A Rich New NFT Source: Chess as the Art of Combat

by Citrusw00d

As NFTs integrate into everyday life, the ancient game of chess — a mind-war between two human beings sublimated into an art form — presents a promising and largely unexplored vein of content for future projects.

The market for non-fungible tokens is leaping into the mainstream. Little-noticed as recently as three years ago, then pooh-poohed in tongue-in-cheek features about bubble-licious-ness when media outlets caught wind of 6-figure and 7-figure sales transactions in early 2020, the NFT market today is drawing attention and capital from the sort of blue-chip institutions and public figures that enable an activity to plant durable roots within developed economies.

Visa’s explanation for why it bought a CryptoPunk NFT in August was most revealing: “First and foremost, we wanted to learn… To help our clients and partners participate, we need a firsthand understanding …. This is just the beginning of our work in this space.”

Another dramatic illustration is the weeks-long October takeover of New York’s iconic Penn Station by the “Art in Motion” exhibition and sale of NFT digital art works. From October 4 through month’s end, some 200 advertisements and QR codes to bid for the art on OpenSea blanket the transportation hub… from its soaring clocks, pillars, and rotundas at street level, down to the below-ground platforms served by Amtrak and local commuter-trains.

The most visible and largest-selling categories of NFTs to date fall into four well-defined areas: online gaming; physical spectator sports; fine art; and cartoon-like meme characters. But a fifth area, chess, has great potential to populate a distinct niche within the NFT world.

A chess collection drop in late September, although well funded and widely covered by news media, barely touched the potential market. In what follows I will build a case for chess as a content category whose natural affinity for the NFT container remains largely unrecognized — rich enough to populate not just a particular collection or two, but a full-blown asset class within the overall NFT space.

Before considering chess NFTs, I will briefly lay out a conceptual framework that I found useful for understanding the economic logic that undergirds demand for NFTs today.

The NFT concept provides a radically innovative vehicle for both codifying and transferring ownership of almost any conceivable kind of digital content. But a work minted as an NFT must fulfill certain basic conditions to be a viable product. Content producers need an incentive to both utilize the NFT format and offer their creations for sale via NFT marketplaces. Consumers need reasons to both enjoy the NFTs they purchase, and to view them as investments likely to appreciate or at least maintain their market value. NFT collectors and speculators — frankly I find it difficult to distinguish between them right now — just like with physical and financial assets, follow marketplace trends but also help drive them (sometimes to the point of fueling market bubbles).

Common NFT traits that add economic value include:

• visual and/or auditory appeal
• brand associations, such as athletes or performing-arts celebrities or popular gaming characters
• close connection to a niche activity that enjoys an active, passionate, and socially connected base of acolytes who follow and/or practice it, in substantial numbers

Along with aesthetics, brand profile, and cult following, many NFT asset class use cases are associated with and draw support from a parallel real-world asset: paintings for fine-art NFTs, pro sports for sports NFTs, gaming for gaming NFTs, and chess history and/or current chess competition for chess NFTs. (One might quibble about whether gaming is “real-world,” since its existence is confined largely to cyberspace. But it was a real and thriving economic sphere long before the advent of NFTs or even cryptocurrencies.)

These factors point to several key drivers of demand for today’s established NFT types.

• Collections designed from popular trading cards and gaming characters naturally appeal to existing fanbases — bringing ready-made brand value that an NFT creator or owner can leverage.
• Sports NFTs likewise possess brand value as well as a real-life universe that makes the associated NFT images instantly comprehensible to wide audiences.
• For fans accustomed to owning and trading partly “virtual” assets associated with pro athletes and teams — trading cards, yearbooks, signed photographs, jerseys, and other merchandise — acquiring analogous items through NFT marketplaces will feel like a natural next step.
• What’s more, NFT ownership can be paired with real-life or online “experiences” that range from a high-value private meeting with the celeb-athlete, to lesser but still valuable perks like group audiences, preferred seating at games, clubhouse access, a particular physical merchandise item such as a signed ball or signed uniform, etc. (Performance-based entertainment contains much the same potential as sports to support an NFT marketplace tied to existing celebrity brands, which can be leveraged through experiences and merchandise tie-ins to add further value to an NFT based on a famous performer or production.)
• Most demand for fine-art NFTs derives from a different source: the inherent aesthetic appeal of a particular work or its artist. For visual artists, the NFT is simply a new and distinct vehicle for making and selling works that in earlier eras could have been painted, designed, sculpted, performed, etc., in physical form only.

Chess content, if optimally rendered, combines all the virtues of today’s successful NFT asset types, and more. This ancient yet strikingly modern form of stylized combat has a worldwide community of millions of active players, and fans estimated in the hundreds of millions. The leading playing site, Chess.com, claims 74 million members, up 40% year-to-date and up 150% since January 2020, and several million chess games contested on its site alone every day.

The very nature of chess may contribute even greater value than the existing fanbase and player base. For a viewer, a chess game is visual and dynamic, rooted in the movement of stylized characters according to well-defined rules. It is intensely competitive, the on-the-board action reflecting tension between two human opponents that gradually builds toward a climax of sublimated violence, embodied in the form of either checkmate or decisive and unstoppable threats to capture (kill) the enemy’s men. At the same time, a well-played chess game is often described as conveying beauty and harmony. And for people even modestly conversant with the game’s characteristic plans and objectives, witnessing (or better yet, personally conceiving and playing!) a string of inspired chess moves can rival the rapturous state delivered by a Mozart symphony.

Along with visual and emotional appeal analogous to arts and sports NFTs, chess brings a feature all its own: mental stimulation. True, the depth and nuance that fueled centuries of growth are difficult to capture in brief videos for the general public. But the task is not impossible. The small handful of chess-themed launches to date did not attempt to showcase the inherent qualities that can add rich veins of value to digital asset collections.

Beyond all this, chess enjoys a rich history dating back many centuries that few if any other popular games possess. That history supports a worldwide subculture of collectors of antique chess equipment, chess books, and old and rare artifacts tied to important chess events of the distant past.

The NFT space saw its first well-funded chess project in late September when Play Magnus Group (a Norwegian publicly traded company controlled by World Champion Magnus Carlsen) announced and began listing a collection based on players and images from its Meltwater Champions Chess Tour, a series of 10 elite online chess tournaments held over the course of 2021. As of October 14, a total of 20 items have sold, with the bulk of the traded volume coming from a single transaction: the Champions Trophy, sold at auction for 6.88 ETH on October 8. Most of the motivation to bid for that particular item likely stemmed from a unique experience bundled with it: its owner will play a private game against Carlsen, which will itself be immortalized as an NFT.

Despite using the slogan, “Own a piece of chess history,” the recent Meltwater collection’s content was exclusively topical, rather than historical. It also shied away from exposing any of the aesthetics of what happens on a chessboard. Instead, the creators hewed to the physical sports model, presenting film clips of players in action and live commentary focused on the visual drama and emotions displayed when games were decided, rather than the chessboard maneuvers that decided those contests.

That choice was a no-brainer, in light of the ready-made business model for marketing professional sports content as well as the project sponsor’s pre-existing contracts with world-class grandmasters who took part in its tournaments and were depicted in its NFTs. However, the decision to emphasize player close-ups and on-camera scenes left the artistic and intellectual facets that propelled the game’s enduring popularity across continents and across centuries, as still virgin territory to be explored by NFT creators and collectors. There is ample room for chess to grow as an NFT genre, in ways entirely distinct from the path that Play Magnus Group just set forth on.

About the author: Citrusw00d is an investor and writer who is working on an NFT project focused on the artistry of chess moves