Non-fungible tokens (NFTs) and cryptocurrency markets are still beset by rampant fraud and wash trading, but gambling affiliates might still be able to cautiously integrate NFTs into their business plans, experts have said.
Affiliates are sometimes on the cutting edge of trends, as they were among the first to adopt multiplayer online role-playing games, which became hugely popular, said Julian Buhagiar, co-founder of RB Capital investment firm.
But they need to be wary of the excesses in the cryptocurrency and NFT markets, he said, as disasters are frequent even among supposedly respectable names.
F1 Delta Time, an official Formula1 NFT and crypto-powered racing game, abruptly closed down March 16, making some NFTs that some fans had supposedly paid up to $100,000 for worthless .
“Where’s the token going to go, where do I redeem it?” Buhagiar said.
“There’s a tremendous amount of fraud in NFTs,” said Corey Padveen, partner at t2 Marketing International.
In January, NFT marketplace OpenSea revealed that 80 percent of the NFTs created using its minting tools were spam, fraud or trademark violations.
Since then, it has been sued over claims of security flaws by customers who had their supposedly hugely valuable “Bored Ape” NFTs stolen and immediately resold.
The theoretical value of many NFTs has been inflated by “wash trading”, or members of the same collective “selling” them back and forth amongst each other, in the hopes of getting their product on trending lists to make them look more appealing to outsiders, Padveen said.
Affiliates should probably not try to structure their business around NFTs, but they could be a handy recruitment tool for new customers, if the process was managed carefully, he said.
Padveen and Buhagiar were speaking last week on an investor-focused panel on cryptocurrencies and NFTs at the iGB Affiliate Conference in London, a sister-show alongside ICE London 2022 that closed last Thursday.
Buhagiar said he wished he had invested in ZED RUN, a digital horseracing game built on the blockchain, or Axie Infinity, a play-to-earn game massively popular in the Philippines.
“I regret passing them up”, he said. “But I don’t regret passing up most of the stupid ideas coming my way this year.”
Axie Infinity, however, was recently the victim of a supposed $625m cryptocurrency theft that the US government has blamed on North Korean hackers.
Still, some gambling companies have started launching products linked to NFTs, with early success.
Last month, Gibraltar-based Caleta Gaming introduced an NFT-themed slots game that uses NFT artwork and promises to award winners with “exclusive NFT art pieces”.
The game is already among Caleta’s most popular, said Giles Lucas, managing director of Malta-based Yolo Investments.
The cryptocurrency market is still in Wild West days, he said.
“For day traders, that’s great,” Lucas said. “For long-term investors, not so much.”
“Is it a bubble, or is it the future?” asked Sergio Muscat, founder of Malta-based Oxygia. “I say both. There will be a lot of flops, episodes like the scam ICOs (initial coin offerings). The products creating hype, not all will survive.”
But for one example, the free-to-earn crypto games model could be a good one, he said.
“We’ve had a bubble, but NFTs are here to stay,” Buhagiar said. “Just don’t go rushing out buying any Bored Apes yet, they’re overpriced.”