Why NFTs will shape the future of gaming
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Video games are one of the few mediums where people collaborate freely regardless of race, ethnicity, gender or geography. This universal appeal stems from the ability to enable players to travel across different dimensions and build their own narrative as they unlock characters, weapons and other items in the game. The allure of creating an entirely new identity in another world fosters a deeper interaction with users, far beyond that of any other form of media.
Unfortunately, as it stands today, game applications are built on centralized infrastructure with all in-game assets, user data, game logic, etc. stored on closed systems where full ownership rests solely with the game companies. This means that these games mainly operate by maintaining a stream of value where players invest time and money only to increase the profits that are retained by game developers such as Activision, EA and Epic Games, to name a few. The gaming industry is expected to generate nearly $200 billion in revenue in 2022 alone, and shows no signs of slowing down in the coming years.
To restructure the one-sided economic systems imposed by traditional games, a blockchain technology called NFTs can empower players to contribute to a fair ecosystem that embodies the values of ownership, interoperability and transparency.
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Own
The famous first-person shooter Call of Duty generated an estimated few hundred million dollars in revenue from in-game purchases in 2021 alone. Despite having paid for these digital assets, if Call of Duty experienced any downtime or was discontinued altogether, players would have no way to use their assets, as they were only available within the confines of the game. Thus, players have never experienced ownership over any of their assets.
In contrast, NFTs exist independently of any individual gaming ecosystem and live directly on the blockchain. As a result, regardless of what happens to a game, in-game purchases in the form of an NFT can always be bought, sold or traded on public marketplaces.
The autonomous nature of NFTs enables many use cases beyond just trading. For example, an NFT may appear outside of the game in which it originated. This can allow owners to include their NFT on their social profiles to build a reputation as an elite player, collector or degen. Gaming NFTs enable owners to extend their utility far beyond entertainment and become part of a much larger effort to create a unique digital identity.
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Interoperability
Until the introduction of blockchain games, games existed exclusively on centralized servers. As a result of the game, assets could only exist within their own game-specific systems, without being able to communicate with other web applications.
For example, most people will eventually tire of a single game and move on to another. When this happens, they cannot transfer any of the content they unlocked in the game, thus abandoning all efforts. Is it fair that all their time, money and effort go to waste?
This lack of interoperability, caused by siled ecosystems, effectively fragments the game world, ultimately penalizing players. Instead, games have the opportunity to design for interoperability, thereby opening their ecosystem to network effects as players from other games can also interact with their application. For example, two games built on the Binance Smart Chain network can logistically support the same in-game assets such as characters, weapons, and vehicles. As a result, games can see an increase in customer growth, engagement and satisfaction.
Transparency
When players earn or purchase an item in the game, they cannot objectively assess its rarity, authenticity, and scarcity. Therefore, there is an implicit need for game developers to operate as honest players.
On the other hand, NFTs will usher in a new era of transparency in gaming. In-game assets, in the form of an NFT, can enable owners to freely access useful information such as details about the NFT’s uniqueness, the total number in circulation, and indisputable proof of the NFT’s validity. This level of transparency will drastically increase trust between buyers and sellers, and likely lead to a vibrant secondary market. Furthermore, NFTs can provide even more advanced data for keen players. For example, NFTs contain information including the number of previous owners, average holding time, previous sale prices, date of asset creation, etc.
Related: How to fix the lack of confidence in the NFT market
Conclusion
The difference between traditional gambling means and NFTs for gambling is quite significant. A quick dive into the fundamental differences between the two reveals how much more effective blockchain-based assets can be in creating a more player-driven ecosystem.
For the first time, in-game assets such as NFTs will enable games to offer utility far beyond what was previously thought possible. The beauty of in-game NFTs is that they bring the game world a little closer to the real world. And isn’t that the playoffs?
