Over the course of the last few weeks, we’ve shared two posts on our blog, talking about blockchain and its value propositions for gaming (find them here and here). The key benefits we’ve discussed so far were in-game asset ownership, provable scarcity, as well as transparency and authenticity. Now, as previously talked about, all of those benefits are the result of utilizing blockchain technology in games. That’s a very generalizing statement, however, because there are multiple ways to incorporate blockchain.
Especially for gaming, there’s one specific concept that builds the foundation for a good part of the benefits that are attributed to blockchain: non-fungible tokens (NFTs). In today’s post, we want to give a brief intro to NFTs, as well as to how they can be relevant in games.
What are NFTs?
NFT stands for non-fungible token. If you’re a crypto veteran, you probably know what fungible tokens are. Cryptocurrencies are fungible tokens, meaning each unit is the same as any other — they’re interchangeable. If you own one ETH, it doesn’t matter which exact one that is. With non-fungible tokens, that’s different. Each unit is unique and is distinctly identifiable. Let’s take a currency for example. For everyday use, it might not be relevant which unit you own. You probably don’t care if you own one, or the other dollar bill, as long as you own one. However, rare coins for example, are a whole ‘nother story. Although all pennies have the same intrinsic value, if you own a rare one, it might be worth thousands of dollars. In that case, you’ll want to be able to undoubtedly identify it, wouldn’t you?
Now, for physical assets, that’s a lot easier than for digital ones. How can you tell the difference between two dollars in your bank account? Well, you can’t. With NFTs, we’ve found a way to do exactly that. NFTs allow us to confirm the existence, provenance, and validity of distinct digital assets in good ol’ blockchain fashion. The records about each distinct digital asset is stored on a blockchain along with the info about the associated owner. And since it’s blockchain, it’s secure, immutable and fully transparent — yay!
Games are a great field for the application of NFTs since they have been dealing with distinct digital assets, in the form of in-game items for example, ever since the industry exists. Putting in-game assets on blockchain thereby provides a number of benefits to players. To put it in a nutshell, the major benefits are:
- Actual ownership. Players own the in-game assets instead of the game developer.
- Transparency and provable scarcity. The amount of each kind of asset, as well as the history of ownership, is accessible for everyone.
- Interoperability. Since assets exist in independent systems (blockchain) instead of proprietary ones (the game developers’ servers), they can be incorporated in multiple games.
- Security and immutability. Assets cannot be duplicated or tampered with by frauds, or be lost when a game shuts down.
To learn more about the benefits of blockchain and NFTs in gaming, check out the articles we’ve linked at the beginning of this post.
What NFTs can look like in a game
Blockchain gaming is all about creating value for the players. In traditional games, the flow of (actual/monetary) value is almost always one-directional: you, as a player, spend money to get access to in-game content. You buy a skin for your favorite weapon and are happy to be able to use it. But other than enhanced gameplay, or entertainment in general, what do you get in return? What happens to the actual value of this item? If you can’t return or sell it, well, it’s lost.
With NFTs, that’s different. They actually preserve or even generate value for the player. When you buy an in-game asset in the form of an NFT, you don’t only get the utility of it, but an actual digital asset, that you then own. You’ll always have the option to trade or sell it to convert it’s value back. And potentially, it’ll even increase in value over time.
More and more games are utilizing NFTs. And the more we’ll see and test, the better we’ll learn how to utilize them to create maximum value to players. Currently, four general categories of (game) NFTs are emerging:
- Branded NFTs. This category resembles the traditional collectibles, we all know, but in a digital version. Those collectibles utilize established brands, like those of sports franchises for example. If you’d put baseball trading cards or panini stickers on blockchain, they’d belong to this category. Branded NFTs, just like the traditional counterparts, meet demand because people are interested in the respective topic and will translate their interest to the NFT market.
- Memorabilia. If someone offered you to choose between two equal boxing gloves, however only one of them has belonged to Muhammad Ali himself, which one would you choose? The history of ownership can create significant value for a collectible. Since there’s full transparency regarding their history, with NFTs it’s possible to do the same for digital assets. And the best part about it: verifying the ownership is even easier than before.
- Game-relevant NFTs. These NFTs are relevant to the underlying game, and therefore also to the player. In-game items or skins, for example, can fall into this category. Just as with the previous categories, the player/owner thereby doesn’t have a way to directly impact the value of the NFT. The value will majorly be determined by the demand for it, which is generated through the game(s) incorporating the NFTs.
- Story/gameplay driven NFTs. This category is similar to the previous one, in that in-game items, skins, characters, etc. can fall into it. However, the major difference is that the player can actively change the value of the NFT. Imagine your World of Warcraft heroes would be NFTs. Eventually, you’ll be able to max out their level, which will be more valuable in a market than level one heroes. The NFTs value will also heavily depend on the game(s) utilizing it, however, the player will be able to control it to some extent.
With Chain Clash, we’re building a game that utilizes the latter of the abovementioned categories. Avatars, as NFTs, are the main characters of the game and can be developed and formed by players in multiple ways. Even though the game will feature different rarities and editions of avatars, we’re convinced that a good portion of their value can be generated by the players themselves, just from playing. However, generating value through gameplay, as well as an in-game economy, requires a carefully designed and balanced game (that’s a topic for another post, so stay tuned on our blog!).
The future starts now
Blockchain is quite a new technology and NFTs are even newer. Since building games takes time, the blockchain gaming industry has just started to spawn games utilizing this technology. We’re convinced that this is just the very start of a long journey to change the gaming industry for the better. With every new game released, we’ll be able to learn and evaluate how to make the best out of blockchain and NFTs, as well as what works and what doesn’t. Eventually, we’ll know which NFT concepts prove as valuable and sustainable.
If you’re interested in our very own journey in this industry, make sure to stay tuned on our blog, newsletter or join our Discord. We’re currently in private beta and are testing the ins and outs of our game. Make sure to not miss out on our public launch!