By
Dimitar Bogdanov
April 21, 2021
4 Min Read
The emergence of non-fungible tokens has been one of the most exciting developments in the world of crypto and the broader blockchain space. In just a few short years, the technology has managed to advance considerably and is now able to power a slew of interesting applications. One of the areas offering the most interesting use cases for NFTs is gaming.
Before jumping into the main topic we need to take a closer look at the current state of the gaming industry to pin down what makes video games such a great fit for non-fungible tokens. The first factor we need to consider is market size. Long gone are the days when video games were a novel pastime aimed primarily at a younger demographic. Today video games are by far the biggest entertainment industry, generating tens of billions of dollars in revenue every year. In addition to having dedicated platforms in the form of consoles, video games have a strong presence on PC and mobile. Millions of people experience from all ages and walks of life experience gaming, in one form or another, every day.
Then there is the industry’s openness to change and experimentation with new concepts and ideas. While still young compared to other forms of entertainment, the medium of video games has evolved dramatically in a relatively short period of time. Being a unique blend of technology, art, and entertainment, the medium is constantly exploring ways to utilize the latest technological advancements in software and consumer electronics to enrich the player experience. The industry is also not afraid to experiment with different business models in its pursuit of bigger revenues and profits. All this makes video games the perfect testbed for novel ideas and technologies like non-fungible tokens.
Finally, video games have the unmatched ability to provide both social and deeply personal experiences. Multiplayer games offer plenty of opportunities for players to express their personalities or claim bragging rights. Meanwhile, single-player games take players on thrilling journeys shaped through the unique perspective of each player.
Perhaps the best illustration of the power of video games as a vehicle for novel ideas and technologies is the fact that non-fungible tokens were popularized by games like CryptoKitties, which let players collect, buy and sell digital collectibles. In the years since, games have continued to play an important role in the NFT landscape, as demonstrated by the growing popularity of dApps like Sorare, Decentraland and Gods Unchained, among others.You can read more about some of the most prominent NFT collectible games in our previous piece on non-fungible tokens, where we take a closer look at the current state of the digital collectible market. But for now let’s take a look at how NFT-powered collectibles can be applied to video and mobile games.
One way to use NFTs is in Pokemon-like games, where players collect and train virtual creatures and use those creatures in duels against computer opponents. A similar concept is used in collectible card games, where players aim to build the best decks to compete against each other.
Then there’s also cosmetic items. Players spend billions of dollars every year on character skins and other virtual accessories in video and mobile games. The market for cosmetic items is growing at a steady rate year after year and is a significant source of revenue for many companies.
The problem is that under the current model, both cosmetic and gameplay items are tied to the games or platforms they are designed for. This means that players stand to lose all items they’ve collected in a game if that game shuts down.
Blockchain and NFTs offer an effective solution to that problem. Backing virtual items with NFTs ensures that players own true digital assets that do not rely on the centralized storage provided by a particular game or platform. The items that a player has obtained through gameplay or in-app purchases will continue to live on the blockchain even if their respective games are shut down. Players remain in possession of their items until they decide to sell them on blockchain-based peer-to-peer marketplaces.
The NFT approach could also help solve another problem stemming from the siloed nature of the current gaming landscape. The fact is that, with rare exceptions, virtual items are practically useless outside of their respective games. However, NFTs and blockchain can make it possible for items to be used across multiple games and platforms.
One company pioneering this approach is Enjin. The company is building a cross-chain network for NFTs called Efinity, powered by its native token, Enjin Coin. The way it works is that every digital asset created on Efinity is infused with Enjin Coin, which is a tradable token supported by a number of crypto exchanges, including Binance, Bitfinex, and Uniswap. This gives the NFT a real-world value. The tokens can be released through a process called melting, which destroys the NFT.
According to Enjin, more than two billion NFTs have been created using the company’s tools.
Achievements and trophies commemorating great feats of skill, determination or sheer stubbornness have been a video game staple for a long time. Non-fungible tokens could make these types of rewards even more meaningful.
With the help of NFTs, the concept of achievements could be expanded in interesting ways. For example, an NFT could store a unique player experience or even a personal journey through a game world. Imagine not being restricted to what game designers have deemed worthy of achievement. Imagine having the ability to mint an NFT commemorating any silly, wacky thing you’ve done in a game. Anything that has a personal significance to you could be preserved forever on the blockchain as an NFT.
One of the biggest problems in today’s age of live service games is related to protection of personal accounts, which can be stolen or simply lost due to negligence. NFTs can help alleviate this problem by ensuring that players remain in possession of their items and character builds even if account access has been compromised. This proof of ownership could also be used to restore access to the compromised account.
People playing games like Diablo 3, Word of Warcraft, and Path of Exile sometimes spend hundreds or even thousands of hours trying to build the strongest possible heroes. Naturally, such character builds are deemed valuable within the gaming community and are sometimes sold for hefty sums on third-party platforms. The problem is that those platforms are not supported by video game companies and more often than not lack the necessary mechanisms to ensure that a sale would go through.
With non-fungible tokens, character builds could be easily turned into digital assets tradable on a number of established NFT marketplaces like OpenSea. This approach would help standardize the process and create a way for gamers to earn money while playing their favorite games.
Video games have always been on the cutting edge of computer technologies, benefiting from the latest advancements in computer hardware, consumer electronics, and software development. This openness to new technologies has helped the medium to become the king of digital entertainment and has shaped the diverse gaming landscape we see today.
Blockchain and non-fungible tokens represent a bold new frontier for the medium. A frontier that, if history is any indication, the industry should be more than willing to explore.
