IMGL Magazine July 2022

Novel products

Virtual Digital Assets: the state of the market Crypto is fun when values are rising but with Bitcoin and Ethereum down over 60 percent from their peak and others staring down the barrel of insolvency, the fun has well and truly stopped. Past slumps have quickly been reversed, but this time feels different. The price drop has coincided with a run of bad news affecting the real world and, whilst blockchain-based assets should show no correlation to wider asset prices, the reality is they do. such as age verification and source of funds. Geolocation may prove more of a challenge and the network issues mentioned opposite look set to plague the sector for a while. Crypto transactions are movements from one blockchain to another and, as volumes increase, costs are likely to fall and security improve. Operators are advised to avoid currency fluctuations by exchanging immediately into stable coins, crypto pegged to fiat currencies.

Where do we go from here? There are doom mongers and optimists both citing data points to support their view of the future. Meanwhile, the market is

Whilst crypto has real utility for both players and operators in the gambling space, NFTs have yet to prove their worth. Sadly for early adopters, many of the NFT products offered to

still very volatile. There are many who are rushing for the exits but equally some who see opportunity just around the corner. Where there is consensus is that cryptocurrency is here to stay. The technology meets a genuine need, particularly in the gambling sector. Gambling accounts for around 80 percent

consumers in the recent past will prove to have

very little lasting value. NFTs will need to move beyond a gimmick and offer consumers

something of real worth if they are to reach their potential. This is such a creative space that it is hard to predict where value will be unlocked but here are a couple of possibilities. In fantasy opportunity to own part of them. If such an avatar coexisted in a fantasy sports game then their value could be linked to their performance in the real world. Similarly, in P2E games, NFTs could acquire status and value according to their success in the gameplay if the game design allowed for such a possibility. Longer term, if the predictions are correct that life will increasingly be spent in the metaverse, then collectible NFTs may gain value in the same way that wealth or status signifiers do in the real world today. But it does feel like a lot of water will have to pass under that particular bridge before that happens. sports, there could be an opportunity to turn stars into NFTs and sell the

of consumer crypto transactions at a point where banks and the credit card industry are not serving customers well. Proponents point to three reasons why operators should consider accepting crypto. Crypto payments are instant, irreversible and cheap, powerful points when settlement times can run into days, the industry is plagued by credit card chargebacks and transaction costs can reach double digit percentages. That said, there are some challenges although, long term, these are as likely to be solved by blockchain technology as caused by it. The pseudonymity offered by crypto makes KYC and AML requirements a challenge initially although the permanent nature of the blockchain ledger will surely be exploited to overcome issues

Phil Savage is IMGL’s Head of Publications and European Affairs. He can be contacted at phil@imgl.org +44 7778 635836

IMGL Magazine • July 2022 • 25

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