NFTs are revolutionizing the way gamers believe in online gaming and in-game asset purchases.

 

While the worldwide gaming industry continues to improve across all markets, it remains structured in a way that primarily advantages game developers and perpetuates a one-directional flow where players spend money to unlock access to in-game assets and gameplay configurations. In contrast, blockchain-build games and decentralized applications (dApps) enhance players to capture the utility and value of in-game purchases and property acquisitions more effectively.

Blockchain technology in gaming is driven by NFTs, digital assets that represent in-game content. These tokens are individual, rare, and indivisible, while the blockchain networks that underpin Non-Fungible Tokens facilitate player ownership, provable scarcity, interoperability, and immutability. Together, these benefits have the potential to drive mainstream adoption and a much more equitable value model.

Non-Fungible Tokens 101

The Benefits of Gaming NFTs

NFTs and therefore the way forward for the Blockchain Gaming Industry

The world gaming industry generates revenue across three market subsets: mobile, PC, and console gaming, which together are valued within the many billions of dollars and growing. However, while industry incumbents take advantage of this robust growth, players generate little lasting value for themselves. After investing in expensive consoles, PCs, or mobile devices, players enter gaming environments that provide a tiered-access client experience. In these individual games, money flows in one direction: Players must invest money to access in-game content and exclusive features.

In contrast, blockchain-enhanced games — many of which are decentralized applications (dApps) — focus more heavily on generating value for players. This dynamic introduces a paradigm shift that permits players to capture the utility and value of properties acquired through in-game purchases, regular gameplay, or promotional events. As an example, when a player purchases an armor upgrade during a traditional game, their only advantage is enhanced gameplay within the context of that one game. However, during a gaming ecosystem that utilizes cross-platform non-fungible tokens (NFTs), an equivalent armor is often tokenized in a way that transforms in-game purchases into transferable assets which will confer advantages across interconnected games or be exchanged for money or other digital assets.

Underlying blockchain networks enable the generation and deployment of those NFTs within multiple gaming environments. Because NFTs are unique and may be designed to retain value beyond the sport during which they originated, blockchain-build games have the potential to expand gaming economies dramatically, establish new gaming categories, and fuel the development of the latest games. To enroll in how this process might unfold, it’s important first to know Non-Fungible Tokens.

NFTs 101

NFTs aren’t exclusive to the blockchain gaming industry. These tokens can represent digital and original-world assets like artwork, land, collectibles, and even identity. As a result, NFTs have a good range of practical applications that face multiple industries and use cases, and their adoption is accelerating.

In contrast to most other digital tokens, NFTs exhibit three distinct characteristics:

Non-fungibility: because the name implies, each NFT may be a cryptographic token that represents something individual or non-fungible, meaning it’s not interchangeable with another NFT. The metadata inside each NFT exists as a permanent, unalterable record on the blockchain. This record describes what the token represents, almost like a certificate of authenticity, also because of the token’s ownership history and transaction record (title). In contrast, many cryptocurrencies, like bitcoin (BTC), ether (ETH), and other utility tokens, are fungible — i.e., one BTC is effectively just like the other — and thus aren’t unique in this sense.

Rarity: The scarcity of every NFT may be a crucial component of what makes them desirable. As an example, within the CryptoKitties game, users collect and breed digital cats that are each embodied by a delegated NFT. a number of these CryptoKitties are considered rare collectibles, which consequently increases their selling price among collectors who value their provable scarcity. In 2018, a CryptoKitty named Dragon sold for 600 ETH, which was the equivalent of $170K at the time.

Indivisibility: digital currencies like bitcoin are divided into smaller units, given their fungibility and intended use as a medium of exchange. In contrast, most Non-Fungible Tokens must be bought, sold, and held as an entire unit and are therefore indivisible — within the same way that you simply cannot purchase 10% of a concert ticket or 60% of an airplane ticket.

Now that we’ve discussed the defining characteristics of Non-Fungible Tokens, we will begin to explore the benefits of deploying these tokens within the context of online gaming.

The Benefits of Gaming Non-Fungible Tokens

Although many NFTs use Ethereum’s ERC-721 token standard, Non-Fungible Tokens also are prevalent on several other networks, like TRON (Blockchain Cuties), EOS (EOS Knights), and NEO (Blocklords). the various benefits of decentralized gameplay include:

Ownership: Traditional in-game purchases are one-time, non-transferrable investments that remain locked during a single gaming world. In contrast, using NFTs in gaming environments grants players ownership of their in-game assets rather than game developers. Through blockchain technology, gamers can save in-game purchases, sell them to other players, or move them into other supported games.

Provable Scarcity: Collectors value rarity and authenticity, and therefore the scarcity of in-game Non-Fungible Tokens buy is provable through the immutable records embedded in a Non-Fungible Tokens underlying blockchain network. This distributed public ledger validates the amount and uniqueness of every NFT also as its ownership history.

Interoperability: Traditional online games exist on centralized servers. As such, in-game properties exist within proprietary systems that do not communicate with others. In contrast, decentralized games exist on independent blockchains that act because of the backend framework for other interconnected games. As a result, game assets represented by Non-Fungible Tokens are often designed to be interoperable across different environments. as an example, two games built on the Ethereum network can feasibly support equivalent in-game assets like vehicles, armor, or maybe entire characters.

Immutability: When a standard online game shuts down, users traditionally lose all of their in-game purchases. NFTs, however, exist independently of a selected gaming platform and survive the blockchain itself. As such, in-game purchases are often bought and sold no matter what happens to the sport, and new games are often designed to plug into an existing blockchain protocol. Furthermore, blockchain-enabled game assets can’t be duplicated or tampered with due to the permanent record each NFT generates upon issuance.

NFTs and therefore the way forward for the Blockchain Gaming Industry

Although the adoption of NFTs within the gaming world comes with benefits, it also presents significant obstacles to beat. Most notably, NFTs have to be made more appealing and intuitive to mainstream consumers who won’t be technically oriented. and since NFTs possess intrinsic value, there is a risk that some are going to be used predominantly as speculative assets. This potentiality could motivate players to get in-game assets with the hope of selling them for future profit rather than using the assets within the gaming ecosystem as intended.

Despite these challenges, the potential for profit within the gaming industry will motivate more non-blockchain-focused brands to experiment with Non-Fungible Tokens, likely by forming partnerships with middlemen blockchain projects that have the technical expertise needed to bring their vision to life. Simultaneously, the broader success of gaming dApps will likely play a task in further catalyzing NFT infrastructure improvements and drive the event of innovative solutions that unlock mainstream adoption.

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