Non-fungible tokens (NFTs) are exclusive data units that use blockchain to authenticate digital content. They are used to own and distribute digital assets such as music, text, artwork, and many others. Sometimes NFTs are also backed by physical assets, i.e., both the original piece and the NFT are transferred to the buyer as a single asset. NFTs make it easy for digital artists to own, sell, and authenticate their work over the internet.
Even though both are based on blockchain, NFTs are different from cryptocurrencies. Cryptocurrencies are fungible, i.e., you can exchange one crypto unit with another one without loss in value. NFTs are non-fungible and unique tokens that can’t be exchanged with each other due to their unique properties. Furthermore, the ownership of any NFT is a public record and can easily be confirmed via blockchain ledgers.
How gaming NFTs got their start?
NFT rose to prominence when CryptoPunks was launched in October 2017 as a marketplace for digital arts. It was one of the first marketplaces for digital items, even in the blockchain community. The NFT community has come a long way since that. In 2021, almost 150,000 NFTs were sold every week.
Ubisoft was the first gaming company to establish in-game NFT protocols. They launched Ubisoft Quartz, a forum that allowed players to earn and buy in-game commodities or NFTs on the Tezos blockchain. Unfortunately, it was a bit of a faux pas and was met with anger by the horde of gamers who didn’t like the changes in the game. Even though it was a bit early, Ubisoft paved the way for other NFT projects. Other companies realized that selling authenticated NFTs could be a potential revenue source.
GameStop, one of the world’s largest merchandise retailers, observed this rise of NFTs and launched its own NFT marketplace, a hub for buying and trading NFTs for different video games. They also produce in-demand goods such as skins, weapons, and outfits as NFTs.
Nvidia also has launched its own Omniverse, an NFT trading platform based on Metaverse’s Unreal engine. Many companies are now dabbling into NFT games, with Alien Worlds and Axie Infinity raking in the highest user counts.
How can companies benefit from NFTs?
Many experts believe NFTs will boost revenues and scalability for gaming companies through already established blockchain protocols. In many instances, when an online game gets banned, the company can use the NFT collectibles to generate revenue. In addition, tokens such as costumes, scenes, and avatars can be licensed and sold to online bidders for high yields. This also frees these assets from corporate technicalities such as mergers and takeovers, making them more profitable and long-lasting.
NFT ownership can be easily verified, and the company can monitor the transfer, share, and exchange of NFTs through blockchain ledgers. This also improves the security and transparency of digital assets and prevents design duplication and fraud.
One of the major advantages of gaming NFTs is that they help to improve brand awareness. NFT distribution can bring in new gamers and, in turn, new customers to the business. Many companies have successfully used this approach to boost their marketing and increase customer awareness.
How can gamers benefit from NFT games?
In traditional games, you have to win to upgrade and advance to the next level. There isn’t a monetary exchange. Today, innovative play-to-earn structures allow players to get monetary compensation for their time.
For example, if you’re playing a game and you win a nice gun, you can turn it into an NFT and sell it for cryptocurrency. You can also trade it for other NFTs or buy new ones (NFTs aren’t interchangeable because their value is unique yet you can trade them if you’re willing).
There are also in-game rewards. Once you max out your character, you can play tournaments and earn NFTs by beating other players. Some companies also offer exclusive items through these tournaments (items that you can’t normally buy or get through level-ups). You can also perform NFT staking.
These play-to-earn guilds can help newbie gamers get started with NFT. If you’re a guild member, you don’t need an expensive setup to generate and share NFTs. These guilds can help reduce your gas fees and create NFTs cheaply. You also don’t have to pay rent for using game assets.
Of course, this comes with a tradeoff. Once you start earning revenue, you have to pay a certain percentage of your total earnings to the guild.
This is beneficial to both parties. Guilds get new players and generate future cash flow, while players can start earning money for the first day.
Interoperability of game assets
Traditional PC games aren’t interoperable, i.e., if you buy a weapon in one game, you can’t use it in another. So you have to win new characters, assets, and weapons for every game you play and use them exclusively in them. You might also have to pay to win the exact same things (armor, transport, etc.) you just won in other games.
Blockchain NFT’s enhance interoperability i.e, you can use the assets of one game into another. You can also trade your assets for others that you fancy through dedicated marketplaces.
What will be the future of gaming NFTs?
A survey by DappRadar showed that gaming NFTs generated $4.8 billion in 2021. Many companies are now putting out regular NFT content as a way to enhance venture capital interest in blockchain-based gaming startups.
Whether you’re a seasoned gamer or a crypto investor, there is a lot of money to be made from gaming. It’s safe to say that NFTs will be a “game-changer” for the gaming industry.