The blockchain industry has been seeping into the esports space in 2021 with an unprecedented acceleration, and has brought a financial boon to many in the space. However, the blockchain-isation of esports is offering far more fundamental innovations.
NFTs (Non-Fungible Tokens) is another revolutionary application of blockchain technology that leverages a decentralized, trusted, and immutable ledger to capture the ownership of digital assets as they are purchased and resold. In basic economics, fungible assets can be readily interchanged; a $10 bill is as good as any other $10 bill. Non-fungible assets on the other hand are unique and can’t be interchanged. Non-fungible tokens (NFTs) are simply unique digital assets that you can own or trade; the proof of their ownership is immutably stored on a blockchain.
NFTs have now empowered artists to create provably scarce digital artwork, and in one fell swoop, NFTs are solving the challenges around imitation art, copyright infringement, and stolen art. The very nature of NFTs opens up a new world of financial opportunities to artists, creatives, and all participants in the digital/video/knowledge economy. The esports industry is a fertile ground for the practical application of NFTs.
NFTs are generating a new revenue stream for esports organisations, tournament organisers, and other esports stakeholders. NFTs offer a new, authentic way of monetizing esports’ young, tech-savvy audience. Bringing NFTs into gaming is sometimes presented as an idea called “play to earn”, based around the idea that unique digital items can increase in value over time – and be sold off later for profit.
When fans purchase NFTs – unlike many traditional products like merch – they’re buying something that can retain, or even increase, its value and be traded on an open market. That added financial incentive gets fans more engaged and more invested in the success of their favourite teams and streamers.
NFTs help drive sponsorship engagement, but more importantly, they keep fans inside a brand’s ecosystem.