The Power of NFTs
This will be in relation to GameStop and the creation of the NFT marketplace. I am writing this after sitting on the call with /r/wallstreetbets in regards to SimpleAdvice on said call.
Who is an NFT
The NFT is created with a contract on the chain. On Ethereum there are the ERC721 and ERC1155. These are the two most popular standards at this point in time.
What is an NFT
An NFT is a digital asset that belongs to an individual person. Even if there are 1000 of the same NFT each of those digital assets are tied to specific wallet addresses. You can utilize this in multiple ways.
When is an NFT
We are still in the very early days of NFTs. The use cases will continue to expand as time goes on.
Where is an NFT
You can find NFTs everywhere now a days, and on multiple chains. There are marketplaces like the below. I’m sure there are other’s as well but am just listing a few as an example.
- OpenSea. Ethereum, Polygon, and more to come
- CNFT.io. This is Cardano’s chain
- MagicEden. This is on Solana’s chain
- GameStop. TBD. However with partnerships like immutable X and Loopring it will be built on those.
This gives the power of digital assets back to the “player”, to use GameStop lingo. Those assets once bought belong to THAT specific wallet address, which only you should have access to. Please practice good security in regards to your crypto assets.
Why is this important? Because ultimately the backend of the whole NFT space is public infrastructure. The possibilities of being able to tie digital goods to an individual is extremely powerful.
What can GameStop do with it’s marketplace
It can make $$$. How would it do this? Just like any middle-man/broker of a sale. It will take it’s cut of every purchase made on the platform. This is no different than how current NFT marketplaces work today.
Why use GameStop’s market?
You may ask… why would a 3rd party choose to use the GameStop marketplace? Other than the base of people that already utilize GameStop in some form or fashion… Let’s take Blizzard as an example (which is now Microsoft).
First off setting up a marketplace is no small task, and utilizing another parties marketplace then also offloads that services’ availability, reliability, liability, etc. to the provider; in this case GameStop. Second, the creator of those NFTs get to set their own royalty fees on each NFT.
Let’s break down the sale of an NFT. If Blizzard minted a utility NFT of the “Sword of a thousand Truths” and sold each one for 1 ETH on the GameStop marketplace the breakdown (theoretically) would go as follows:
Sale right after a mint, assuming the minter would be Blizzard:
- NFT Sold for 1 ETH (Let’s call that $1000 for math purposes) to myself VeniVidiVici
- GameStop (Marketplace fee of say… 2%). GameStop would pocket .02 ETH ($20) of that sale
- Blizzard would pocket that remaining .95 ETH ($980) of that sale
This is where the beauty comes in, let’s say I no longer wanted/needed the NFT. I can RELIST it on the GameStop marketplace, or really any marketplace. But say I chose the GameStop Marketplace.
Resale of the same NFT:
- Time has passed but my NFT is still only worth 1 ETH and I sell it to user XYZ
- GameStop (Marketplace fee of say… 2%) would pocket their normal market fee and get .02 ETH from that sale
- Blizzard (Assuming they put say… a 5% royalty fee) would pocket ~.05 ETH from that sale
- VeniVidiVici. I would get the remaining ~.93 ETH back into my wallet
So with GameStop hosting the marketplace they will get a percentage of every single transaction made on their marketplace. That percentage would have to be set by them and whatever they decide is necessary. At the end of the day it’s no different than how Steam operates except instead of being tied to steam specifically it’s on the blockchain which anyone can utilize.
If Blizzard chose to mint 1000 of these 1 ETH “Sword of a thousand truths” that would put a market value on this “single” NFT at 1000 ETH. With the initial sale of this NFT GameStop could stand to make up to 20 ETH just off the market fee’s alone while Blizzard would make 980 ETH. Blizzard having to do nothing other than making the NFT itself and the mechanism for it’s utility. And that’s just a single NFT!