Considering that they are based on the same underlying technology, it comes as no surprise that NFTs and cryptocurrency are closely intertwined. From their co-existence in the same industry to the fact that crypto is often used to buy NFTs, the two are constantly being linked to each other.
Now, a report from Chainalysis shows just how closely linked they are, especially in Central & Southern Asia and Oceania (CSAO). As per the report, NFTs are one of the biggest drivers of crypto adoption in this region, along with other blockchain-based products like play-to-earn (P2E) gaming.
How NFTs Drive Adoption
As the report explains, NFT-related activity represents a majority of transactions from crypto services in CSAO, with P2E gaming following close behind.
“NFTs are perhaps the biggest on-ramp to cryptocurrency in CSAO today. 58% of web traffic from CSAO IP addresses to cryptocurrency services in Q2 2022 was NFT related; another 21% was to the websites of play-to-earn blockchain games,” the report explains.
But even the NFTs and P2E games are, in themselves, intertwined. In blockchain-based P2E games, native assets and collectables are often NFTs. This potentially means that the NFT traffic reported in CSAO could be from P2E games as well.
Chainalysis speculates that CSAO is already a hub for blockchain gaming, with games like Axie Infinity and STEPN being headquartered there. This, combined with the organic popularity of such games in CSAO, could explain why NFT and P2E use is so high.
But it hasn’t been all growth and smooth sailing for the crypto space in CSAO. The report noted that traffic to platforms like decentralized exchanges had declined over the time period observed. But this doesn’t seem to have a connection to NFTs or P2E games. Instead, the report cites the overall bear market which has weakened activities in the industry.
Quoting Manan Vora, the Senior Vice President of Operations and Strategy at Liminal, the report notes, “The UST crash played a big role in shaking the confidence of the crypto market. When a top ten coin goes to zero, it becomes very difficult to get people who have just entered the market to stay in the market. These are the users that you may lose forever.”
The report went on to touch on the role of regulations in countries like India and Pakistan and how this has impacted adoption in both countries.
The Drivers of Adoption
Given how complex the blockchain sector is, it comes as no surprise that the adoption of one aspect often snowballs into the adoption of others. The stats coming out of CSAO show that with the growth of NFTs and P2E games, cryptocurrency and blockchain as a whole will benefit.
It also shows how closely tied NFTs and P2E games are, which comes as no surprise given how often the former is used in the latter. If the regulatory issues cited in the report can be addressed, CSAO could become an even bigger hub for blockchain activity.