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It’s starting to feel like a long time ago that this writer started on the investing journey.

Investing is a discipline where you can always do better, and one that no one can ever truly master to perfection. Even legendary investors like Warren Buffett make plenty of mistakes.

But it is also a discipline where one mustn’t make ‘perfect’ the enemy of ‘good’. My first investment into an ASX 200 share was not a perfect one. In fact, it remains the worst investment I’ve ever made. It was Slater & Gordon Limited (ASX: SGH) if you must know, and it cost me dearly. But making such a fatal error so early on proved fortuitous. It prompted me to learn fast.

So what ASX 200 share would I buy if I could go back and do it all again? Well, I won’t take the easy way out and find the share that has been appreciated by the most over the past seven years.

Instead, let’s go with Washington H Soul Pattinson and Co Ltd (ASX: SOL). I own Soul Patts shares today. But I wish I had bought them sooner than I did.

What makes Soul Patts an ideal ASX 200 share to start out with?

Soul Patts is one of the most diversified ASX 200 shares on the market. It doesn’t really function as your traditional company. Rather, Soul Patts’ primary business is owning large chunks of other ASX shares, investing in them on behalf of its shareholders.

Today, it owns stakes in businesses ranging from Brickworks Ltd (ASX: BKW) and BKI Investment Co Ltd (ASX: BKI) to TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC). This is one reason I’m attracted to the company – it really functions as several investments in one.

But this also means that someone else (in this case, Soul Patts’ management) is investing on my behalf. So what gives me the confidence to trust someone else in this matter?

A rock-solid track record.

For one, Soul Patts is the only ASX 200 share that can boast of a track record of increasing its annual dividend every year for more than two decades.

But the company also has the capital gains to back that already-impressive statistic up. Back in March, Soul Patts told investors that its shares had averaged a compounded annual return of 14.5% since 1981.

These factors combine to make Soul Patts the perfect bottom drawer investment in my opinion. And that makes it the ASX 200 share I wish I had bought when starting out on my investing journey.

The post This is the top ASX 200 share I wish I’d bought when starting out appeared first on The Motley Fool Australia.

More reading

• 2 ASX dividend shares I’d buy for passive income
• ASX 200 midday update: BHP and Pilbara Minerals shares tumble
• Do South32 shares have exposure to ‘green metals’?
• 3 ‘disruptive’ ASX companies Aussies now can’t live without
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Chalice Mining Ltd (ASX: CHN) share price returned from its trading halt on Wednesday and tumbled notably lower.

The mineral exploration company’s shares ended the day 6.5% lower at $6.23.

Why did the Chalice Mining share price tumble?

The catalyst for the weakness in the Chalice Mining share price was the completion of the company’s institutional placement this afternoon.

According to the release, Chalice has successfully raised approximately $100 million from institutional investors after receiving very strong support from leading domestic and international institutions.

These funds were raised at $6.00 per new share, which was a 10% discount to the Chalice Mining share price prior to its halt.

Upon completion of the placement, Chalice expects to have cash on hand of ~$141 million.

Why is Chalice raising funds?

The release explains that this capital raising means Chalice is now fully funded for the next 18 months of exploration and pre-development activities at its 100%-owned Julimar Nickel-Copper-PGE Project and the highly prospective West Yilgarn licence holding.

The Julimar Project is located ~70km north-east of Perth in Western Australia and is surrounded by world-class infrastructure. The company has been busy drilling the Gonneville deposit, which intersected shallow high-grade PGE-nickel-copper-cobalt-gold sulphide mineralisation.

This led to the release of its maiden resource last year for Gonneville, which confirmed that it is one of the largest nickel-copper-PGE sulphide discoveries worldwide. It is also the largest PGE discovery in Australian history, which management believes demonstrates the potential for Julimar to become a strategic, long-life green metals asset.

In addition, the company holds an enormous land position in the new West Yilgarn Ni-Cu-PGE Province. Management believes this gives it a first mover advantage in an almost entirely unexplored mineral province.

These certainly are exciting times for Chalice, which goes some way to explaining why the Chalice Mining share price is up over 500% since this time in 2020.

The post Here’s why the Chalice Mining share price sank almost 7% today appeared first on The Motley Fool Australia.

More reading

• Why BHP, BrainChip, Chalice Mining, and Fisher & Paykel shares are dropping
• Chalice share price remains frozen despite capital raise update
• Why is the Chalice Mining share price on ice today?
• These were the best performing ASX 200 shares last week
• 3 ASX mining shares that went gangbusters on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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2022 has been a tough year for most crypto investors so far.

Cryptos have broadly proven susceptible to the same market forces that have seen risk assets take a bath this calendar year.

With fast-rising inflation seeing central banks in developed nations hike interest rates, the tech-heavy Nasdaq is down 28.9% year-to-date. ASX tech shares have gone the same direction, as witnessed by the 33.1% fall in the S&P/ASX All Technology Index (ASX: XTX) over that same period.

With risk assets under pressure, Bitcoin (CRYPTO: BTC) is down 36.9% this year, while the world’s number two crypto by market cap, Ethereum (CRYPTO: ETH) has tumbled 46.9% since 1 January.

In fact, only three of the top 100 cryptos have returned a gain of more than 6% in 2022.

We’ll leave off the second and third spots and shine the spotlight directly onto the top-performing crypto in 2022, Kyber Network Crystal v2 (CRYPTO: KNC).

The digital token is up 3.6% over the past 24 hours, bringing its gains in 2022 to an impressive 62.9%.

At the current price of US$2.24, it has a total market valuation just shy of US$400 million.

What is Kyber Network?

If you haven’t heard of Kyber Network Crystal v2, rest assured you’re not alone.

Here’s what CoinMarketCap says makes the crypto unique:

Kyber Network is the first tool that allows anyone to instantly swap tokens without the need of a third-party, like a centralised exchange. The unique architecture of Kyber is designed to be developer-friendly, which enables the protocol to be easily integrated with apps and other blockchain-based protocols.

For investors who may be considering KNC, do take note of the serious volatility it’s undergone just in the past month alone.

Here’s what we mean.

The token hit all-time highs of US$5.72 on 28 April. Then, only two weeks later, it sank to record lows of US$1.13 on 12 May.

Since the 12 May low, KNC has leapt 98% higher.

What’s intriguing crypto investors?

In the lead up to hitting its all-time highs last month, Kyber Network Crystal v2 said it was integrating with numerous leading blockchains.

As Cointelegraph reported:

KyberSwap, the main decentralised exchange interface on the network, now offers trading across ten separate networks including Ethereum, Avalanche, Polygon, BNB Smart Chain, Aurora, Arbitrum, Fantom, Oasis, Velas and Cronos.

Interoperability has become one of the main themes driving growth not just in DeFi, but in all sectors of the crypto economy because the ability to send assets and data across multiple chains is a necessary feature in the future of DeFi, the nonfungible token (NFT) sector and the Metaverse.

Things move quickly in the crypto space.

But, as of today, Kyber Network Crystal v2 is hands down the biggest gainer of 2022 so far.

The post This is the top performing crypto in 2022 so far, and it sure isn’t Bitcoin appeared first on The Motley Fool Australia.

More reading

• What do NFTs mean for the gaming industry?
• Looking to spend your crypto? Here are 5 things you can buy in 2022
• What to expect for the Bitcoin price heading into June
• Can Bitcoin play a role in a diversified ASX share portfolio?
• Ethereum price rout knocks founder from billionaire’s list. Does he still ‘welcome a bear market’?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Woodside Energy (ASX: WDS) share price has remained steady on Wednesday.

The company’s share price is currently trading at $29.13, the same as yesterday’s closing price. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) is 0.57% higher at the time of writing.

So let’s check what’s happened with Woodside today?

First day under a new name

Today is the first day Woodside is trading under its new name and ASX ticker. Previously, the company was trading as Woodside Petroleum Ltd (ASX: WPL).

The new name was approved by shareholders at the company’s AGM on Thursday.

Woodside shareholders also overwhelming approved the planned merger with BHP Group Ltd (ASX: BHP)’s petroleum business on 19 May. The merger is scheduled for completion on 1 June.

In other news today, Woodside CEO Meg O’Neill today said demand for LNG is on the rise amid the Russian invasion of Ukraine, Channel News Asia reported. Speaking at the World Gas Conference in Daegu, South Korea, O’Neill said:

With the invasion, we are seeing the world try to move away from Russian hydrocarbons and that means that demand for LNG from places like Australia is up.

We do expect prices to remain elevated for the next year, perhaps next few years as the world tries to rebalance gas in supply and demand.

In the first quarter of 2022, Woodside reported an increase in LNG sales volumes and revenue.

Natural gas prices are up 0.28% to US$8.8210 MMBtu, Trading Economics data shows. Crude oil WTI prices have also jumped 1.21% to US$111.12 per barrel.

Woodside share price snapshot

The Woodside share price has soared 32% in the past year, while it is up 28% in the year to date.

For perspective, the S&P/ASX 200 Energy Index has returned about 26% in the past year.

Woodside has a market capitalisation of about $4.2 billion based on the current share price.

The post Woodside share price steady on first day trading under new name appeared first on The Motley Fool Australia.

More reading

• What exactly is the difference between Woodside Energy (WDS) and Woodside Petroleum (WPL)?
• 5 things to watch on the ASX 200 on Wednesday
• Own ASX 200 energy shares? Here’s the ‘key risk to watch’ post election
• ASX shares paid out a record $98b in dividends in the 12 months to March. Which are the star performers?
• What’s boosting the Woodside share price on Tuesday?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The tech sector has been a very difficult place to invest this year due to concerns over a potential global recession and rising rates.

For example, the S&P ASX All Technology index is down by approximately one-third in 2022.

While this is disappointing, the team at Goldman Sachs believe there are still some quality tech shares trading at very attractive prices.

Its analysts have been screening for tech shares that they believe will continue to prosper in the current environment and have picked out their favourite.

Goldman explained:

Given concerns around a global recession and the continued de-rating of the ANZ tech sector, we screen for Australia Technology names (ANZ software companies >$250mn market cap) that look well-placed to navigate a more challenging macro environment based on FCF margins, b/s strength and recurring revenue.

The tech share that came out on top was enterprise software provider TechnologyOne Ltd (ASX: TNE).

What did the broker say?

Goldman likes TechnologyOne due to its defensive qualities, high recurring revenue, and strong long term growth potential.

Defensive end markets (public sector and education) with IT spending that are relatively resilient to recessions (see our initiation here). Contractual CPI pricing pass-through, high recurring revenue, minimal churn (<1%), high margins and net cash are attractive attributes in a slowing economy. In addition, TNE’s recent result highlight continued momentum towards the +A$500mn FY26 ARR target, providing valuable earnings growth visibility over coming years, in our view.

According to the note, the broker has a buy rating and $13.30 price target on the tech company’s shares

Based on the current TechnologyOne share price of $10.20, this implies potential upside of 30% for investors over the next 12 months.

The post Leading broker names the best ASX tech share to buy following 2022’s tech meltdown appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Why Nufarm, Sayona Mining, Tabcorp, and TechnologyOne shares are falling
• Here’s why ASX 200 tech shares are under pressure on Tuesday
• ASX 200 midday update: Nufarm, Tabcorp and TechnologyOne tumble
• TechnologyOne share price slides despite strong first-half SaaS growth

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BrainChip Holdings Ltd (ASX: BRN) share price is tumbling today despite no news having been released by the company.

At the time of writing, the BrainChip share price is $1.09, 5.65% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently 0.69% higher.

Let’s take a closer look at what might be weighing on the neuromorphic computing company’s stock today.

What’s going wrong for the BrainChip share price today?

BrainChip shares are having a rough day on Wednesday, slumping more than 5% as the tech sector struggles.

Right now, the S&P/ASX 200 Information Technology Index (ASX: XIJ) is down 2.6% while the S&P/ASX All Technology Index (ASX: XTX) is recording a 2.05% drop.

The sector is struggling following the tech-heavy Nasdaq Composite‘s 2.35% tumble overnight.

The dip was led by social media stock Snap Inc (NASDAQ: SNAP). It plummeted 43% on the back of a negative trading update.

It was also likely driven by fears of a recession in the United States, The Motley Fool’s Bernd Struben reported this morning.

Suffering alongside the BrainChip share price is stock in tech giants Block Inc (ASX: SQ2) and Megaport Ltd (ASX: MP1). They’ve both tumbled more than 5%.

However, the dip hasn’t been enough to send BrainChip’s stock into the long-term red.

Right now, it’s trading for 38% more than it was at the start of 2022. It’s also 91% higher than it was this time last year.

At the current share price, BrainChip presides a market capitalisation of $1.97 billion.

The post Why is the BrainChip share price tumbling 5% on Wednesday? appeared first on The Motley Fool Australia.

More reading

• Why BHP, BrainChip, Chalice Mining, and Fisher & Paykel shares are dropping
• Why BrainChip, Codan, Elders, and Karoon Energy are storming higher
• Why is the BrainChip share price rocketing 15% higher today?
• The BrainChip share price just plunged 8%, what happened?
• Nearmap share price jumps 9% on Friday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and MEGAPORT FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX dividend shares could be the answer if investors are looking for investment income.

Interest rates are rising, but they are still low. After a drop in the ASX share market, a number of potential dividend options now have higher prospective dividend yields.

A high yield alone may not necessarily be enough to be a good dividend option. What happens if the business regularly cuts its dividend? That’s not very useful for income reliability.

But, the below two ASX dividend shares have continued to grow their dividends.

Brickworks Limited (ASX: BKW)

Brickworks is one of the older businesses on the ASX. It has been operating for more than half a century.

I think it’s an interesting business. While the name and heritage is all about its building product operations, the attraction for me is its dividends also come from other assets.

Brickworks can point to the fact that its normal dividend has been maintained or increased every year since 1976.

One of the main assets is its large shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. It’s an old investment house that owns a large portfolio of different investments across various sectors including telecommunications, resources, property, agriculture, and financial services.

Soul Pattinson has been paying a steadily-growing dividend, which Brickworks is benefiting from.

Brickworks also has a property segment through a joint venture with Goodman Group (ASX: GMG). Brickworks divests excess land into this joint venture where industrial buildings are built on that land. The ASX dividend share has enough land for a few years of building projects before those industrial estates are full.

At the current Brickworks share price, it has a grossed-up dividend yield of 4.2%. I think it’s a solid starting yield.

Charter Hall Long WALE REIT (ASX: CLW)

This is a real estate investment trust (REIT), as the name might suggest.

It owns properties across a variety of sectors including office, industrial, retail, agri-logistics, and telecommunication exchanges.

What links all of those properties is that they all have long lease contracts, leading to the ASX dividend share having a long weighted average lease (WALE) expiry of around 12 years. I think this provides attractive rental visibility and stability for investors.

The business has been achieving distribution growth for investors. As of the FY22 first half, 46% of its leases were inflation-linked (which is currently running high) and 54% of leases were fixed with an average fixed increase of 3.1%.

The property portfolio is worth approximately $7 billion, spread across around 550 properties. The occupancy rate is 99.9%, so almost every property is being fully utilised.

The ASX dividend share is expecting to generate FY22 operating earnings per security (EPS) of at least 30.5 cents, representing growth of at least 4.5%. With a distribution payout ratio of 100%, that would equate to a distribution yield of 6.2% in FY22.

The post 2 ASX dividend shares I’d buy for passive income appeared first on The Motley Fool Australia.

More reading

• Is it reasonable to expect share price growth AND reliable dividends from ASX shares?
• Where I’d invest $10,000 into ASX shares this week
• These ASX All Ordinaries shares have the greatest margin risks from surging inflation: UBS
• I’ll never sell this ASX dividend share. Here’s why
• 2 ASX dividend shares I’d buy with $1,000

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on course to record a solid gain on Wednesday. In afternoon trade, the benchmark index is up 0.7% to 7,176.5 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

BHP Group Ltd (ASX: BHP)

The BHP share price is down 9% to $43.35. The catalyst for this has been the Big Australian’s shares trading ex-dividend for its in-specie dividend. Eligible BHP shareholders can now look forward to receiving one new Woodside Energy Group Ltd (ASX: WDS) share for every 5.534 BHP shares they own when the demerger of BHP’s petroleum assets completes on June 1.

BrainChip Holdings Ltd (ASX: BRN)

The BrainChip share price is down 5.5% to $1.09. This follows news that its executives have been granted very generous stock issues. For example, the company’s CEO, Sean Hehir, who was only appointed to the role in November, has been issued over 7 million restricted shares. Shareholders clearly weren’t happy, with almost a quarter of votes at the annual general meeting against the issue of 6 million of these shares. However, this wasn’t quite enough to stop the shares from being issued.

Chalice Mining Ltd (ASX: CHN)

The Chalice Mining share price is down 6% to $6.27. This follows the completion of the mineral exploration company’s capital raising this afternoon. Chalice has successfully raised approximately $100 million at a 10% discount of $6.00 per new share. The proceeds will be used to fund ongoing exploration and pre-development activities at its 100%-owned Julimar Nickel-Copper-PGE Project.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price is down almost 2.5% to $18.29. Investors have been selling this medical device company’s shares following the release of its full-year results. The company reported a 15% decline in operating revenue to NZ$1.68 billion and a 28% drop in net profit after tax to NZ$376.9 million.

The post Why BHP, BrainChip, Chalice Mining, and Fisher & Paykel shares are dropping appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: BHP and Pilbara Minerals shares tumble
• What exactly is the difference between Woodside Energy (WDS) and Woodside Petroleum (WPL)?
• Fisher & Paykel share price exhales following ‘strong’ full-year results
• Why is the BHP share price sinking 10% today?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has shaken off the meandering of the past two days so far on Wednesday. The ASX 200 initially opened strong this morning, but has been brought down to earth over the course of the trading day, and is now up by 0.7% at around 7,180 points.

So let’s dive a little deeper and check out the ASX shares that are currently sitting at the peak of the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Wednesday

Telstra Corproation Ltd (ASX: TLS)

Telstra is our first ASX 200 share to have a glance at this Wednesday. At the time of writing, a hefty 11.16 million Telstra shares have been bought and sold on the markets thus far. There hasn’t been anything of note out of the telco itself today. However, the Telstra share price is shooting ahead. It’s currently up by a market-beating 1.42% at $3.92 a share. We can probably thank this rise for the elevated volumes we are seeing with this blue-chip share today.

Pilbara Minerals Ltd (ASX: PLS)

From TLS to PLS! ASX 200 lithium stock Pilbara Minerals is next up this Wednesday. So far today, a notable 15.9 million Pilbara shares have found their way to a new home. We haven’t heard anything out of the Pilbara offices today either. But Pilbara shares are copping quite the beating today and have lost almost 4.5% of their value. This could be related to the company’s auction results, which were released yesterday. Although these were promising, they still might not have met investors’ lofty expectations. It’s this steep drop that has probably resulted in Pilbara’s place on this list today.

Tabcorp Holdings Limited (ASX: TAH)

For the second day in a row, it’s ASX 200 gaming company Tabcorp that takes out the top spot. So far in this Wednesday’s trading session, a whopping 38.93 million Tabcorp shares have swapped hands. Tabcorp spun out its Lottery division this week, which is now its own ASX company in The Lottery Corporation (ASX: TLC). But investors apparently have been drawn to the newer, shinier share, with Tabcorp copping a 4.55% selldown so far today to $1.01. So it’s likely that it is this selloff, combined with the machinations of a demerger, that has elevated Tabcorp to the ASX 200’s most traded share so far today.

The post These 3 shares are topping the ASX 200 volume charts on Wednesday appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• Could Tabcorp’s newly demerged Lottery Corporation become a takeover target?
• ASX 200 midday update: BHP and Pilbara Minerals shares tumble
• Is Telstra an ASX 200 share worth owning right now?
• Tabcorp share price slumps another 7% following demerger

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Many video game companies have launched non-fungible token (NFT) projects over the past year. Ubisoft (OTC: UBSFF) released NFTs for Ghost Recon: Breakpoint, Konami (OTC: KNAMF) auctioned off NFTs for its classic Castlevania series, and Square Enix (OTC: SQNNY) sold its biggest Western developers — including the creators of Tomb Raider and Deus Ex — to fund the development of new blockchain and NFT projects.

But will NFT projects generate meaningful revenues for gaming companies? Let’s review the potential profits and pitfalls.

How do NFTs work?

NFTs, like cryptocurrencies, are minted on a decentralized ledger called a blockchain. But unlike cryptocurrencies, they aren’t “fungible,” or equivalent to each other. For example, a single Bitcoin can be directly traded for another Bitcoin because they have the same inherent value. NFTs can’t be exchanged that way because they contain data that is linked to a digital asset like a picture, video, or song.

Simply put, NFTs are digital logs that allow a person to own the underlying digital asset. Digital artists can mint their artworks as NFT token. These represent the ‘originals’, as opposed to the ‘copies’ that can be downloaded online — or they can use algorithms to randomly generate unique digital artworks with a wide range of traits.

Critics claim NFTs are inherently worthless because they’re simply links to digitally-copied assets. However, NFT evangelists believe it’s the scarcity of those links that give them value — in the same way physical collectibles like paintings, baseball cards, coins, and comic books are valued.

Why do video game companies want to sell NFTs?

It’s easy to see why video game companies would want to sell NFTs. Sales of in-game items, which are used to monetize most modern games, have already trained gamers to accept the concept of digital ownership.

At the same time, higher-end ‘triple A’ video games have become more expensive to produce over the past decade. Ubisoft’s original Assassin’s Creed (2007) reportedly cost $20 million to develop, but the company reportedly spent $100 million on Assassin’s Creed IV: Black Flag (2013). Square Enix reportedly spent $60 million to produce Final Fantasy XIII (2009), but Shadow of the Tomb Raider (2018) cost nearly $100 million.

Those rising costs have made it difficult for video game companies to recoup their production costs with an average price tag for a game of $60. That widening gap is pushing them to launch more downloadable content (DLC) packs and paid in-game content to maximize revenue per player. 

Therefore, creating NFTs as rare collectibles, which can then be sold on third-party marketplaces, makes strategic sense for gaming companies.

But will gamers actually buy NFTs?

Unfortunately, gamers don’t seem as enthusiastic about that plan. Ubisoft minted thousands of NFTs for Ghost Recon: Breakpoint and gave them to users free, but its users then resold fewer than 100 in the first 120 days, according to Ars Technica. That indicates that excitement was low. Konami reportedly generated about $150,000 in revenue by selling its Castlevania NFTs earlier this year, but that’s still a drop in the pond for a company that is expected to generate $2.31 billion in sales this year.

That’s why Square Enix’s decision to sell its Western studios for about $300 million to chase NFT-based games raised some eyebrows. It might consider creating NFTs to be a lower-risk strategy than funding triple-A games like Shadow of the Tomb Raider — which broadly missed its own sales targets — but it seems doubtful that NFTs or NFT-driven games will generate as much revenue as its divested franchises.

Most video game companies will shun NFTs

NFTs seemed like the next big thing last year as retail investors piled into blockchain-related assets. However, inflation and rising interest rates have driven investors away from those riskier assets over the past six months, and the prices of cryptocurrencies and NFTs have plummeted. That decline is reflected in the crash of Defiance Digital Revolution (NYSEMKT: NFTZ), the NFT-oriented exchange-traded fund (ETF) that launched last December.

That ongoing market rotation, which could continue for the foreseeable future, could easily wipe out the weaker ‘altcoins’ and most NFTs. I believe that a wake-up call will convince most video game companies to simply abandon their NFT projects and stick with regular DLCs and in-game content instead.

So for now, investors should consider NFTs to be experimental side projects — and not meaningful sources of revenue — for most gaming companies.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post What do NFTs mean for the gaming industry? appeared first on The Motley Fool Australia.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and recommends Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Ubisoft Entertainment. The Motley Fool Australia has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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