Can Gaming Help the Public Embrace Blockchain Technology?
This article was originally published on ETFTrends.com.
As cryptocurrencies and its underlying technology, blockchain, continue the uphill battle for wider adoption, it could get a boost from an unlikely source--gaming.
While cryptocurrencies have yet to be fully embraced by the public as it battles security and regulatory battles, blockchain is beginning to attain more traction as companies, large or small, public and private alike, are beginning to see it as a viable application for a variety of uses in a multitude of sectors. As such, optimism is riding high on blockchain technology becoming more and more prevalent.
While the majority of investment capital into blockchain technology is coming from abroad, Forbes’ list of 50 companies exploring blockchain use include domestic names, such as JPMorgan Chase & Co, Berkshire Hathaway Inc, Bank of America, and Wells Fargo. From the financial sector to the healthcare sector, blockchain technology appears to be manifesting itself in various forms as a workable solution for housing data and securing it from unwanted access.
“We are extremely optimistic on the increasing use cases for blockchain especially on the enterprise level right now,” said Matt Markiewicz, Managing Director at Innovation Shares, an index provider for exchange-traded funds (ETFs). “Many industries have not only started to explore but are actually implementing various blockchain-based solutions in their business models in order to help improve productivity, fortify data security and enhance connectivity. IDC’s latest blockchain spending guide estimates a CAGR (compound annual growth rate) of 73% in blockchain spending over the next 4 years to $11.7 billion in 2022 with the manufacturing, professional services and banking industries expected to witness the fastest growth.”
Gaming, however, could be the driving force that pushes blockchain over the edge, according to Andrew Colosimo of Xaya--a blockchain gaming platform. According to Colosimo, gaming can help with fraud prevention when it comes to payments, lower commission fees and play to earn gaming experiences.
“I think gaming definitely has the potential for being a catalyst for bringing more of the masses to blockchain,” Colosimo told Forbes. “Gamers, particular PC gamers are normally somewhat technical and typically enthusiasts who like new technology, and blockchain does need that bit of expertise at the moment. From our point of view - we know there is going to be a market for blockchain gaming but it needs to be approached carefully.”
Colosimo admits that the impact of blockchain technology in gaming won't be instant, but like most good things, it will take time. However, with the combustible growth potential of gaming and blockchain, it could be as early as five years.
“Blockchain from our point of view is not going to take over the gaming industry completely but open new opportunities and a new genre of games,” said Colosimo. “That being said, as the technology matures it could be that in five, 10 or 20 years, every multiplayer game, payment systems and assets are stored and run on the blockchain, but certainly not in the near future.”
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Gaming and eSports ETFs
In a bilateral benefit, implementation of blockchain technology could help further gaming's cause as the image of the typical sport jock lifting weights and participating in locker room banter may soon be replaced by the quick-thinking, button-pushing video gamer as competitive video gaming, or eSports, is positioning itself to become a disruptor in traditional media and entertainment. ETFs like the VanEck Vectors® Video Gaming and eSports ETF (ESPO) are looking to capitalize on this market share.
ESPO seeks to track the performance of the MVIS® Global Video Gaming and eSports Index (MVESPO). The index is a rules-based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports.
The list of companies within the index may include developing video games and related software, streaming services, and/or those involved in eSports events. To be included in the index, companies must generate at least 50% of their revenues from video gaming or eSports, which allows ESPO to have the highest concentration, among U.S.-listed ETFs, of pure play names participating in this fast-growing space.
ESPO will take aim at in industry that is already garnering more interest than traditional sporting events like the MLB and NHL. ESPO will tap into an eSports market share that boasts 380 million people globally and has been experiencing exponential growth in just a short span--40% average growth since 2015.
Additionally, the growth of eSports has also sparked a gush of revenue, which equates to a 175% growth per person since 2014.
“Just a few years ago, talk of sold out stadiums, viewership in the millions, high-profile sponsors, and notable marketing arrangements would have been centered on football, baseball, basketball or hockey. But today, that talk can just as easily be applied to the world of video games and eSports,” said Ed Lopez, Head of ETF product at VanEck. “This is the future of sports and a growth story that is global in scope.”
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