Fungibility, Non-Fungible tokens (NFTs) and the gaming use case
What is fungibility?
Fungibility describes an asset that can be easily replaced by an identical item. Within the world of money & cryptocurrency a fungible coin or token is one that is easily interchangeable with another. One dollar = one dollar; one monero = one monero. This is important because good money requires it to be a store of value, unit of account, and medium of exchange.
What are NFTs?
A non-fungible token (NFT) is a digital asset that is unique in its nature. Each one is different. This makes it “non-fungible”. NFTs represent a way of creating digitally scarcity, unique items that are provably verified without a centralized authority.
The biggest application for NFTs to date is digital collectibles. Most notably, Crypto Kitties. Crypto Kitties — a game featuring breed-able digital cats — became one of Ethereum’s most used DApps in late 2017. It created over 800,000 NFTs and the most expensive one was sold for $113,000.
The Gaming Use Case
Gaming “add-ons” like power ups, expansion packs, digital skins and loot boxes are a massive industry — some sources put it in the tens of billions. But these items are created and distributed by big gaming companies that hve complete control of the add-ons. They can create digital value out of nothing and take it away from users at the drop of a hat.
Non-fungible tokens on the blockchain are disrupting that. By taking these digital assets and putting them on a blockchain like Ethereum, gamers are given the ability to store them or trade them in a decentralized marketplace. There are a host of crypto gaming projects and platforms that are pushing this forward.
At Terra Virtua, NFTs will allow each user to create and customize their Vflect avatar and have it stored immutably on the blockchain. The Terra Virtua VR gaming world will also have a dedicated area for trading in-game items in a fair and open way.
One of the most agreeable blockchain use cases
Don’t lose sight of the fact that the primary use case of a blockchain is censorship resistance and immutability. A good percentage of crypto projects are solving problems that don’t need those features; they are utilizing a blockchains simply for marketing and attention.
NFTs and their fit with gaming is firmly not in that group. Censorship resistance and immutability are necessary. You don’t want game developers to be able to flip a switch and delete your hard-earned skins because they feel like it. Verified scarcity is a required feature as well. It allows buyers know they are receiving the real thing, and not a counterfeit. It also offers for intellectual property protection for the content creator.
A few notable tweets about market sentiment on NFTs:
An exchange between Peter McCormack and Justin Wu on the product/market fit of blockchain gaming:
Got any questions or comments on NFTs & their uses cases, Terra Virtua, VR or gaming — ask away in the comments!
