For the last 20 years, economic opportunities have existed in specific sectors of undeveloped nations, which largely depended on foreign investment and companies bringing low-cost manufacturing or tourism. But as the digital age opens up new doors for creative business ideas and new untapped revenue sources, those once reliant communities now can take more control of their financial futures by exploring these new avenues—one of them is digital assets, or more specifically, NFTs.
The NFT frenzy of late 2020 and early 2021 opened the eyes of the world to just how encompassing and creative digital assets could truly be, and more importantly, just how much cash they could fetch. With more companies jumping into the pool that is the global NFT marketplace, could they become the new commodities that everyone craves? The developing world may soon find an opportunity to farm these assets and sell them to hungry customers on the other side of the horizon.
NFTs’ Billions
Since the advent of NFTs just a few short years ago, a number of marketplaces sprang up awaiting the day that they'd become far more relevant in the mainstream eye. Finally, in February 2021, their day in the Sun arrived and the market ballooned. Notable purchases like the Mars Home or Jack Dorsey's first tweet gave a sense of legitimacy to these assets, and ever since, the digital-asset-obsessed can't get enough. And the market volumes indicate it's not going away soon, boosted by these notable purchases. Despite Invezz's prediction that the market cap for NFTs will rise from $330 million to $470 million between 2020 and 2021, total sales have already surpassed that figure, with $2.5 billion total in sales in the first half of 2021.
Furthermore, Dapp Radar reported on July 1: "In 2020 the total amount of volume generated by the NFT collections tracked by DappRadar equaled a staggering $94,862,807. Even more impressive is that by the end of Q2 2021 that figure stands at almost 2.5 billion dollars."
Platforms like Rarible and OpenSea on Ethereum have capitalized on the frenzy, giving enthusiasts of all levels the chance to buy NFTs. But they're not even the highest grossing. Right now, Axie Infinity—whose valuation recently surpassed game publisher Take-Two Interactive—has the highest volume of NFT sales, generating over $600 million in trade volume over the month of July, almost $400 million more than OpenSea. And that's just from the game Axie Infinity, excluding other games or from artists minting NFTs. Therein lies the economic opportunity, and seized, it was—even before the NFT craze.
NFTs and Playing to Earn amidst an economic crisis
For years, some gamers were able to scrounge a living out of gaming, but as a number of countries grapple with economic crises and high unemployment, some citizens are turning to newer, more creative income sources. Venezuela was a primary example four years ago.
In 2017, Bloomberg reported that the dire situation in Venezuela drove a handful of locals to play RuneScape and Tibia, which they could mine for digital gold by playing and then sell the loot online in exchange for crypto. That crypto could be either used to buy goods or turned into Bolivars, although less likely given the currency's hyperinflation. On the other side of the world, the Philippines became a hotspot for digital asset farming and earning, riding the play-to-earn model. When the pandemic forced residents of the thousand-island nation to stay home, where they had to find alternative means to earn income.
Playing Axie Infinity, many in the Philippines were able to earn more than they might have by working a regular job. Gabby Dizon, a native of the Philippines and founder of Altitude Games, claimed gamers could earn $300-$400 per month playing the game. While the median monthly salary is an estimated $800-1000, increased unemployment and numerous pandemics kept many in a difficult situation, not to mention millions living below the country's official poverty line.
Dizon empowers those willing to earn by playing through the Yield Guild Gamers organization, which invests in NFTs and organizes communities of gamers to earn. According to a Business World report, the guild claimed its gaming community collectively earned 14 million in Axie Infinity game tokens (called Small Love Potions) valued at $1.9 million in total. These tokens could be converted into real cash by swapping them for cryptocurrencies like Ether and then cashed out on exchanges like Binance and Coinbase.
Looking at the model that the Yield Guild Gamers has built and gamers in Venezuela accomplished, it's extremely likely a new microeconomy will emerge based on digital asset rewards—mainly NFTs. In another scenario, these are likely to become hotspots for digital asset farming or manufacturing, with demands around the globe growing for them. Gamers in developed states are already willing to pay for others as a service to advance them in multiplayer role-playing games, like World of Warcraft. It's only a matter of time before the market shifts from earning to survive to earning as a lucrative business.
Moreover, the digital assets, unlike regular commodities, are cross-border and demand far lower import fees and shipping/transfer fees, while also cutting out intermediaries. In light of the potential, it is possible that a small sector of the economy in developing states may shift from affordable goods to manufacturing and farming digital goods that can be sold elsewhere for higher margins. These new possibilities could empower communities once dependent on manufacturing jobs to gain much greater financial freedom, while gradually developing digital microeconomies of their own, independent of the domination of larger corporations and legacy financial institutions.
Where there is demand there will be supply and the NFT demand will certainly stick for the next few years. In states where the pandemic inflicted heavy casualties on the economy, NFT farming will be the next big manufacturing beacon where there is money to be made.
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