The NFT market has literally exploded in 2021. Even though the crypto markets are experiencing a significant slump, NFTs remained unphased. And the gaming industry is one particular niche where non-fungible tokens have been extremely successful. Game devs are increasingly taking advantage of blockchain technology to enhance gaming experiences and provide players with the means to monetize their favorite hobby.
However, NFT gaming has encountered some significant resistance from the gaming community. Not everyone is happy that NFTs are making their grand entrance in AAA games. The ethical implications of NFT in games are creating a huge divide between crypto and gaming enthusiasts.
In this article, we try to get to the bottom of this controversy and explain its repercussions on NFT gaming in the long term. To this end, we analyze NFTs in games, their practical applications, and their pros and cons. Then we will delve deeper into some recent developments in the gaming industry and analyze the possible outcomes from an ethical standpoint. So, are NFTs in games a blessing or a curse? To answer this question, let’s first try to define blockchain gaming.
What Are Blockchain Gaming and GameFi?
Blockchain technology has ramified into almost every industry known to man, and gaming is no exception. This has resulted in the creation of two particular niches: blockchain gaming and GameFi.
The term blockchain gaming is self-explanatory; it encompasses games whose digital assets are registered on the blockchain. These can either be in-game items, characters, even currency that will form the game’s economical model.
Speaking of economy, GameFi, on the other hand, is a by-product of DeFi. By registering game assets on the blockchain, developers have allowed individuals to access financial products throughout gaming. Blockchain provides full ownership of digital assets, so players can sell their in-game rewards and avatars on the open market. This allows them to monetize their time spent in the game and participate in a growing decentralized gaming economy.
The community dubbed this play-to-earn model GameFi, denoting these new financial aspects that blockchain games possess.
What Are NFTs and Why do They Matter in Blockchain Gaming?
NFT stands for non-fungible token. This is in contrast with cryptocurrencies, which are fungible and can be easily exchanged for one another. Fungible tokens like Bitcoin are interchangeable, as every coin has the same value and characteristics as any other. NFTs, on the other hand, are unique. They have a number of characteristics that are defined in their metadata which differentiates them from one another. Additionally, they can be attached to unique artwork, video, or audio, which increases their collectibility.
This aspect of NFTs has spurred growing interest among collectors, as it allows individuals to own a deed to a digital item and prove its uniqueness on the blockchain. In this regard, developers use NFTs to represent various game items that define the gameplay. NFTs can represent the player’s avatar, rare items, or simple cosmetic enhancements to make them stand out from the crowd.
In either case, blockchain technology provides full ownership of these items to the player within the game. Consequently, the NFT represents a unique link that proves their connection to these items. The decentralized aspect of NFTs also implies that they are free to do whatever they want with them. For example, they can sell them on NFT marketplaces for profit, or even rent them to other players to access specific quests or areas.
Applications of NFTs in the Metaverse
One of the biggest appeals of NFTs is their future implication in upcoming metaverses. Metaverses are virtual worlds that individuals can freely explore and participate in various events, socialize, learn, work and even play games.
However, to make the users’ journey worth the effort, there needs to be a robust economy in the metaverse. People need to be able to retain the value of items purchased in the game world and translate this value into real-world assets.
That’s where blockchain comes into play. We can record every asset in the metaverse as an NFT, including virtual real estate, clothing, vehicles, or art pieces. In turn, users can freely exchange these assets with each other, or buy and sell them on NFT marketplaces. Therefore, NFTs connect the virtual economy of the metaverse to the real world and empower users with the benefits of decentralized finance.
Do NFTs Have Use Cases in Gaming?
Game developers have been working hard at implementing blockchain technology into the gaming industry. From entire game worlds that run on blockchain to simple cosmetics connected to players’ accounts, new NFT use cases in games are materializing every day.
Players are now able to collect NFTs in hundreds of blockchain-based games. They can also sell these NFTs gaming assets and collect crypto rewards, turning their hobby into a lucrative venture. And what better way to showcase these benefits than to provide you with some examples of successful blockchain games currently on the market.
What Are Some Successful NFT Games?
As we mentioned, there are hundreds of games out there that use blockchain tech in one way or another. However, a select few stand out from the crowd, that provide a pleasant gaming experience and a decent opportunity at generating a steady stream of income.
Undoubtedly the most popular blockchain game out there is Axie Infinity. This game allows players to collect virtual monsters (similar to Pokemon) and pit them against each other in PvP battles or online RPG quests. The monsters themselves, called Axies, are registered as NFTs on the Ethereum blockchain.
For completing quests and winning battles, players receive the SLP cryptocurrency. They can use this game currency to create new NFT monsters or enhance their team to increase their odds at better rewards. Gamers can also directly trade their SLP tokens for other cryptos or the open market, or sell their Axies on an NFT Marketplace such as OpenSea.
And Axies are very, very valuable. The most expensive ones sell for hundreds of thousands of dollars and even the most basic monsters can set you back a couple of
hundred bucks. Due to this incredible profit potential, this game has become one of the most hyped-up play-to-earn blockchain games. The game has even become a significant source of income for individuals in developing countries, including the Philippines and Vietnam.
The Sandbox is an up-and-coming metaverse that users can populate with their own NFT content. By using the tools provided by the gaming platform, creators can design various voxel creations and sell them on the marketplace. In turn, players can purchase these NFT items and use them as enhancements for their avatars in the game.
This metaverse also introduces the concept of virtual land ownership. Land parcels are a limited resource and are recorded as NFTs. Landowners in The Sandbox can create gaming experiences for others to explore. They can choose to release this content for free or monetize it through microtransactions using the SAND cryptocurrency native to the platform.
All in all, The Sandbox provides a versatile platform for creators and gamers alike. Both types of users can access advanced GameFi features and participate in its booming economy.
NFT Gaming Controversy – Why Is It Causing Such a Ruckus?
So, if there are so many advantages of NFTs in games, why is there so much controversy on this topic? A large portion of the gaming community is taking a firm stand against NFT practices and believes they have no place in the gaming world. Cryptobros and gamers are clashing over NFT gaming, but why is this happening? There are a few legitimate concerns that we need to point out to explain the naysayers’ point of view.
The Environmental Impact of NFT gaming
The first major issue with NFTs in games is their environmental impact. Proof of work blockchains like Ethereum require enormous amounts of energy to process a single transaction. Consequently, NFT transfers in games will require an exponential increase in energy expenditure than what we currently use in our games.
In a time when everyone tries to do their part to fight climate change, blockchain gaming might seem like an incredibly wasteful enterprise. Imagine if every item in a successful role-playing game was an NFT. With millions of players requesting blockchain transactions, the energy required to process them could result in a doomsday scenario.
That being said, a large part of the community also misunderstands how NFTs work. Not all blockchains are power-hungry behemoths like Bitcoin or Ethereum. Game developers are already opting for greener blockchain solutions for their games that could theoretically scale with increased demand while keeping the environmental impact of NFTs at a minimum.
Pay To Win Models Are Already Plaguing The Gaming Industry
However, eco-consciousness is not the only gripe gamers are having with NFTs in their games. A recurring issue in the gaming world is the increased focus of game publishers to push out pay-to-win microtransaction schemes.
There are a few unfortunate examples of unsuccessful economic models that tried to introduce buying and selling loot in games for real money. And one that often comes up in forum discussions about NFT in games is the Diablo 3 auction house debacle. The extremely popular action RPG introduced a way for players to trade loot they gathered in the game for real-world cash.
While this sounded like an excellent idea at first, it backfired miserably. The issue with Diablo was that loot was the actual endgame. People played the game to get better loot, which was the ultimate goal. Once they could simply buy the best items at the auction house, the incentive of actually playing the game disappeared. The developers eventually scrapped the auction house model, but this hurt the game’s reputation in the process. And even though this happened almost a decade ago, it has left a sour taste in almost every gamer’s mouth.
Furthermore, there are many games that already use gambling-like economic models. The most notorious in this regard is Electronic Arts’ FIFA Ultimate Team. Here, gamers can build their own teams by purchasing players in random lootboxes. Since the players are obtained randomly, many consider these types of games to be nothing more than glorified gambling.
The gaming community fears that NFTs would just emphasize this problem, instead of solving it. Since players would be able to trade with NFTs obtained randomly, pay-to-win mechanics could overbear the industry. Instead of being rewarded for their skills, players with access to more expendable income would be able to dominate the gaming ecosystem.
NFT Gaming Ethics – Is There Reason to Be Worried?
As you can see, gamers’ concerns about NFTs are far from being unwarranted. Since NFTs can be such a profitable venture, gambling with game items could become a much bigger problem than it already is. With blockchain being relatively impossible to regulate, NFT lootboxes could create huge legal problems. At the same time, they could help fuel the gambling addictions of more susceptible individuals.
There is also the issue of digital ownership of in-game items. While NFTs effectively provide exclusive access to digital assets, this doesn’t mean that they offer control over what happens to the game itself. Publishers are still free to cut server support for multiplayer games, making the NFTs completely worthless. Users would still be able to exchange their NFTs on the blockchain, but their usability would become non-existent. As a result, their value could plummet, wiping out any real-world money and time invested in the game.
And finally, because of the fad-like nature of NFTs, a great number of developers might be tempted to jump on the bandwagon and release their own blockchain game. Suddenly, the market might get flooded by hundreds of titles using NFTs in one way or another, However, while they can be useful in some cases, NFTs don’t belong in every type of game. More often than not, they won’t provide any additional value than what is already possible without blockchain technology. This could lead to an oversaturation of low-quality games that waste blockchain bandwidth and computing power just to be part of the NFT gaming mania.
Game Publishers on NFT gaming
The profit potential of NFTs in games is undeniable. NFTs are getting more retail attention than meme coins, and some major game studios are not going to let this opportunity slide.
Epic, Square Enix and EA games have openly expressed their enthusiasm about NFTs in video games.
However, it’s Ubisoft that has taken the biggest step by offering cosmetic NFTs for their Ghost Recon Breakpoint multiplayer game, called Digitz. The reception in the community was… mixed, to say the least. The announcement video got hundreds of thousands of dislikes on Youtube and gaming forums were unanimously flaming Ubisoft. That said, the first batch of NFTs sold out instantly, showing that there’s a lot of interest for these types of assets, despite the backlash.
Not all gaming platforms were as passionate about NFTs, with Steam taking a firm stand against them. The PC distribution service openly stated that they would not allow any games using NFTs on their platform. And with a user base of over 25 million active gamers, this declaration has a lot of weight in the industry.
Also worthy of note is that gaming studio GSC Game World which is developing the much-awaited S.T.A.L.K.E.R. 2 first-person shooter RPG backtracked on their decision to integrate NFTs in their game. After a severe backlash from the community, the studio declared on Twitter that they were canceling all NFT-related plans. On a side note, the next Stalker game was supposed to be the first AAA title with NFT integration.
What Is the Future of NFT Gaming?
Although there’s a lot of backlash around blockchain gaming, we can’t see that we expect this trend to die out soon. As previously seen, major game companies are already joining the movement. Considering game development takes between 3 and 5 years, we shall certainly see some blockchain games popping out in the near future.
To quote Stefan Stankovic and his 2022 predictions for Crypto Briefing:
“Gamers and game studios will capitulate and embrace NFTs. In 2021, we saw crypto skeptics bully Discord out of integrating Ethereum. Some also tried it with Ubisoft, but they didn’t succeed. In 2022, Ethereum will become 99.9% more energy efficient as it moves to Proof-of-Stake. Companies will take advantage of that fact to jump into the space. As play-to-earn games take off, most gamers will drop their make-believe concerns for the dolphins and embrace tokenized JPEG versions of them.”
But what can we really expect from gaming NFTs in addition to play-to-earn models? Let’s try to provide a few concrete examples.
Redeemable Skins and Collectibles
One immediate application we could see with major publishers are collectibles, cosmetics, and skins that reside on the blockchain. Ubisoft has already started this trend and other publishers are ready to join in.
However, a development that might make all of this more interesting is if these gaming NFTs can be destroyed to retrieve some of their value. Some gaming-oriented blockchains like Enjin already offer such features. They allow to reverse the process of minting and break down NFTs into the native cryptocurrency of the blockchain.
Ultimately, this means that even if the game servers shut down, the NFTs don’t become entirely worthless.
Digital Game Copy Trading
Another, more utopian vision of NFT gaming, would be to be able to trade your digital copies of your games on the blockchain. Currently, buying a digital copy of the game equates to a lease and it remains locked to your account. If the publisher decides to stop offering it on its marketplace, you might not be able to download it in the future. Nintendo has infamously removed the Mario All-Stars games from its store and prevented upcoming generations from the joy of playing the red-hatted plumber classic games.
NFTs could allow us to genuinely own the digital copies of our games. For instance, you could resell your copy to another user once you are done playing it. And game publishers could jump on board as well, as NFTs can be programmed to provide royalties from subsequent sales.
The ethics revolving around NFTs in games have spurred up a heated debate. Both skeptics and supporters of the technology have their valid points. Without any doubt, owning your hard-earned digital assets and being able to sell them is an appealing concept. It appeals to collectors and allows anyone interested in gaming to make some extra cash from their hobby.
However, their implementation needs to be near-perfect to not deteriorate the gameplay or diminish the player experience. Moreover, not every game needs NFTs, and developers and publishers will hopefully understand this.
What we need to ask ourselves is whether NFTs can bring something new to the gaming industry and provide added value to gamers. For the moment, their usefulness still needs to be proven, but the opportunities remain numerous and captivating.