Although the global gaming industry continues to develop in all markets, it is mainly created to benefit game developers and maintain a one-way value stream where players spend money to unlock access to game assets and gameplay configurations. On the contrary, blockchain-based games and decentralized applications (dApps) allow players to more effectively achieve the usefulness and value of acquiring purchases and assets in the game.
Blockchain technology in gaming is powered by non-fungible tokens (NFTs), digital assets representing the game’s content. These tokens are unique, rare, and indivisible, while the blockchain networks that overlap NFTs simplify players’ ownership, significant reduction, interoperability, and immutability. Together, these advantages can adapt widely and operate a model of far more equal value.
- Games and blockchain
- Non-fungible tokens 101
- Advantages of gaming NFTs
- The future of the NFTs and blockchain gaming industry
Games and blockchain
The global gaming industry generates revenue in three segments of the market: mobile, PC, and console games, which cost hundreds of billions of dollars and are growing. Although industry-based companies benefit from this strong growth, players create little lasting value for themselves. After investing in expensive consoles, PCs, or mobile devices, gamers enter a gaming environment that provides the user with a tiered access experience. In these traditional games, money flows in One Direction: players must spend money to access the content and special features.
On the contrary, blockchain-powered games-many of which have decentralized applications (dApps — More focused on creating value for players. This dynamic leads to a sample shift that will allow players to understand better the usefulness and value of assets acquired through in-game purchases, regular gameplay, or promotional events. For example, if a player buys an armor upgrade to a traditional game, the only advantage is to improve the gameplay in the context of this one game. However, in a gaming ecosystem that uses cross-platform non-fungible tokens (NFTs), the same armor can be taken in such a way as to convert purchases in the game into movable assets that can be transferred. Provides benefits for interconnected games, or money or other digital assets can be exchanged.
Basic blockchain networks enable the generation and deployment of these NFTs in multiple gaming environments. Since NFTs are unique and can be designed to maintain value beyond the game they were created, blockchain-based games can dramatically increase the game economy, establish new game categories and advance the development of new games. To investigate how this process can develop, it is first necessary to understand the NFTs.
Non-fungible tokens 101
Non-fungible tokens are not exclusive to the blockchain gaming industry. These tokens can represent digital and real assets such as works of Art, real estate, collective, and even personal identity. As a result, NFTs have a wide range of practical applications that address several industries and use cases, and their adoption is accelerating. Unlike most other digital tokens, NFTs have three distinct features:
Non-fungibility: as the name suggests, each NFT is a cryptographic token representing something unique or non-fungible, which means it is not interchangeable with any other NFT. Metadata in each NFT exists as a constant, immutable record in the blockchain. This record describes what the token represents, similar to the certificate of authenticity, as well as the date of ownership of the token and the Transaction Record (title). In contrast, many cryptocurrencies such as Bitcoin (BTC), Ether (ETH), and other utility tokens are fungible-I. e. One BTC effectively matches another – and is therefore not unique in this sense.
Rare: the lack of each NFT is important to what makes it desirable. For example, in the CryptoKitties game, users collect and breed digital cats, each of which is distinguished by a certain NFT. Some of these crypto kittens are considered rare collections, increasing their asking value among collectors who appreciate their significant decline. In 2018, a crypto kitten called Dragon was sold for 600 ETH, equivalent to Tok 170k.
Indivisible: cryptocurrencies like bitcoin can be divided into smaller units due to their fungibility and intended use as a means of exchange. Conversely, most NFTs have to buy, sold, and kept as a whole unit and are inseparable — just as you can’t buy 10% of a concert ticket or 60% of a plane ticket.
Now that we have discussed the defining features of NFTs, we can start exploring the benefits of providing these tokens in the context of online games.
Advantages of gaming NFTs
Although many NFTs use Ethereum’S ERC-721 token standard, NFTs are also common on several other networks, such as TRON (Blockchain Cuties), EOSIO (EOS Knights), and NEO (BLOCKLORDS). Among the many advantages of decentralized gameplay are the following:
Ownership: shopping in a traditional game is a one-time, non-transferable investment that remains closed in a single-game world. In contrast, the use of NFTs in the gaming environment gives players ownership of their game assets rather than Game Developers. Blockchain technology allows players to save purchases in the game, sell to other players, or transfer to other supported games.
Scarcity: collectors value rarity and authenticity, and the lack of NFT purchases in the game is proven by immutable records embedded in NFT’s core blockchain network. This distributed public ledger validates the number and uniqueness of each NFT and the date of their ownership.
Interoperability: traditional online games are present on the main servers. Therefore, assets in the game are present in proprietary systems that do not interact with others. On the contrary, there are decentralized games on independent blockchains that serve as the backend framework for other interconnected games. As a result, game resources representing nfts can be designed to collaborate in different environments. For example, two games based on the Ethereum network can support assets such as vehicles, armor, or even entire characters in one game.
Immutable: Users lose all their game purchases when a traditional online game is closed. However, NFTs exist independently of a specific gaming platform and remain on the blockchain. Therefore, regardless of what happens to the game, purchases can be purchased and sold in the game, and new games can be designed to be integrated into existing blockchain protocols. In addition, blockchain-powered game resources cannot be duplicated or manipulated due to the constant record that each NFT produces at the output.
The future of the NFTs and blockchain gaming industry
Although the introduction of NFTs into the gaming world brings benefits, it also prevents important obstacles that must be overcome. Above all, NFT needs to be more attractive and intuitive for mainstream users who may need to be more technically oriented. And since NFTs have an internal value, there is a risk that some will be used primarily as speculative assets. This ability can encourage players to buy assets in the game in the hope of selling assets for future profits rather than using assets within the gaming ecosystem.
Despite these challenges, the profitability potential in the gaming industry will encourage more non-blockchain-focused brands to experiment with NFTs, perhaps through partnerships with third-party blockchain projects that have the technical expertise to bring their vision to life. At the same time, the widespread success of gaming dApps will likely contribute to further catalyzing the improvement of NFT infrastructure and advancing the development of innovative solutions that enable mainstream adoption.