The US based retail company GameStop recently announced in the Wall Street Journal that it is entering the NFT space. After a turbulent couple of years for GameStop, in January 2022 they launched a new NFT marketplace focused on in-game NFTs.
GameStop’s new NFT landing page invites NFT creators to apply to join their marketplace, under the banner statement “Power to the players. Power to the creators. Power to the collectors.”
By developing an NFT marketplace, GameStop hopes to benefit from future increases in the use of NFTs in gaming. It does not plan to rely on immediate financial gains from NFTs or NFT-related stocks.
So, what is NFTs? How will GameStop’s new NFT marketplace impact the success and stability of NFT-related stocks?
What are NFTs? Â
Many people are confused by how to define an NFT. NFTs, non-fungible tokens, are units of value whose worth is not stable or set. Something fungible is made up of units that can easily be exchanged. For example, $10 can readily be swapped for 10 $1 bills, or two $5 bills, without losing any value in the transaction. NFTs are unique assets that must be traded as single units. They are usually image or audio files.
Unlike easily accessible digital images, NFTs have a unique ownership certificate. This certificate, or token, is registered in the blockchain. The record of ownership is part of a public and decentralized ledger. Because this blockchain ledger is stored on many computers separately and simultaneously, it cannot be forged. This secures the ownership of NFTs so that, even if the image is reproduced, the ownership of the digital image cannot be contested.
NFTs and NFT marketplaces
NFTs are traded in cryptocurrencies and held in NFT wallets. They can be transferred from one marketplace to another. NFTs themselves can be bought or traded. In addition, people can buy NFTs in NFT marketplaces or companies incorporating NFTs into online games as another way to access the growing NFT market.
As NFT-related stocks are largely unrelated to other commodities or stocks, the marketplace seems to operate relatively interpedently. Economic factors such as inflation could impact the value of the currencies in which NFTs are traded. Changes in the values of these cryptocurrencies do not impact the value of the individual NFTs.
NFTs and the art worldÂ
NFTs started out as a niche product. Wider interest in NFTs began in 2020, with a boom in the NFT marketplace. From January to March 2021, more than $200 million was spent on NFTs.
Many celebrities have made a lot of money selling NFTs, including Paris Hilton, Snoop Dog, Shawn Mendes, Eminem, and Lindsey Lohan. NFTs give fans the opportunity to own a digital image of a celebrity.
For about a year, traditional auction houses have been selling NFTs. Christies auctioned an NFT by Mike Winkelmann, the digital artist known as Beeple, was sold for over $69 million. Sotheby’s auctioned off NFT of the original source code of the internet for over $5 million.
Another emerging space is institutions such as museums selling NFTs of famous artworks in their collections. The British Museum has partnered with French start-up La Collection to sell 200 NFTs of famous Japanese artist Hokusai’s artworks.
Each resale of an NFT can generate profits for the NFT’s creator. Because of this, NFTs are considered to be a more reliable, transparent, and lucrative way for artists to sell their work.
The surge in the production, sale, and trade of NFTs in the art world means that NFT marketplaces are likely to become increasingly important.
NFTs and the gaming landscapeÂ
GameStop is not the only gaming company with a stake in the future of NFTs. For years, gamers have been spending money on in-game purchases. Some online games have recently introduced NFTs to supplement or replace those purchases, with limited, mixed success.
NFTs are likely to play a role in gaming and trading in the metaverse. In the metaverse, people will move seamlessly through activities including work, social interaction, and gaming, all in a virtual space.
The future of NFT-related stocks and NFT marketplacesÂ
It is impossible to know which NFT-related stocks to buy to secure medium- or long-term value. The success of NFT investing depends on the specific NFT-related stock, as well as the value of the cryptocurrencies in which the NFTs are traded. The increase in GameStop’s stock since the announcement of their NFT marketplace indicates that NFT-related stocks could see an increase. But what is clear is that NFTs are here to stay, and that NFT marketplaces, like GameStop’s, will become increasingly important.
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