OPSkins is the world’s largest centralized marketplace for virtual goods (gaming skins, etc.), with millions of users with almost 100% retention, millions of transactions annually, billions of items listed, and growth of nearly 200,000 new users per month. The marketplace for virtual goods trading is estimated to be $23 billion dispersed in trading, with another $23 billion being traded between players. OPSkins maintains transactional trust between users and prevents fraud by maintaining banking relationships and risk management processes with vigilant security controls headed up by OPSkins personnel.
However, while OPSkins has eliminated user risk through careful management of its platform, centralized marketplaces have constraints stemming from the fact that the marketplace is centralized. While platforms like OPSkins allow users incredible efficiency trading within a platform, the centralized nature does not allow virtual goods traders and gamers to transact outside the platform with the same level of efficiency and security.
There are several major reasons for this, including a lack of liquidity within smaller virtual goods trading sites, the lack of a common trading method for different games that prevents assets being traded on a directly exchangeable basis, and the lack of sufficient variety within buyers and sellers to ensure a market for every potential virtual good. While centralized marketplaces work well, they only work to a point. And this is where the need for a decentralized marketplace comes in, and this is why decentralized asset exchanges are the next big thing in gaming.
Worldwide Asset eXchange™ (WAX), a decentralized marketplace for virtual goods, allows gamers to trade wherever and whenever in a peer-to-peer fashion. There are a number of exciting aspects of a decentralized exchange that enable unprecedented growth in virtual goods markets, and a number of benefits that decentralized exchanges will produce for the space that would not be possible without blockchain:
P2P Decentralized Asset Exchanges.
Decentralized asset exchanges are the next big thing in virtual gaming because they’ll solve a number of massive problems in traditional P2P exchanges. With the success of OPSkins, it’s clear that there is significant pent-up demand for virtual goods trading, but because of bottlenecks stemming from centralization, growth is restricted until the marketplaces become decentralized. Platform decentralization enables every single user to set up a digital storefront and trade virtual goods in a P2P fashion, and this “entrepreneurial user” model has led to the success of numerous platforms that allow businesses to sell directly to users, including Houzz, eBay, and Upwork. WAX taps into the entrepreneurial nature of many early adopters of tech, and WAX Token provides the incentives structure for having these virtual goods entrepreneurs transact on WAX. Decentralized exchanges for virtual goods will result in massive growth for the virtual goods industry, with WAX at the forefront.
And beyond this, users won’t even need to worry about any of the complex technological problems, since WAX has it handled. Problems like fraud, transactional settlement, and international payments transactions are handled. The market for online goods is currently around $50B and there are around 400 million online gamers worldwide…a number that rivals the number of baseball fans globally. But, there are nearly 2 billion gamers globally, and only 22% are online. So imagine the growth that will occur in the virtual goods space once all 1.8 billion are online and many of them trade virtual goods. It would be impossible for any centralized technology to handle this level of volume, so a decentralized platform like WAX will enable perfect scaling while also providing the transactional assurance and platform trust necessary for a market in which users can invest both their time and resources.
The smart contract is the building block of a decentralized virtual asset exchange, and the smart contract allows the seamless facilitation and enforcement of a virtual asset transaction that guarantees the fulfillment of a buy or sell without requiring the interference of a centralized party. And beyond this, the smart contract can allow any virtual good owner to establish their own decentralized virtual goods exchange.
WAX utilizes smart contracts to allow millions of virtual asset owners to seamlessly exchange virtual goods in a P2P fashion with only a few clicks without ever exiting their gaming screens. With the use of a simple widget, gamers can establish digital storefronts, and the smart contracts underlying the decentralized exchange enables absolute trust within a virtual goods transaction without the necessity of a third party intermediary. Problems like non-delivery of assets or delivery of incorrect assets will be eliminated with the use of smart contracts.
The most exciting aspect of decentralized virtual goods exchanges is the ability to tokenize virtual goods. On the WAX platform, users are provided with WAX Tokens as a means of signifying owners in virtual goods, and with the use of WAX Tokens, users will be able to directly exchange their virtual goods for a utility token that will be seamlessly exchangeable for cryptocurrency. Within WAX’s decentralized asset exchange, WAX Tokens represent the ownership of virtual assets, and WAX Tokens allow each user to develop his or her own virtual goods business without the traditional investment in expensive technology. From this, we should expect a new wave of virtual asset entrepreneurs to emerge and a great deal of value to be created within the gaming space.
There are massive inefficiencies and frictions introduced when two users try to make a cross-border transaction. With WAX Token, users have a common utility token that seamlessly facilitates these transactions, and doesn’t involve hefty international payment processing fees or delays. It simplifies everything, and it enables users to sell virtual assets through their social networks with little more than a simple widget that users can disperse among people who might be interested in purchasing their virtual assets.
Decentralized virtual asset exchanges will fix all of the inefficiencies that centralized virtual asset exchanges have never been able to completely master, and what will be produced is an efficient, frictionless market for virtual goods that will ensure user satisfaction, add value to virtual assets, and expand the size of the virtual goods market. Blockchain has the power to completely change most technology verticals, but gaming is particularly poised for the immediate application of blockchain tech, and WAX is leading the way.