Just out of reach, behind a digital curtain, exists a galaxy of activity. A new economic frontier that may be the answer to the generational wealth gap.
Between December 2017 and January 2018, 34,356 parcels of land were sold in a single real estate auction in a single city to buyers from all over the world. The auction had a number of peculiar features. By far the most unusual was the fact that the real estate being sold did not exist in any traditional sense. It was virtual. These plots were being sold in a yet-to-be-created digital city accessible only through a browser, enhanced by a sophisticated marketplace and a proprietary cryptocurrency. Tens of millions of dollars have flowed through the marketplace since its auction launch.
But it is not unique. In 2010, a nightclub within the game Entropia Universe was sold for $635,000. A digital equivalent of Amsterdam was sold in Second Life for $50,000 in 2007. The same year, an elf called Zeuzo was sold in World of Warcraft for $9,500.
Elsewhere, a 17-year-old just earned $500 for designing a gun that can’t shoot anyone. A 21-year-old earned $125 for controlling someone’s identity for an hour, and a 16-year-old just won $3 million in prize money for eliminating everyone on a virtual island in front of millions of people.
This is the Virtual Economy. An agglomeration of sophisticated platforms, fledgling and often dubious marketplaces, skilled nixers, volatile assets, and ambitious pioneers that exist or operate uniquely in virtual environments. It sits just out of reach, behind a digital curtain, invisible to most of us. Within it, there is a galaxy of activity and opportunity. A new economic frontier that may just be the answer to the generational wealth gap.
It is a place frequented, with varying degrees of immersion, by some 2.5 billion people through phones, consoles, laptops, desktops, and headsets. It is an environment native to the tech savvy, a dual citizenship of sorts for the technically fluent. It is a place where people go to socialise, to play, to create, to work, to fantasise, to deceive, and to prosper. An emerging habitat exhibiting the capacity of emerging technologies like distributed ledgers, virtual reality (VR), computer vision, real-time ray tracing, cryptocurrencies and non-fungible tokens (NFTs).
SYSTEM RELOADED: SOCIAL MOBILITY’S NEW FRONTIER
Over the last century, the developed world has built economies based on principles of rationality, efficient markets, and crucially, a merit-based system of social mobility. These systems imbued a sense of fairness and opportunity that generally placated and incentivised the masses. People were promised that hard work, education and adherence to social convention would be rewarded with prosperity, comfort, and financial stability.
Workers in the post-WW2 world understood that to obey these principles almost guaranteed that their children would be better off than they were. This idea was propagandised colloquially as “The American Dream,” but the core tenets were similarly present across much of northern Europe, Australasia, Canada, and South Korea as a social philosophy of abide and prosper.
This system of fair exchange drove extraordinary improvements in global equality, poverty and innovation over decades. But since the early 1990s, social mobility has slowed considerably. According to the OECD, it now takes at least five generations for a child born into a low-income French, German, Korean, British or American family to reach average income. This is evidence that as economies mature and growth slows, social mobility becomes increasingly difficult.
The Virtual Economy is an opportunity to short-circuit that system failure. It is an environment where entrepreneurs, prospectors and skilled agents can generate significant wealth very quickly without the need for startup capital. Esports players, streamers, skin designers, level boosters are just some examples of the creative new ways that people are generating wealth in this new economy.
What if a 21-year-old college graduate could use the €250,000 of virtual assets they have accrued as collateral for a mortgage? What if a single mother could use the income that she earns from renting digital real estate to buy groceries? What if a retiree could supplement their pension with the fees that they receive from being the celebrant for virtual weddings?
The Virtual Economy will provide an opportunity for people to smooth or augment their real-world income through a non-native economic system. This has profound implications for global wealth and income inequality. Participants in the Virtual Economy can circumvent the barriers preventing financial equivalence in the real world.
The promise of extraordinary opportunity is magnetic to those in a position to take advantage of it. But historically opportunity tended to discriminate against all but a select few. Those who have the means, the profile, the heritage or the good fortune to access it.
The anonymity afforded by the Virtual Economy obviates the traditional characteristics that would preclude the unprivileged from accessing the opportunities presented by great industrial change. The Virtual Economy is notably distinctive in that it is possible for almost anyone, young or old, rich or poor, regardless of gender, ethnicity, religion, location, heritage or social status, to succeed as long as they have the intellect, decisiveness and the technical capacity to see the opportunities emerging within it.
The Early Days of Virtual The Virtual Economy's trajectory follows the evolution of tech-enabled expression, social interaction and exchange across platforms in gaming and beyond.
The Virtual Technology Stack The past, present and future of the Virtual Economy is rooted in four key technologies blending the interactive with the immersive.
POST-VIRAL VIRTUAL: THE IMPACT OF THE PANDEMIC
The efficacy with which a virus has shut down global transport and trade is startling to most. The contemporary systems of travel, economics and communication make the spread of ideas, knowledge, shocks and indeed viruses inevitable. We have witnessed billions of people retreat to their homes, relying on digital platforms and environments for socialisation and competition. We have seen an immediate and significant rise in streaming viewership, gaming participation and virtual spend.
What the global pandemic has demonstrated is both the opportunity and necessity presented by the Virtual Economy. The participants active within it are still earning, largely unaffected by outside events, illustrating the value of supplemental virtual incomes.
Virtual incomes are an asymmetric hedge against real-world events. When things go well, so too does the Virtual Economy.
But when things go badly, it can excel as a destination for education, entertainment, community, utility and sports, unperturbed by social distancing and diminishing reserves of hand sanitisers.
We will emerge from this global quarantine to see new icons, influencers and entrepreneurs within virtual worlds. They will come to prominence at a time when people question the fundamental usefulness of traditional institutions, protocols, and the social contract. The virus is underlining the inequity of and unfairness of some of our civil systems. The Virtual Economy is emerging as natural ventilation to the pressure chamber of a now fragile and fractured social order.
THE MARKETPLACES
Much of the Virtual Economy lives on and and thrives off massive multi-participant platforms in gaming and beyond. Many of those were designed to have or subsequently developed internal markets and economies, with proprietary currencies that players use to buy and sell virtual goods and services.
These platforms are the nerve centers of the Virtual Economy. They are simultaneously places for entertainment, content creation, social interaction and, ever so often, economic production and exchange.
These platforms are growing at an extraordinary pace. Global virtual multi-player gaming and virtual simulation platforms and interactive media revenue reached around $109 billion in 2019, up from $62 billion in 2015, and is projected to hit almost $129 billion by 2021, according to research house SuperData. This is higher than the film industry, which reached $96.8 billion in revenues in 2018, according to the Motion Picture Association.
GROWTH IN DIGITAL GAME SPENDING ($US REVENUE)
2015 $62 BILLION2019 $109 BILLION2021* $129 BILLION*Projected by SuperDataContent goes here
The success of virtual platforms has also spawned a wild multibillion-dollar world of online grey and black trading of in-game currencies and goods, casino gambling, money laundering, and online piracy.
CLOSED CENTRALISED MARKETPLACES
Most of the marketplaces in the Virtual Economy are owned by a gaming publisher that sets the rules of the virtual world, oversees its economy and facilitates the creation of virtual assets. Game publishers and developers typically determine or manage every aspect of their economy – from the supply of resources, through pricing, to capital controls. Within these worlds, users – sometimes in the tens of millions – can build, earn, buy or sell virtual goods and services, often using one or more in-game currencies. Inflation, deflation, bubbles and even recessions can occur.
Virtual assets vary in nature – from weapons, cars and real estate, to skins, clothing, characters, accessories, currencies, and more. These goods can be created either directly by game publishers within the game, by a third-party vendor, or in some cases, by players themselves.
As the ultimate owner of everything created on the platform, the publisher typically does not permit the external sale or transfer of those assets beyond the gaming environment. This makes it difficult to commercialise them for real money, save for the illicit trade of virtual goods on grey and black markets.
FORTNITE
If you have a teenager at home, you may have heard them call a friend – or a nemesis – ‘Default’. This is a schoolyard insult for Fortnite players using free skins, the very synonym of uncool.
Released without much fanfare in 2017, Fortnite quickly turned into a cultural phenomenon with 350 million registered accounts as of May 2020 – up by 100 million since March 2019 – and more than 57 million active players in 2019. The third-person shooter game generated more than $1.2 billion in revenue in its first 10 months, becoming the first free-to-play game to reach that mark in its first year. At launch in 2018, its mobile app was generating $2 million a day.
$57 MILLION ACTIVE PLAYERS IN 2019
$350 MILLION REGISTERED ACCOUNTS AS OF MAY 2020
$1.2 BILLION REVENUE IN FIRST 10 MONTHS
Fortnite is a third-person shooter Battle Royale game. Players are dropped into an island to fight up to 99 other players until only one person remains. But over time, it has evolved beyond a traditional game – it’s simultaneously a play arena, a place for mass social gatherings, and an opportunity for global brands to put their name in front of a new digital audience.
Much of the game’s monetary success lies in its emerging sub-economy, which allows “players” to build their own identities, games, and worlds. Fortnite’s marketplace features a constantly rotating set of skins, dance moves and other cosmetic items to encourage repeat purchases. The in-game culture awards status and recognition to those with the most recent, coveted, and higher-cost items. Most in-game purchases rely on microtransactions. For example, Fortnite skins cost players anywhere between $8 and $20. The average paying user spends around $20 a month in microtransactions.
Its in-game currency, V-Bucks, can be purchased with real money. It can’t be used outside the game and serves solely to buy cosmetic items and game-play passes, which give access to gear, emojis, and other benefits.
Third-party marketplaces have popped up to fill this need – Fortnite skins and V-Bucks reloads are trending on multiple peer-to-peer exchanges. However, there is a distinct lack of oversight, governance, and transparency, making using these sites risky for players who have accumulated valuable items.
OPEN CENTRALISED MARKETPLACES
There are also a number of more open, and often more sophisticated, marketplaces within games or other virtual worlds that bear many similarities to closed in-game marketplaces but allow the purchase or sale of assets within the platform or externally. For example, users can sell game assets for money, or exchange game currency for real-world currency.
Most of these transactions are made inside the platforms themselves. This means the transactions occur on a marketplace that is owned and operated by a publisher. This is the easiest and most secure way to purchase assets, and more gaming companies are recognising the additional monetisation benefits from creating a sanctioned marketplace.
This explosive growth of virtual transactions, combined with the ease of online payments and the rise of mobile and console gaming, has propelled virtual goods into a new digital asset class and an area of interest for financial institutions.
Users are becoming increasingly comfortable with purchasing virtual goods. The virtual goods ecosystem ranges from individual gamers looking to exchange or sell an item, to “commercial” vendors who specialise in acquiring coveted items specifically for resale.
Virtual goods exist at every price point. Most in-game purchases rely on microtransactions as a continued source of revenue. The business model has been controversial with many gaming communities, yet has grown immensely since the early 2010s through the introduction of in-game currencies, ever-growing collections of rare in-game items, lucrative packs of random chance purchases, and the setting of expiration to encourage users to purchase to continue playing.
Gaming company Valve has been a leader in this space since 2011 through the creation of new developer and community tools that enable outside creators to earn money on Steam, the company’s digital distribution platform, allowing creators to sell and trade virtual goods. Notably, Valve expanded their tools for third-party games, enabling their community to create items for games the company doesn’t own.
MINECRAFT
Ask the occasional gamer about the best-selling video game of all time, and chances are they would guess Pokémon or Super Mario, or even Tetris. In fact, the title goes to Minecraft, a game without flashy graphics, an intricate storyline, or even an endgame.
With over 180 million copies sold, Minecraft has outsold the second-best selling game, Tetris, by 10 million even though it is three decades younger. Despite breaking with gaming conventions, Minecraft has become a smash hit that is played by more than 112 million gamers around the world – on computers, smartphones, and consoles.
Minecraft is a creative 3D block-building game that is completely open ended. At its core, it is a form of virtual Lego set in a private randomly generated world, where everything is mineable or modifiable. With no set objectives, players are dropped into a pixelised environment to explore and extract materials, or build and rebuild objects in an infinite world. Depending on the game mode, they may face exploding zombies and other foes. This forces players to learn how to build shelters to survive the night through trial and error. Many would also spend hundreds of hours creating new environments with pixelated ladders and building blocks.
More than a fun game, Minecraft is a real example of a market created to facilitate demand. It allows users to own servers, enabling them to create their own games within the game. Players who manage their own private server can decide what type of gameplay exists, what type of weapons can be used, or the look of the environment.
Entire mini-economies have emerged around Minecraft private servers thanks to the power of the base code and the size and fanaticism of its playerbase. The Minecraft homebrew community creates everything from fighting games, to adventure games, to Bitcoin treasure hunts.
These platforms attract millions of users and can generate significant revenue from a variety of sources, such as donations, subscriptions, advertisements, and microtransactions for cosmetic in-game items. Pay-to-win items are forbidden by Minecraft’s owner, Microsoft, ensuring a level of gameplay fairness. Some servers find unique ways to generate revenue – SatochiQuest, for example, charges a small access fee that is then pooled into a 1 Bitcoin prize for the winner of a Minecraft scavenger hunt.
More than a fun game, Minecraft is a real example of a market created to facilitate demand. Image credit: Minecraft
Minecraft also has its own Marketplace, featuring content from handpicked community developers – from skins and textures to hand-crafted worlds, and epic adventures. Payments are made with the game’s proprietary currency, Minecraft Coins, which can only be obtained in bundles bought with real money. The Coins can then be used to purchase professionally made lands to explore and play in. Players, however, cannot exchange that secondary currency for real money or mine any assets for real money directly in the game.
This open-ended model has generated more than $1 billion in revenues since the launch of the Marketplace in 2017. Yet Minecraft’s monetisation remains at odds with a market flooded by free-to-play apps relying on microtransactions for revenue generation. The top 50 highest-grossing apps on iOS in 2019 are all free to play except for Minecraft, which charges $7 per download. Around 17% of users purchased items from the Marketplace, spending an average of $12 a month on console and $5 on mobile.
The revenue-sharing model for partners in the Marketplace is not public. However, Microsoft says that over 50% of revenues are paid out to developers after platform fees. In the first 14 months of the marketplace, over $45 million were distributed to publishers. Many hobbyists formalised the operations and applied for the developer program, enabling young people to pay for college or even to create 40-people-strong design studios.
By any measure, conventional or otherwise, the volume of microtransactions shows that the significance gamers attach to their virtual items and achievements can be a real source of economic value.
Yet most in-game marketplaces currently lack transparent and legitimate in-game or out-of-the-game secondary markets for all the items that have value in game. Gamers currently go to great lengths to exchange the assets on black and grey markets – such as Reddit forums, or peer-to-peer online exchanges – risking being scammed, getting locked out of games or having their PayPal accounts frozen.
And in most cases, even when purchased in the game platform legally, in-game items ultimately belong to the game publisher, which determines how the user can access, modify or transfer the assets. If the game or virtual world shuts down, the item disappears and its value vanishes. So does the time and money spent to acquire it. This means a lot of sunk costs in terms of money, effort, and time.
The need for transparent and legitimate ways to exchange virtual assets has prompted entrepreneurs to seek alternative options, away from the walled gardens of game publishers.
Distributed ledgers presented exactly this opportunity. Blockchain technology enables instant secondary marketplaces that can operate outside of games and in-game economies. Multiple platforms, marketplaces and exchanges for virtual assets have been created since Ethereum was launched in 2015, with new projects springing up every few weeks or months.
DISTRIBUTED OPEN MARKETS
Distributed open markets are typically based on decentralised infrastructure and are not owned by any single entity. They allow the creation of unique virtual assets that only exist in a virtual space. These assets are created, bought, licensed, rented and sold in decentralised markets.
These decentralised exchanges are currently a fairly small slice of the Virtual Economy but present some of the most promising use cases for the creation and exchange of virtual assets.
The CryptoKitties craze of 2017 – the primitive blockchain game that allowed users to breed digital cats to produce new virtual cats of varying rarity – was a run-up to the emerging interest in creating and trading of virtual assets represented as tokens, especially in online social games built on the blockchain.
A token could represent any asset – such as a painting or a digital skin – or a utility, such as a token that gives you access to 10 hours of streaming on a video streaming service.
Tokens represent a new way to own digital goods and services. Unlike traditional physical assets or money, tokens can be programmed, which gives them more flexibility and variety than physical assets. For example, they can be programmed to reduce in value over time. Developers can also cap the supply of certain tokens, making them a scarce resource.
Non-fungible tokens (NFTs), in particular, represent unique digital items on the Ethereum blockchain. NFTs could be collectibles; game items such as weapons and skins; digital art; virtual real estate; event tickets; social network handles and even ownership records for physical assets. Unlike other tokens like cryptocurrencies, NFTs are not interchangeable – they can’t replace or be replaced by another identical item.
NFTs also have a clear trace of ownership that is preserved on the blockchain. Since they are standardised in their programming, they can easily be exchanged on open markets. And unlike a lot of virtual goods on centralised gaming platforms, NFTs can be liquidated for real-world value without breaching the terms of service or the law. From land worth hundreds of thousands of dollars, to trading cards, to shoes that look like fish, NFTs offer an infinite market of goods that can be scaled at no cost.
As tokenised virtual assets increase in value, they can be traded, insured, and securitised. In the right circumstances, users might also be able to obtain loans from their NFTs and to lease their NFTs if they don’t use them often. And if NFTs and other virtual assets are in high demand, users would want to buy and sell them on trusted platforms for other virtual assets, cryptocurrencies, or real money.
CryptoKitties launched NFTs into the mainstream and were a massive attraction point for investors in the space, giving rise to an evolving ecosystem of NFT projects in gaming, art, virtual real estate and gambling, among others.
The early NFT market was kept afloat by the emergence of viral “hot potato” games involving the fast exchange of NFTs. The rules were simple. A new NFT would be minted, then traded and passed among users at an increasingly high price, some increment of the previous price. The last person holding the NFT loses all their money and is stuck with a no-value NFT.
In 2018, an NFT of Donald Trump in the game Cryptocelebrities sold for 123 ETH – or $137,000 at the time.
Though the equivalent of $18M was traded between the launch in January and shutdown in March 2018, 6% of every transaction went to the eight anonymous developers. Users are now left with unique but useless NFTs.
Though speculative, the hot potato phenomenon showed that a specific NFT can see incredible growth in value in a matter of days. It also ushered in experimentation with pricing and auctions in the budding NFT space.
After the CryptoKitties bubble, the number of unique accounts interacting with NFTs has grown slowly but steadily on OpenSea, the largest NFT marketplace, from around 8,500 accounts in February 2018 to more than 20,000 accounts in December 2019. For reference, the Ethereum blockchain as a whole has nearly 92 million registered accounts as of early 2020.
Moreover, developers are building more NFTs on the Ethereum network, increasing the likelihood of finding more attractive NFTs that can generate momentum.
Overall, the market for NFTs is still small, fickle and harder to size than the cryptocurrency market, given the prices for assets.
The closest proxy indicator, the secondary trading volume – or peer-to-peer sales of NFTs – is roughly $2 – $3 million in volume per month currently, according to OpenSea. Overall, while the number of OpenSea users and contracts based on the NFT standard is increasing, the volume of trade seems to be steady or decreasing.
The NFT market remains volatile. It is highly sensitive to fluctuations in the Ethereum price and to the actions of a small number of power users. Variation can happen quickly through the actions of a small number of players, either wittingly or unwittingly acting as a cartel.
OpenSea data shows a small number of NFT sellers capturing high volumes and a small number of NFT buyers buying high volumes. On OpenSea, as of early 2020, the median seller has sold $71.96 worth of NFTs, whereas the average seller has sold $1,178 worth of items. At the same time, the average buyer has purchased $943.81 worth of items compared to the median buyer with $42.72 worth of NFTs.
OPENSEA MEDIAN VS. AVERAGE SALES
$71.96 worth of NFTs MEDIAN SELLER$1,178 worth of NFTs AVERAGE SELLERSOURCE: Data from OpenSea
The trading volume on the NFT market is also highly sensitive to fluctuations of cryptocurrencies. For example, contrary to what people might expect, a noticeable bump in trading volume on February 7, 2020 does not seem to indicate increased interest in NFTs since the number of active users did not change much on or around that day. In reality, a small jump in Ethereum prices that day jolted one or a few big players (buyers or sellers) to liquidate their assets.
While the indicators of the future growth of the NFT market are inconclusive, it’s clear that that variation can happen quickly through the actions of a small number of players.
The first wave of knock-on effects in 2017-2018 was in a small immature market incapable of handling both user expectations (Cryptocelebrities) and the number of transactions (CryptoKitties) needed to sustain growth.
By the same logic, the NFT market has the potential to skyrocket if a small number of blockchain-based apps can reach mainstream status and have a potential knock-on effect for other NFT assets.
NFTs are also showing signals of a maturing market ready for growth. While collectibles were a straightforward application of NFTs, there are signs that users are starting to gravitate towards more complex games that expand on the NFT capabilities.
DECENTRALAND
It was a 25x return on a six-figure investment. By any measure, it was a solid deal. In 2017, Miles Anthony bought into a $26 million token sale distributing an in-game currency in Decentraland, a virtual reality platform allocating ownership of digital real estate on the Ethereum blockchain.
Encouraged by the return, in 2018 he re-invested some of the coins to buy virtual land in an auction on Decentraland. He used some of the land to build a mega casino in the virtual world, which he is now leasing in parcels to willing buyers. Investors were quick to join the venture, renting out floors in the casino in a profit-sharing arrangement.
It is a virtual world that is designed by its users and where landowners have the freedom to build whatever content and experiences they want in a 3D virtual world. Some 90,000 lands have been released since Decentraland’s first auction in late 2017 and many are now traded in an open market for MANA, the proprietary in-universe currency used for land purchase and transactions on the platform.
Most Decentraland investors focus on flipping virtual land. Others like Anthony are betting on building experiences on their virtual property as a “quicker route to monetisation.” Some plan to lease parcels to users wishing to build on them – anything imaginable, from art galleries, through games, to billboards.
The land comes in the form of NFTs, an emerging asset class in the Virtual Economy that is aiming to change virtual ownership and is seeing a flurry of new projects and experiments, from crypto games and marketplaces, to new infrastructure solutions. Decentraland, in particular, aims to allow the creation and exchange of truly unique virtual assets and experiences outside the walled gardens of centralised virtual gaming environments.
The platform officially launched in February 2020 after a long beta period. Users can now explore the virtual world for free through their browsers. New content is being added by the day. The decentralised nature of the world will allow users to move and trade inside the universe with no restrictions. While the world still feels young and incomplete, its premise is tantalising.
All major decisions in Decentraland are made by the landowners through its voting platform, Agora, allowing the emergence of organised districts and proto-governments. This level of control by users is unusual in traditional virtual platforms and makes Decentraland attractive to virtual land developers. The Dragon City district, for example, will include nearly 6,500 parcels and showcase a mixture of ancient Chinese and Western culture. Other initiatives include a fashion district and a casino strip modeled after Las Vegas.
While the world is built around decentralised free-market ideals, analog real estate conventions still apply. Land around Genesis Plaza, the launch point of all users, is worth a premium, with locations closest to the center of the universe auctioning for $270,000, enough to purchase a home in many cities. Land at the edge of the world or with no road access is trading for around $700. Since launch, over $50 million worth of transactions have taken place, according to Meilich.
These investments put a lot of pressure on landowners to monetise their land, creating concerns that real estate speculation would remain the driver of value in Decentraland. Meilich hopes that eventually billion-dollar companies could be creating content for the platform. Though they may not be seeking direct monetisation, corporations could see an opportunity to reach tech-savvy crypto enthusiasts. Design contests have also been organised to incentivise the creation of new content on the platform.
It is, however, hard to imagine that sin stocks or exit scams for crypto will not play a role in the economic development of Decentraland. A red light district is already planned at the border of virtual Vegas. Grey and black market players could exploit the platform to expand their trade. Extremist groups could also infiltrate Decentraland to recruit young people or spread propaganda.
To counter destructive behaviours, filters could be applied by the portal used to access the world, blocking offensive content, or modifying others. Meilich compares these yet-to-be-developed third-party filters to community-driven modding software used to alter games. Filters are, however, not yet a reality as the source code required for development remains closed source for now. The official client at decentraland.org currently serves raw, uncensored content. It is still unclear what impact filters will have on this brave new world.
Meilich hopes for a multi-billion economy to develop on Decentraland in the next decade. For now, the low-poly aesthetics of Decentraland are closer to a modernised user-generated Farmville than a futuristic Blade Runner.
In more than one way, the NFT market resembles the days of the dot.com bubble, which ultimately shifted the Internet tech industry towards more sustainable growth models.
The Bitcoin bubble led to investors throwing liquidity at NFTs at any valuation in 2017 and 2018. This has allowed objectively poor-quality NFTs, such as Cryptocelebrities, to turn big profits. Much hyped NFTs failed to deliver on their promise. Blockchain transactions were slow. Transaction fees ballooned. Games failed. A number of ICO creators profiteered and ran. The bubble burst in 2018, resulting in capital withdrawals and plummeting values.
The surviving players remained due to a process akin to natural selection. They consolidated their place in the market despite lower valuations. Many were flush with cash from the bubble, others lost it all.
Secondary players also saw the bubble as a stress test that showed the limitations of the infrastructure. This led to a period of standardisation and the early build of scalable technologies.
Amid continuing volatility, NFTs now resemble more a young stock market than a free-for-all cash-burning machine.
A potential future CryptoKitties-like knock-on effect in a more mature market could lead to a Bitcoin-like exponential growth that can be sustained by the new-found utility of NFTs and a more streamlined and scaleable trading experience.
To be continued….. (maybe not)
