In this day and age, people are rethinking the way that they make video games. We’ve seen a lot of innovation in the past decade and now there’s a new way to make games even more interesting. Non-Fungible Tokens (NFTs) are a relatively new technology that has been making waves in the video game industry.
In a nutshell, NFTs allow for players to own unique items or characters within their game instead of having them all be the same. This is opposed to items like gold, which is very fungible because it acts as a type of currency for purchasing other things.
But will this technology carry on through within the next decade or will it flunk? Let’s find out the possibilities of NFT gaming of whether it will benefit the game developers and players or cause a new gaming industry crash like the Atari game burial of 1983.
Before we proceed, please know that this article is not financial advice.
What is an NFT?
It might be misleading to say that it’s a new concept because they’ve been around since the early 2000s. However, over the past few years, we’ve seen them become more and more, well, common. Some of the most popular examples include CryptoKitties and Etheremon.
The idea behind NFTs has always been simple: it’s tokenized property. You can think of something like a video game character as the equivalent of owning stock (or maybe even more like equity). Different tokens correspond to different properties. For example, if you own one CryptoKitty, you might own Kit #829292. There are many different tokens on the blockchain, but you can think about each one as a tokenized property. In other words, every single NFT is unique and has specific properties associated with it.
In fact, some people have been able to use this idea in different ways. For example, CryptoKitties offered a special edition of their game for a limited time. Some people who couldn’t afford to purchase a Copycat were able to use this as an alternative.
In the future, there will be many different NFTs that can interact with each other. You might have one token for your house or apartment and another token for the car that you drive. All of these tokens could potentially represent something unique that you could own.
Some people have also noticed how this idea could change the way that we do other things. For example, if you wanted to sell your house, you would transfer the token to someone else’s account instead of going through a lengthy process for signing papers and waiting on approvals. That’s because tokens are unique properties.
So, if this idea is so great and forward-thinking, why haven’t we seen much adoption outside of the world of blockchain? There are a few reasons. First of all, not everyone is familiar with this idea yet. Many people still don’t know what blockchain is or how it works.
Another reason is that there’s no real infrastructure for this sort of thing yet. However, people have been trying to figure out ways to create a bridge between the physical world and the virtual world. That way, tokens could represent real-life objects that can interact with each other in different ways.
One good example of this is Etheremon, whose goal is to combine blockchain technology and gaming. They’ve even created a way to use NFTs in the real world. This company wants to combine technologies like VR and AR with blockchain so that, in their words, “players can see, train and trade monsters virtually.”
If this idea sounds exciting to you, there’s a lot of potential for NFTs in the future. They can even be used across different games to create a more cohesive ecosystem. Players could interact with each other in real life by simply transferring tokens instead of manually trading things like cards or characters.
As you can see, NFTs offer a lot of interesting possibilities and the future of gaming may look very different due to this new technology.
What This Means for the Future of Gaming
It might sound simple, but that’s only because this idea hasn’t been implemented into video games yet. Right now, every single game has its own way of dealing with assets and virtual currencies. They all work in different ways and it can be a hassle for gamers to keep track of everything.
NFTs solve this issue by allowing players to own one asset that has its own distinct value or characteristic. This will protect the player’s digital assets while also encouraging more transparent interactions between developers and their fanbase.
In fact, several companies have already started to use NFTs in their games, such as Cryptokitties, a game where players can own unique virtual cats. This company has even created a way for people to buy and trade these crypto-cats using physical items.
The uses for NFTs are only just being realized, but they’ve already shown a lot of potential. When a person owns a NFT, they also own a unique token that represents the asset they have. This means it will be much harder for people to cheat or scam each other. For example, if someone tried to sell you a fake cat, you could easily tell by checking their ID.
Other examples may include exclusivity over every digital asset, an auction over a specific rare item and carrying that item over to another game as long as both of them exist in the same metaverse.
Why NFTs Can Benefit Both Developers and Players
In video games, people create characters and items to use in the game. The issue with most video games and “rares” is that they’re worthless. For example, in World of Warcraft, some players have created characters with rare and powerful items which would be extremely useful if the game’s economy was real life money instead of virtual gold coins. However, because this is a video game, no matter how “rare” or “powerful” an item may be, it’s only worth a few cents or dollars. This devalues video games and makes them less enjoyable to players who don’t have the skill or resources to obtain rare items. With NFTs, however, there is a real use for these otherwise worthless rarities.
On February 28th 2018 alone, 466 people bought virtual cats for over $6 million. These cats are only unique because of their CryptoKitties NFT tag, not because they have any particular in-game advantage. This means that players can trade these cats with each other in exchange for money or other in-game items, making them much more valuable than many rare items in video games. NFTs increase the value of games and make them more fun to play.
NFTs also mean that people can collect rare digital items, like characters or weapons, without making the experience extremely repetitive and boring for those who don’t have these “rare” items. There are dozens of different skins for most weapons in video games, but players only find a few in the course of a normal gaming session. With NFTs, however, players can collect all these items and use them whenever they want without having to spend money on the game itself.
NFTs make video games more fun for gamers because they allow them to trade rarer items without making the experience repetitive or detrimental to gamers who do not have these rare items. NFTs also make video games more fun for non-gamers because people can collect and trade virtual versions of real life belongings (ex: cars) in games.
The Risks of NFT in Video Games
Like with any new technology, some risks are involved when using NFTs in video games. The main risk is that because NFTs are so new, there aren’t any laws or regulations surrounding them. As of right now, the U.S government doesn’t consider NFT’s to be money, which means they don’t face the same restrictions as other types of currency (ex: restrictions on gift cards ). Because of this, there is no guarantee that NFTs can be quickly and easily traded in the future. This lack of regulation could cause people with large amounts of NFTs to lose their money because there is no guarantee that they would be able to trade them with other people in the future.
Another risk is that without any form of regulation, NFTs could become a preferred currency for criminal activity. For example, in the past, criminals have traded virtual items in video games for real money. If NFTs become a stable and fungible currency in gaming, this type of illegal trade could become much easier and more common than it was in the past.
However, there is no way to tell whether or not NFTs in video games will become a global phenomenon. Even though NFTs make video games more fun and profitable for gamers, their lack of regulation and ease for criminal activity makes them a risky investment. For now, it is best to wait on investing in NFTs until there are more regulations surrounding them or they become globally more common.
The risks of NFTs in video games are that there are not enough regulations surrounding them yet and that they could easily become a currency for criminal activity. However, it’s impossible to know whether or not the use of NFTs will become more widespread in the future. So, for now, it’s best to wait and see what happens with NFTs in video games.
Current Blockchain Technologies Involved in Gaming
Video game designers now use blockchain technology within their video games to enhance the experience for their players, such as using non-fungible tokens (NFTs) to create unique in-game items or implementing a system of scarce resources.
Currently, four popular types of blockchain technologies are being used with video games: Ethereum smart contracts, ERC-20 tokens, crypto assets, and user-owned digital assets.
Ethereum is a decentralized platform that makes use of smart contracts. The platform is a well-established blockchain technology used by developers to build customized apps and solutions on top of it, such as video games. Smart contracts can be used to provide a unique way for players to interact with the gaming world – from accessing the whole game economy to creating their own items without having to rely on a centralized server.
ERC-20 tokens are protocol-based cryptographic assets created on top of the Ethereum network, following a standardized token behavior which is implemented by smart contracts. This makes it easier for game developers to design their games and enhance them with blockchain technology. These ERC-20 tokens can also be traded between players on decentralized marketplaces, creating more ways for players to interact within a game economy.
A crypto asset is a digital asset that relies on cryptography to validate and authenticate the transfer of assets from one party to another. In video games, crypto assets can be used as in-game items or currencies that are usually scarce and unique. These items can be bought, traded or sold to other players in decentralized marketplaces.
User-Owned Digital Assets
These user-owned digital assets are created on top of existing blockchains that users can manage and store, usually in their own wallets. However, once created, these assets are completely independent from their initial blockchain network. They function as tokens which can be transferred between different users within the game’s community.
Top 5 Popular Gaming Projects
Here are some of the most known NFT and decentralized gaming projects that make use of the blockchain technology. Some are used as video game platforms like Steam and GOG; several projects empower digital items into lucrative assets while others are directly fully-fledged video games.
It’s impossible to write about NFT gaming without Enjin. In summary, Enjin spearheads the minting of digital creations of developers into valuable NFTs. In addition, Enjin is a powerful tool used by both developers and gamers – for developers, it’s a way to create an online community around any game, while gamers can get the most out of their favorite games by meeting like-minded people through guilds, chats or forums.
It makes sense because this kind of technology will give rise to a legitimate economy for gamers where players can trade items for fair, legitimate prices. The Enjin project will also help in reducing scammers such as the infamous trading scams from World of Warcraft and scalpers in Counter-Strike: Global Offensive.
Currently, they’ve signed for collaborations with high-profile companies like Microsoft, Ubisoft, and Samsung. With more video game companies showing awareness towards NFTs and how they can net more profits for both the developers and the players, it won’t be soon until we see NFTs as part of the norm in video games – given that gamers will accept its existence.
ULTRA is an ambitious project that aims to create a central hub where everything you need in gaming comes under one roof. This includes the game store, your crypto wallet, and a streaming app to keep you in touch with your favorite streamers or if you want to stream yourself. It is still a new project and only time will tell if it can level with giants like Steam, GOG, and Epic Games Store.
Additionally, its local UOS tokens will let you buy video games with better discounts or use them to support and donate to streamers. The tokens also serve as currency for game developers who wish to host their game in ULTRA. The developers behind the ULTRA project promises lower fees compared to the competition as well as an exclusive software development kit (SDK) that game creators can use for their own games.
Axie Infinity became one of the most popular NFT games in 2021, especially its mainstream success in 3rd world countries like the Philippines, Vietnam and Thailand. Axie Infinity is like any classic Pokemon game: you collect monsters called Axies and bring them to battle – whether against the game AI or other players. Everytime you win in the game, you get rewarded with SLP – Smooth Love Potions. SLP can be exchanged for ETH or directly for fiat money, making it feel like a game that’s too good to be true for gamers. After all, who doesn’t want to get paid for playing video games?
We could say that Axie Infinity is the first decentralized video game that got the attention of the masses and the legitimacy of Play-to-Earn (P2E) video games. Right now, some people are still skeptical of the idea of where you earn money for playing video games, but this is reasonable since it is a new system. If big game publishers like EA Games, Activision Blizzard, Microsoft, and Take-Two Interactive will release P2E titles in the future, then NFT gaming could become a mainstream success.
Some people call Decentraland as an idea of what Metaverse would look like once Mark Zuckerberg releases the final version to the masses. In hindsight, Decentraland is an online social game where you get to have a second life: a virtual version of yourself in a virtual version of the world.
Decentraland is a stand-alone game in which you design your own world for others to live in. You may shape your realm as you see fit with plenty of customizable options. Alternatively, join the community by making entertaining apps for everyone. It’s simply that: a virtual social center that acts as a marketplace for NFTs and role-playing games.
The game takes place in a virtual world made up of 35km x 35km plots, each of which can be owned by users. It uses the Ethereum blockchain to buy and sell these pieces of land. The most expensive plot sold so far was for $170,000 USD. Revenue is generated through non-fungible token transactions and “LAND” (the credits used to create or edit worlds).
Due to the amount of people using decentralized applications, scalability has become a significant issue. Generally, there needs to be more infrastructure in place for these products before they achieve mainstream success. However, Decentraland is not one such project – it will be achievable by the public, especially with Ethereum’s scaling solution.
While it may not be a gaming-based project per se, Chiliz is a project involved with both sports and esports; allowing fans to engage directly with the teams they support. Chiliz is a blockchain-based token and management system designed to facilitate the growth of communities and companies in the sports and entertainment industry. The company wants to do this by connecting fans, entrepreneurs, and advertisers through cutting-edge technology.
Chiliz aims to attract fan bases worldwide by introducing the cryptocurrency revolution to sporting events such as tennis tournaments, football matches and general esports. Fans can purchase voting rights to participate in decisions ranging from stadium ambiance and ticket prices to the color of team jerseys.
This may feel like a no-brainer since the sports industry generates vast revenues every year and with the help of NFTs and blockchain in general, this may give way to a new kind of support for fans to their favorite teams.
As the world continues to adapt to blockchain technology, it will be interesting to see how video game designers use this innovative technology to enhance the user experience of their games, as well as create new ways for players to interact within a game economy.
Right now, the idea of video game NFTs seems alien for gamers worldwide, but that’s only natural because of its early project. Remember that gamers had the same reaction towards downloadable content (DLC) back in the mid-2000s when Microsoft first introduced it to the world, until most other triple-A companies followed suit. Soon after, DLCs became part of the video game norm.
The same can be said about NFTs in video games in the future, but only time and the overall reception of games will determine the success of blockchain gaming. If you are planning to invest in this technology, it poses a huge risk yet the pay-off will be sky-high if ever NFT gaming becomes a regular part for gamers all over the world.