NFT Trading Card Games (TCGs) have become the latest brainchild of the crypto-community. They are enjoying unparalleled popularity thanks to the irrefutable, blockchain-enabled evidence of ownership they boast. Since time immemorial, tradespeople have looked for ways to future-proof their assets against uncertainty. From financial crises to state-sponsored inflationary catastrophes, losing one’s fortune has long haunted us humans. In a world whose complexity accelerates by the minute, low-beta, alternative asset classes are duly gaining traction. The new dawn for TCGs is a testament to this claim. Without a doubt, it is a phenomenon bolstered by the secure, theft-proof NFT blockchain technology.
In this article, we will explore what promise NFT trading card games hold and what their future might be. Specifically, we will investigate:
Pokemon and baseball cards have notoriously sold for millions before NFTs ever existed. In 2020, eBay reported that the trading card category on its platform had a 142-percent annual growth rate (AGR) with 4 million cards sold. The online marketplace announced that the biggest gainers were soccer and basketball cards, with respective AGRs of 1,586 and 373 percent. The physical card game Magic: The Gathering with 20 million players worldwide set the ball rolling in 1993 for all other trading cards to follow. In January 2021, the 1952 Topps Mickey Mantle rookie card PSA 9 grade, a baseball card, set the record for the largest card transaction of all time at USD 5.2 million.
To put in context how NFT trading card games came to be, it is necessary to squarely bound their definition. In the larger umbrella of trading cards, some are games, out of which some are digital, and some amongst the latter are blockchain-backed. For example, sports cards are strictly collectibles; they are trading cards but not games. Next, while Pokemon cards prove to be collection items rather than play artifacts, they were originally designed to be game cards and thus make up a non-digital trading card game. On the other hand, the Game Boy Color version of Pokemon Trading Card Game was a digital TGC albeit not leveraging a distributed ledger. In this vein, an NFT TGC is a digital trading card game whose cards are minted as non-fungible tokens in a blockchain.
NFT trading cards, at the center of NFT TCGs, are a subset of NFTs–digital assets in limited supply on the blockchain. More often than not, there is a specific set of internal rules that these cards answer to within their native game context. For example, they may represent warriors with performance statistics on an array of categories. These could include offensive qualities, experience levels, and special attacks. In the game they pertain to, they are deployed in accordance with a unique battle procedure. The contest’s outcome is usually deterministic in part with some stochastic elements. The card subjects at times have a life of their own, rising in skills and maturity as they grow. In some cases, they can fuse with other collectibles and improve their overall performance.
What is most notable about NFT trading card games is that the collectibles that power the gaming environment can be taken out to one’s wallet and stored or sold thereafter. Blockchain trading cards games especially in digital environments make for a more convincing ownership experience. Thanks to the ERC-721 Ethereum protocol, it is easy to keep track and have a record of one’s NFT portfolio. What’s more, the untamperable, inimitable asset in limited supply can be traded independently in the marketplace. It unlocks capabilities in the gaming environment but remains a stand-alone asset minted in the blockchain.
When a franchise is built around a storyline, its characters, and a fantasy world there is a potential for the cards to rise in popularity beyond the game environment. Profit-motivated gamers can bet on this in addition to the value associated with the prestige of holding a rare in-game collectible. As a general rule, short-supply cards will be more valuable. Further, we can call TGCs decentralized in that the game developers will have no hand in modifying a card NFT’s attributes once it is minted and circulated.
As Fuel Games co-founder Robbie Ferguson stated: “Blockchain allows players to monetize their time.” This is a very discriminative property of TCGs as they set out to replace physical trading cards. Indeed, the new model that Web3 propones is one where the entry fees are null. The computer game company generates profit through in-app purchases. Nonetheless, there are also ways for non-spending players to progress through the game solely with game time. For example, they could improve their cards with battle experience and resell them at a profit. This is especially useful to bolster the game’s brand equity as more can join in, thus also bumping the demand for and allure of the rarest collectibles.
The play-to-earn model is a win for the developers, a win for the players, and a win for the investors provided that the assets continue to appreciate with old age. It is an assumption based on the expectation that the metaverse will unfold and those best positioned to integrate new technologies into their games will be the first movers. Their garnered brand equity and technical expertise will dig up a moat around them and reduce the threat of new entrants in the space. Accordingly, TCGs target gamers and investors with the vision of a high-quality virtual matrix. Just like people use entertainment centers to network and socialize in the physical world, so will people enter gaming realms in the metaverse to that end. There they will be able to brandish their cards and signal status.
One important reservation skeptics have about NFT TCGs is that they are not physical. We cannot touch and feel them nor can we put them down on a table and declare “Uno!” or “All in.” The cards that are supposed to foster social interactions would add yet another screen between humans and their surroundings. However, one might argue that this is the exact reason why the outlook of early NFT adopters is visionary. On September 9, 2021, Facebook announced its partnership with Ray-Ban to build seamless AR glasses and further dissolve the boundary between the physical and virtual centers of experience. In effect, Facebook CEO Mark Zuckerberg noted:
“With Ray-Ban Stories, you can stay focused on what you’re doing, and you don’t have to choose between being on your device or being fully present. We believe that this is an important step on the road to developing the ultimate augmented reality glasses. [...] Imagine seeing holograms, turn-by-turn directions, or being able to play chess on a table in front of you with your loved one three thousand miles away right from your glasses.”
This effectively echoes his previous statement that “people will transition from seeing [Facebook] primarily as a social-media company to seeing [it] as a metaverse company.” In this vein, TCGs can be expected to evolve over time and attract people with an array of interface preferences.
Blockchain game developers are realizing that NFT trading card games represent an unprecedented market opportunity. New games are being announced on a frequent basis including Splinterlands, Berserk, Dark Country, and Kingdom Karnage. The following are some of the most successful:
To put in context the sales number and assess whether they were spurred by a few record transactions or numerous smaller ones, we can look at the Gods Unchained Cards NFT daily holder count. From the graph below, it comes to light that the unique wallet holder count has been steadily rising since the game’s launch on November 17, 2019 to 15,423 by June 29, 2021. This means that the sudden bump in sales on April 11, 2021 was either an exceptional transaction or a thin set of large purchases. Accordingly, it appears that the game’s popularity has been slowly but consistently growing. Further, the most significant investment opportunities seem to center around the rarest game collectibles.
A number of key stakeholders need to cooperate for the TCG ecosystem to thrive. Typically, they range from game developers to infrastructure architects. A sample of some of the top stakeholders in the space is as follows:
In conjunction, Horizon is also building Arcadeum. It is its proprietary Layer-2 platform to support asset handling on blockchain-enabled computer games. Horizon has plans to open this platform to other game developers that require it. It will effectively platformize the infrastructure in need across the industry for others to use. An analogy to this business model outside Web3 includes Slack and Amazon Web Services (AWS). In effect, they respectively abstract away the need to build in-house communication channels and servers. In turn, businesses benefit from the lowered unit price that these larger service providers derive on the services offered from economies of scale.
Horizon’s seed round investors include CMT Digital, The Xchange Company, BITKRAFT Ventures, Khaled Verjee and Zyshan Kaba. It ultimately bets on a modular product architecture meant to suit NFT developers beyond the gaming industry.
Trading card games are deeply ingrained in our collective imaginary. They fit in our hands, provide distraction, surprise, and delightful competition in social settings. By abiding by one set of rules, a group can connect, communicate, and share an emotional space beyond language and creed. With their potential to rally billions of people, TCGs have the fabric of decacorns. Making them decentralized is indeed the right step to opening up new matrices where people interact with pseudonymous names, profile pictures, and avatar holograms. Since user privacy must be paramount to enable full-scale expression, only decentralized platforms can trustlessly deliver on this commitment.
When asked “Is crypto the future or is it a fad?” in a Bloomberg interview, Ethereum co-founder Vitalik Buterin answered: “It’s the future that contains fads.” As an example, he gave the ICO frenzy in 2018 that ended up not taking off. The NFT industry and its tentacular branches can in turn rightfully ask themselves this question. Notwithstanding, this primer defends that TCGs are set to expand manifold over the next decades. In effect, the model they propose inscribes itself in deep trends in the Web3 revolution. It sets the stage for the user monetary incentivization, collectibles unlockerization, and metaverse development to converge. What’s more, it does so merely by evolving what already works on a superior interface. It can reasonably be expected that rare collectibles in burgeoning TCGs will detonate in value over time.
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