Non-Fungible Tokens (NFTs) have had a wild ride over the past few years. Since their emergence on the scene, they have experienced a bubble, a crash, and a gradual integration into the ecosystem of the blockchain at a more sustainable level. Many people will remember the NFT bubble of 2021 when they associated with digital art, such as cartoons of apes, reached astronomical prices. In a particularly egregious case, the actor Seth Green had purchased an NFT of one such cartoon ape and had planned a television show around the ape character until he lost control of it. More frequently, we have seen NFTs that sold for sky-high prices at the height of the bubble lose almost all of their value. Its crash of 2023 led to a loss of $2 trillion in value.
At the bottom of the market, following the 2023 crash, 95% of all NFTs were estimated to have no value.
Fortunately, NFTs have bounced back from their post-crash lows, even if they may not reach the dizzy heights of the initial speculative bubble again. As NFTs become more fully integrated into the online ecosystem, they are beginning to reshape the online economy in new ways.
One of the most interesting ways that NFTs are reshaping the world is through their integration into online gambling platforms. Digital collectibles have entered into the gambling ecosystem. Currently, they have only started changing online gambling, but there are some exciting developments that we can expect to see over the coming years.
In this article, we'll examine the world of digital collectibles and explain how NFTs are impacting online casinos today and may reshape them in the coming years.
What Are NFTs and How Do They Work in Casinos?
A Non-Fungible Token (NFT) is a unique digital asset that represents ownership of real-world or digital objects. It is a record of ownership placed on the blockchain, certifying authenticity and preventing alteration, copying, or division. NFTs use the same technology as cryptocurrencies and can be bought and sold. However, unlike cryptocurrency, they are not a store of value. These assets are highly speculative, with values determined largely by individual demand rather than the broader market.
Each NFT is different from every other, so even those that represent similar items or items in a series are unique. Because of this, they are often used for digital ownership of collectibles. For instance, U.S. President Donald Trump has released multiple series featuring digital art of himself in different costumes and poses. Each is linked to a different trading card-style image, and no two are the same.
NFTs came on the market in 2014 and began gaining traction with digital collectors in 2017. The market book in 2021, when celebrities rushed into the market space and began endorsing NFTs and buying them for millions. When the market experienced a downturn in 2022 and a crash the next year, the market lost 95% of its value. However, since then, the market has gradually recovered to a more sustainable level, and there is now an active community of traders who buy and sell NFTs.
How NFT Casinos Work: Using Digital Collectibles in Gambling
Because the NFT market has recovered and is returning to health, digital businesses are looking for new ways to integrate them. For online casinos, that means finding ways to incorporate NFTs into the gaming experience. To understand how NFT casinos work, it's important to see how they merge digital collectibles with online gambling, giving players real ownership of in-game assets. This is explained in our guide. Many now allow gamblers to buy, sell, and trade them within the online gaming environment by creating digital assets that represent in-game items or products. This is only one way NFTs have infiltrated the gaming space.
A lot of NFT gambling sites are exploring new ways to reward players, offering unique digital collectibles that can be traded or sold, unlike traditional casino rewards. Many online casinos have begun exploring how best to deploy NFTs to attract younger and more tech savvy users with unique game experiences. Traditional online games, for instance, do not allow users to "own" the assets they collect when playing it - thing the tokens, gems, coins, and other in-game objects used in gameplay - NFTs allow players to have an ownership stake in the games they play and to be able to buy, sell, and trade the objects they collect in the game to other players.
Additionally, some casinos allow users to mint NFTs through gameplay and winning, granting access to VIP spaces, exclusive events, and other benefits. Because they are highly tradeable, a robust secondary market emerges where gamblers can buy, sell, or trade them, driving interest in the casino and its games - and, with luck, increasing gameplay.
Giving Players Ownership
As we mentioned, NFTs give players an ownership stake in the games they play. That change marks a huge transformation from traditional gaming, where the player was a more passive participant in games created and administered by the house. In the case of NFTs, players might be able to own things like custom slot machine skins, personalized playing cards, custom avatars, and more - all customizable to fit the tastes and interests of the players.
Crypto casinos with NFTs provide a next-level experience, allowing users to earn and own digital assets that can enhance their gameplay across different platforms. Now, in-game items have been a fixture of online gaming for a long time, but previous in-game purchases did not have ownership value and mostly existed solely to allow players to customize their user experience. NFTs have changed that by injecting ownership and making some of these customizations valuable. While traditional in-game purchases were limited to one platform, they have the capability to be changed between platforms, so an NFT purchased in one casino can also be used in other casinos where the same game is played. This interchangeability means that the assets a player collects have true-world value that extends beyond just one casino, and that in turn creates a secondary market for buying, selling, and trading these digital assets.
How NFT Gambling Sites Offer Better Rewards and Exclusive Incentives
Casinos have many tools for encouraging players to keep playing. Offering rewards is one of the most effective, and most online casino patrons are familiar with bonuses, free spins, and loyalty points. So popular are these incentives that many online gambling sites even put them in their commercials, even those that air on daytime TV and are aimed at senior citizens. These incentives, though, carry relatively little value due to the restrictions they carry. For instance, many casinos don’t allow players to withdraw winnings earned through free spins until they have completed a fixed number of transactions, thus making it less likely you will realize significant gains from these bonuses. And, of course, these incentives are non-transferrable, so you are quite limited in terms of how you can use them.
One of the biggest attractions of NFT gaming rewards is that they hold real value, giving players the ability to use, trade or sell them freely without restrictions. On the other hand, NFTs hold the potential to reward players with incentives that hold real value. Since each is unique and belongs to the player who earns it, the NFT can be bought, sold, or traded, meaning its value is instantly available to the player and can be easily taken out of the casino without the red tape and restrictions of traditional incentives.
For example, if you are playing a particular casino game, the casino may want to encourage your loyalty by offering NFTs as achievements within the game or giving them away as a reward for winning a competition or participating in an in-game event. The chance to earn it creates an engaging user experience and encourages the player to stay loyal to the game.
But more than that, it gives the player an asset with real value. The NFT will carry its own unique value, based on rarity and demand, and can be bought, traded, or sold, thus creating an NFT market within the game and potentially beyond the casino as well. This financial incentive creates an added dimension to gameplay and helps players feel that they are investing in something of real value while they gamble.
What's Next for NFTs in Online Casinos
All of this is happening right now in online casinos, but it is not the end of the road for casino NFTs. In the coming years, NFTs have the opportunity to create a sea-change in the way we interact with online casinos. As its popularity rises once again, even traditional casinos may be encouraged to join the blockchain revolution and decentralize, as crypto casinos have done, freeing players from the prying eyes and the oversight of the banking industry and, ultimately, making online gaming more transparent and more secure.
In the immediate future, the marketplace created by casino NFTs might change the way we think about gambling. Typically, online gambling is a solo activity, but the desire to collect NFTs creates a sense of community that historically has not been present among online gamblers. A more collective approach to online gambling might alter the kinds of games that are played and the balance between competition and cooperation among players.
Conclusion
In the coming years, we are likely to see NFTs join crypto in becoming one of the dominant ways that we engage with online gambling. This will help casinos become more interactive, more customizable, and more fun for everyone.