Gamers have a long history of disliking cryptocurrencies, nonfungible tokens and the fast-money trappings of the web3 industry. Now, they’ve lost a prominent industry figure to the other side.
Justin Kan -- co-founder of the streaming service Twitch, which exploded in popularity for broadcasting video games -- has a new crypto startup that on Friday said it raised $35 million from investors including Paradigm and Multicoin Capital.
The company, called Fractal, sells nonfungible tokens like virtual pets, weapons and avatars that are used in games based on the Solana blockchain. The remote-first company chose to specialize in gaming NFTs because blockchain technology enables people to actually own their digital assets and trade them outside of a game, Kan said in an interview.
“NFTs are heading towards having more utility,” he said. “It’s not just art.”
Gamers have pushed back against NFTs before, objecting to blockchain’s environmental impact and the idea that the technology is just another way for companies to profit off of players without making games more fun. At the Game Developers Conference last week, Ubisoft Entertainment SA, Electronic Arts Inc. and Square Enix Holdings Co. were booed after announcing interest in NFTs or introducing the tokens into games.
Gamer hostility isn’t the only problem Fractal could face. Shortly before launching in December, a scammer infiltrated Fractal’s Discord server and used its announcement bot to post a fraudulent link promising access to special NFTs. The users who clicked the link and tried to buy the fake NFTs were scammed out of a total of $150,000.
Kan said he personally paid back the stolen funds and the company has put new security measures in place, including limiting staff access to Fractal’s online communications.