’s Lightnite, which will be released shortly. This is a groundbreaking P2E alternative since gamers can also lose money if they don’t succeed in their multiplayer combat encounters.

One last P2E game we’ll mention is The Sandbox, which is somewhat unique if only for the big-name investors that are backing it. The game is in beta right now, but already, before the widely played alpha version has even started, eager players have already invested in the game’s currency, with market capitalization standing at around $700 million.

An After School Job?

Multiplayer, metaverse gaming has always rewarded skills like perseverance, critical thinking, strategic planning, artistic creation, and others – admirable lessons, for sure. The new, P2E aspect of these activities will be also cited by shrewd, young teens to justify the hours at a time they’d like to spend in these worlds. They may have a point. P2E can certainly be a crash course for them to learn about the working, entrepreneurial world.

As with many things, though, every parent or guardian will have to decide for their family if P2E is appropriate and whether and how to set boundaries. In doing so, they’ll need to consider the fact that certain elements of P2E are safer or less safe than others for pre-adults.

They’ll need to take the time to realize there’s a difference between:

• Earning a hundred dollars a week in cryptocurrency by shrewdly maneuvering through a metaverse.
• Selling a well-conceived, personally designed  NFT toy image on the P2E game’s exchange for $250 in cryptocurrency.
• Storing all P2E earnings in relatively unstable cryptocurrency accounts.
• Buying an NFT for $500 because it looks cool and might be flipped for $1,000 next month.
• Engaging in a P2E game where players might also lose money (aka gambling).

Moving forward, we’ll see more self-imposed or outside regulation of P2E platforms. Already, for example, Axie Infinity is only open to players 18 and older, and while Blankos Block Party allows 13-year-olds to play, they must be 18 or older to cash out.

Parental Warning

And for their part, parents will increasingly be forced to understand the world of blockchain and cryptocurrencies. Unfortunately, too many have their heads in the sand, hoping/assuming this will all go away. It won’t. They don’t have this luxury of denial anymore.

P2E will thrive as long as cryptocurrencies remain viable. Blockchain-based currencies have evolved too far to be legislated out of existence. Blockchain and cryptocurrencies inevitably will be part of their children’s lives moving forward, so Gen Xers and Boomers had better do their homework and due diligence.

We looked at Non-Fungible Tokens, or NFTs earlier this year in the context of their place in the art world. That raised a lot of questions for some readers so it’s time to look at the bigger picture, if you’ll pardon the pun. NFTs are increasingly showing up in other areas of the creative arts and leisure, but I see their basic technology and applications extending far beyond that.

As a refresher, an NFT is a tool that effectively grants uniqueness to a digital item. When you “tokenize” an asset of some kind using blockchain technology, most commonly Ethereum, you immediately grant it a certified, one-of-a-kind status. That, in turn, bestows ownership value within the supply-and-demand-driven marketplace.

If an artist tokenizes their work, they can sell that NFT on the marketplace. Since the work itself isn’t tokenized on the blockchain, a digital file of an image, for example, can still be copied by others for visual enjoyment, but there will only be one owner with the “papers” to prove that ownership and any rights accorded them in the NFT offering.

The numbers

NFTs are making the news on a minute-by-minute basis. They’re becoming an integral part of the metaverse. Their total market value quadrupled in the first half of 2021 to $250 million. The average price grew from $142 in October 2020 to $4,000 in February of this year.

Is it a fad? Perhaps. Part of the force driving the NFT market is speculation, which is going hand-in-hand with the novelty and bragging rights of owning something with this kind of pedigree.

Is there an NFT bubble? Possibly, but that doesn’t mean they’re going away. If there’s a bubble, it will burst at some point. New points of price equilibrium will emerge with less fluctuation as NFT products become normalized and buyers, sellers, and markets get a little more rational.

What does the future look like for NFTs? Their growth will be astounding because we’ll continue to apply this method of documenting ownership to situations well beyond the arts.

Movie Stars

One development recently caught my eye. Larva Labs, developer of the CyberPunk family of ten thousand crypto-figure characters, has signed on with Hollywood talent agency UTA to integrate those characters into films, television, video games, and other projects. Each character is an NFT, privately owned via a documented blockchain process.

It’s important to note that depending on the structure of the NFT, the arrangement doesn’t always grant exclusive reproduction, licensing, or copywriting rights. That must be the case here, but I doubt that the CyberPunk NFT owners are complaining, given what the exposure will do to the price of their NFTs!

Diversions

For some, NFTs will support new hobbies or new versions of old hobbies.

Hobbyists will build one-of-a-kind digital clothes closets with fashion items from handbags to dresses to sneakers. Collectors will also be drawn to the trading card aspect of NFTs, for example taco-themed GIF files from Taco Bell and digital collectibles endorsed by the major sports leagues. The NBA has been especially active in this area.

Have you ever wanted to get into horse racing? Zed Run is a company that sells NFT horses. Their owners enter them in races on the company platform where they vie for prize money. The equine NFTs are bought, sold, and presumably bred, just like in the real world.

How about owning a mansion on Mars? An artist and an architect have teamed up to create that digital home and the ability to experience it in virtual reality. They sold the NFT for $500,000.

Gaming

For many, gaming is more than a hobby and for some, even more than a passion. That describes some hardcore gamers. A major aspect of online metaverse gaming is collecting things – tokens, weapons, property, etc. – whether they’re purchased or earned. The ability to make in-game purchases of these kinds of supportive assets has been an integral part of most online games.

What’s new, though, is the ability to purchase those assets in the form of an NFT.

Why does that matter? These NFTs will be preserved, even when the game shuts down. They can be used, re-sold, or traded since they’re truly owned by the player outside of the particular game. An NFT-based asset might even cross over into other games or be swapped out for equivalent assets in those other games.

But beyond art, hobbies, and gaming, will we see NFT technology used for more serious matters?

Other Future Applications

Recall the logic of the value of NFTs. They document the pedigree of digital assets and their undisputed ownership. More and more of our world and our products are digital. That means more and more items in our world can be digitally right-click copied, i.e., counterfeited.

In the future, NFTs will be an option to protect any item that 1) has perceived value, 2) is or can be stored digitally, 3) can be re-sold or transferred, and 4) might otherwise be copied or counterfeited.

Here are three secret applications that will cement NFT’s role in our future.

1. Event tickets – Event organizers will sell NFTs, not tickets. The purchaser can resell them if they choose and organizers can be confident their NFT won’t be counterfeited.
2. Asset ownership documentation – In the future, titles to homes and vehicles will be tied to NFTs. Sales processes will be streamlined since title searches will be simplified, to say the least.
3. Cybersecurity – Blockchain security is not 100% invulnerable to crypto-criminals, but assets secured in that way certainly are not the low-hanging fruit that criminals tend to go for first. To the extent that anyone’s important assets are locked within an NFT, they might sleep a little better at night.

No, NFTs are not going away. They’ll become mainstream in their application to business processes and our personal downtime, and they’ll serve as a new category of assets for the average person to invest in.