If you have gun, you can rob a bank, But if you have a bank, you can rob anyone — Black Mask.
3 Major Pitfalls of NFTs in Gaming
There are 3 major pitfalls of NFTs as far as making them work in digital games. A few disclaimers first. This is not a comprehensive article that covers every aspect of NFTs, especially when applied to gaming. It is a starting point. Please do not make decisions based on this article because it is not meant to cover all the pros and cons that you could face in making a decision about NFTs and gaming. The purpose of this article is to start discussion points and expose 3 main problems that are faced by putting NFTs in games.
Finally are all pitfalls equal? Are these the 3 major pitfalls? The 3 major pitfalls I am proposing are just that proposals. They are certainly pitfall and certainly play a role in NFTs and gaming. So let us investigate each one one at a time.
Creating a Secure Network
In order to own a game or games, the network has to maintain control over the game or games. This is usually accomplished by using a DLT or a network that is privately owned by the company that own that game. A company who wants to own the game would probably solve the problem by hard forking. However this creates its own issues. First each game would have to hard fork. It would create blockchains for each new game. A result of this is that each time you wanted to start playing a new game, you would have to join the new blockchain. How many versions of blockchains would this create? Would gamers want to join multiple blockchains? Who would mine so many blockchains? Would the gamers be incentivized to mine by offering extra or exclusive NFTS? Would gamers or others want to mine so many different games? Would mining so many blockchain hard forks be financially viable?
Double Spending
Blockchain might be considered an eloquent solution to the double spending problem. In order to for any economy or tokens to work, the double spending needs to be virtually impossible. Double spending occurs when a token can be spent more than once. NFTs are digital assets. Anything digital can be duplicated. How prone are NFTs to double spending in gaming? As Antonopoulos notes you do not really own an NFT, but you own the certification, if you will, that you received this NFT from the owner or issuer of the NFT. Your NFT can be copied, but does the blockchain actually solve the double spending problem for NFTs? What happens if double spending does occur? What are the penalties? It is true that double spending is much less likely to occur on the blockchain. However it does happen. The implications of it happening on a gaming network with NFTs could have real consequences, especially if you can buy and/or trade NFTs for that game. Hard forking blockchains for every game can confound the double spending problem. There is more to explore with double spending. The double spending problem is a good Segway into the next major pitfall regulations.
Regulating Gaming NFTs: Does offering NFTs on Games Make Gaming Companies Banks?
With economy comes crime. With crime comes regulations. There are lots of problems with starting an economy. Surely these apply to NFTs on the blockchain. According to the podcast co-hosted by Adam Levine and Andraes Antonopoulos among others, gaming companies might open themselves to regulations by introducing NFTs. This is simply because introducing NFTs opens the gate to money laundering among other crimes. Are gaming companies becoming banks? Or will gaming companies merely have to abide by all the regulations without the benefits of being an actual bank or being defined as being a bank? A more general question would be what types of regulations will apply to NFTs? Consequently would these types of regulations also apply to NFTs in gaming? Are NFTs in general money? Are NFTs in general intellectual property? Or are they a combination of these 2? The question becomes which regulatory body will be utilized to regulate NFTs? Do NFTs in gaming have different properties to NFTs that are linked to other digital assets considering they are created by the gaming company and therefore have a centralized point of contact? Other NFTs also have a centralized point of contact. So does this make gaming NFTs different from other NFTs? There are lots of regulatory questions. Cryptocurrency had to jump through a whole number of regulatory hoops with the SEC. It was tedious, time consuming, and costly. Do NFTs have to jump through regulatory hoops and who’s regulatory hoops? What defines NFTs as different to FTs?
Summary
The topic of NFTs in gaming is vast. There are lots of aspects to cover. This article attempts to outline the 3 major pitfalls of NFTs in gaming as a starting point to the discussion of NFTs, NFTs in gaming, and where to start in understanding the complexity of NFTs and NFTs in gaming. Disclaimer: I am claiming these are the 3 major pitfalls of NFTs and NFTs in gaming. This is my opinion and not fact. Feel free to disagree with me or propose your own 3 main pitfalls. Also feel free to propose other pitfalls.
