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NFTs are derived from this lens in game design

If I were to ask you what your favorite toy was when you were young, I’d be almost sure that you had a great story behind that toy of yours. It had memories of you interacting with it, be it biting it, throwing it across the room or even bringing it to the toilet with you, there was something attached to it. Something valuable. Something irreplaceable. Something endogenous.

Photo by Andrey Metelev on Unsplash

Let’s cut to the chase. The lens we are going to explore today is the lens of endogenous value, a lens that holds together all my beliefs in games and many other toys. As a matter of fact, this lens opens up one of the many elements to the up-and-coming trend these days: NFTs. Before going into NFTs, let’s get some points out of the way.

We have been playing games our entire life, if you haven’t already noticed, but a more important question is: What actually is a game? If you have been following the previous articles, you know some elements of it, but we never really took the chance to define it exactly. In fact, it has multiple definitions accordingly, but I like this one by Elliot Avedon and Brian Sutton-Smith which was mentioned in the book The Art of Game Design:

“Games are an exercise of voluntary control systems, in which there is a contest between powers, confined by rules in order to produce a disequilibrial outcome.”

As always, let’s break it down. “An exercise of voluntary control systems” — this means we usually enter games at our own will and nobody has to force us to play it if we don’t want to. “Contest of powers” seems complicated but really, under the hood, it simply expresses the inner desire to have dominance and power over either the game or the other players. “Confined by rules” — a very crucial element in games because without it, the entire essence of it will be missing. As such, the rules and boundaries define our actions in-game or outside the game whether you believe it or not, evidently clear as we either win or lose a game. From here, we can make out a pattern from the definition of a game and simply put, it is an interactive structure of endogenous meaning that requires players to struggle toward a goal, as defined by Greg Costikyan. The entire structure of a game, fundamentally, is to get you to grind hard towards figuring out a solution for a problem created by us game developers! The struggle is real when you want to win the game but remember, it is something the game developers have spent time trying to guide you towards and essentially you created your own problem! Nonetheless, the better element here is the endogenous value we create ourselves every time we are in a game.

Our real world has more than enough problems and truthfully we lack enough solutions. I have to say, there are really hard working people working towards solving those huge problems but there is another camp of people who prefer to solve problems they create for themselves. Enter endogenous, or “internally generated”, a description for something created within ourselves that we don’t usually notice. This comes at times when we find ourselves attached to a certain item in-game or hoarding up items because that’s what we do in real life! At the end of the day, whether in real life or in-game, the items that we go out of our way to buy or compete for have tremendous value to us. A very cool example given in the book was the way currency in the Monopoly game means so much to us although it is pretty much useless in real life. A reasonable justification for that is when we play the game Monopoly, the fake cash somehow has value that helps us gather more assets in order to be rich, but it’s all inside the game! The way game developers are able to bring the endogenous value of cash and money into the game Monopoly and get people to “fight” over it just proves how compelling a game can be once an endogenous value is discovered.

While we are on this, the same reason can be put forth for NFTs. The fact that these digital art pieces are accumulating value in virtual worlds somehow means that the endogenous value differs for everyone. Some value the drawing of a monkey more so than a house in the real world! As games have been around for decades or even centuries, and with NFTs taking off because people are starting to find value in digital assets, it opens up more possibilities for games to adopt the same technology behind it and share the same kind of value everywhere, though most of the value of items in games must have been explored exhaustively for many years.

I also read about the endowment effect, where people would rather hold and keep an item if they own it than to acquire it. Say a bottle of wine with a price tag of $1,000,000, you find that the value is exceeding what people would pay for, and so you will keep it, but at the same time, if you don’t own the bottle of wine, needless to say, you are not going to buy it. And the fact that people who sold precious items that had emotional attachment to them felt sad makes the point clearer. With each item that holds meaning, you are more than likely to keep it and as rare as it gets, the floor price eventually rises.

To end this on a high note, at the same level as the value of NFTs (at the time of writing at least), I am curious, what is one thing that keeps you in whichever game you are playing right now? Are there any valuable pieces of memories worth sharing? The way I see it, as long as we are conscious beings, the more value we place in things that can hold memories. Including this piece of article, I hope.

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