Technology

The debate over NFTs rages on — How might they impact gaming?

If you have been keeping tabs on gaming or tech news within the past year or so, you may have heard the term “NFT” thrown around at least once. The NFT, which stands for “non-fungible token,” has become greatly coveted by tech gurus, cryptocurrency aficionados, and gaming executives alike, with many claiming it represents “the future of gaming,” or art, or some other digital marketplace to which it applies.

Alongside these ringing endorsements comes a heavy dose of backlash and derision, particularly among gaming enthusiasts. Many of them fear how companies could abuse NFTs to get a quick buck off the consumer. Ultimately, though, there exists a very real possibility that gaming companies will widely adopt NFTs in the near future, which makes it important to consider how they could affect the gaming landscape for better or for worse.

 

NFWN (“Non-fungible what now?”)

Of course, those who only heard about NFTs in passing or fall asleep at the sound of technical or economic jargon may wonder exactly what an NFT is. Essentially, NFTs are pieces of data representing distinct digital items that, in theory, cannot be replicated, hence the “non-fungible” part of the name. This data is stored in a blockchain, a digital ledger of sorts spread across a network of computers that records the transactions made with those digital items. Virtually any kind of digital asset you can think of, be it an image, a video, a clip of audio, or a skin in a video game, can be made into an NFT, and many are willing to pay hundreds if not thousands of dollars for them.

Some may wonder why anyone would pay exorbitant amounts of money for something as simple as a GIF on the internet. One reason has to do with NFTs’ perceived uniqueness; since there is supposed to be either a finite amount or only one of each NFT on the entire blockchain, purchasing one feels all the more special, as the individual who bought it would be one of or the only person in the world to own that specific item. This essentially replicates the concept of ownership commonly understood for physical goods; when someone buys a physical product, they tangibly possess that product, but that does not usually apply for digital goods due to their easily replicable nature. With NFTs, people hope to bring digital ownership more in line with physical ownership.

The most powerful incentive of all

This at least partially explains the psychology behind purchasing NFTs, but there obviously exists a more extrinsic benefit for doing so: money. Although the initial prices of NFTs can often be quite steep (the average NFT on OpenSea costs $500 USD, for example), selling them can be very lucrative, especially at an auction, where buyers can bid prices higher than the initial cost.

To top it all off, every time an NFT is sold, the original creator can take a cut from the profits as part of a royalty agreement. The original creator is not guaranteed to profit from this, especially since minting the NFT on the blockchain requires a sizeable gas fee. But if the NFT becomes popular, then the cuts from those sales can really add up. People have debated whether or not this qualifies as a pyramid or Ponzi scheme, but that is outside the scope of this writing.

 

NFTs gaming Matsuda

What do game companies plan on doing with NFTs?

So why would video game developers and companies want to jump in on NFTs in the first place? One obvious reason is so they can make more money; after all, if some average guy on the internet can make thousands or even millions of dollars off of NFTs, then one can only imagine how much a major corporation could make. But their motivations go deeper than that, at least if their rhetoric is anything to go by. Some developers are using NFTs as an opportunity to explore new game concepts. For instance, Dom Hofmann, one of the founders of the now-defunct Vine app, is making a console that can play games minted on the blockchain. He aims to make each copy of every game unique from both a visual and gameplay standpoint.

But a recurring talking point among video game executives has to do with NFTs’ potential to reward players who purchase items or create content in-game. So if a player buys a cosmetic hat item in a multiplayer shooter that also happens to be an NFT, then they could sell that hat to other players online and potentially reap a profit. Or they could create a custom map in that same shooter and set a price tag on it rather than just letting all online players experience it for free. Both Square Enix president Yosuke Matsuda and Ubisoft Strategic Innovation Lab VP Nicolas Pouard highlighted this as a major innovation of NFTs.

A less than successful venture

This all sounds well and good on paper, but it ultimately does not mean much if players aren’t interested. The results of companies’ NFT ventures so far certainly suggest this is the case. Two weeks after Ubisoft announced it would include NFTs in Tom Clancy’s Ghost Recon Breakpoint, the company only managed to sell a measly 15 NFTs. The backlash to developer GSC Game World’s desire to include NFTs in STALKER 2 became so severe that the studio ended up reversing its decision outright. Smaller, dedicated NFT games, such as Axie Infinity, have found more success, but major companies have not gotten anywhere close to cracking the code yet. Valve’s decision to ban the sale of NFTs and blockchain games on Steam only makes things more complicated for major studios.

Stalker 2 NFTs gaming

The potential pros of NFTs

So if NFTs are this widely loathed by the gaming community, then what do proponents of this emerging technology see in it? Well, as mentioned before, the earning potential of NFTs is certainly one benefit, as is their ability to tangibly reward players simply by engaging with certain games. Another potential benefit is that they could allow developers to facilitate the transfer of items and other forms of content from one game to another. Traditionally, items obtained within a certain game could not be used outside of it, but this could change with NFTs as long as the developer puts out multiple NFT-compatible games or makes deals with other companies to allow for cross-game transfers.

CMO of Novo Studios, Devin Nash, suggests that studios could allow players to vote on or influence company decisions by purchasing certain NFTs. Granted, people can simply buy company stock to attempt the same thing, and it skews the voting power of players toward those with more disposable income, but it’s an interesting suggestion nonetheless.

But it’s important to note that the current opposition to NFTs did not come from nowhere. A number of holes in the way that NFTs function have been pointed out, and several concerns have been raised over how developers would go about designing games around these tokens.

The eternal grind

Ideally, developers would make NFTs an entirely optional aspect of their games, and players would not gain a demonstrable advantage simply for buying them. But as the deluge of microtransactions and “pay-to-win” games that dropped within the past decade or so have shown us, many developers are all too willing to design games in such a way that they incentivize players to spend money as often as possible. Developers often accomplish this by making progression excessively slow or reliant on grinding unless players pay up. One can easily imagine a game that makes a required level cap incredibly time-consuming to reach without buying a powerful, stat-boosting NFT item.

In fact, we don’t need to spend much time imagining such as scenario at all, as something like this has already happened. The aforementioned Ghost Recon Breakpoint includes an in-game cosmetic NFT called “Wolf Enhanced Helmet A,” and there are only 250 of them available to obtain. Players can sell this helmet to others online, but to even get it in the first place, they need to spend 600 hours playing the game. This item has no real gameplay function, so it doesn’t really qualify as “pay-to-win.” But dedicating 25 full days of one’s life to Ghost Recon Breakpoint just to obtain one cosmetic is a commitment that just isn’t realistic for most people. If NFTs become widely adopted, then there is little reason to assume that developers will refrain from using them in even more predatory ways in the future.

NFTs gaming Ghost Recon

The blockchain is not invincible

Another major problem associated with NFTs and the blockchain in general has to do with their vulnerability to hacks. Proponents of blockchains claim that their often decentralized nature makes hacking them difficult to impossible, but that has not proven to be the case. It is easy to accidentally leave behind vulnerabilities in security when developing a particularly complex blockchain system. And when certain NFT marketplaces, such as OpenSea, give users complete control over their NFTs and finances, the security risks become that much bigger.

These risks have become especially important to consider in light of a recent incident in which an art gallery owner had 15 NFTs, which were all together worth $2.2 million USD, stolen from him. Gaming enthusiasts have already experienced systemwide hacks in the past, so situations in which a hacker steals massive amounts of NFTs from players are far from an impossibility.

What do NFT consumers actually own?

Even the notion that players can “own” NFTs is a bit misleading. Digital items are rarely permanently stored directly in the blockchain, as the process of doing so is incredibly difficult and data-intensive. Because of this, most NFT platforms simply resort to minting a link that directs users to the item and any information associated with it. This is why NFTs are often referred to as “certificates” rather than true digital assets; buyers of an NFT do not own the actual media upon purchase, and there is nothing prohibiting someone from copying the media through whatever means available to them.

But that’s not the worst of it. The aforementioned link, like any other, is tied to an online server, and if that server happens to go down, then the link becomes defunct. At that point, no one will be able to definitely prove who purchased the digital item or if it was the original work. And servers can go down for any number of reasons: the server could encounter a bug, the company hosting the server could go out of business, or the company could accidentally let the domain name expire.

An inherently unstable market

And even assuming the best-case scenario, where the servers manage to not encounter any problems, it will all be temporary. Online gaming servers that aren’t maintained by incredibly dedicated fan communities eventually get shut down. Player bases of specific games generally do not remain active forever, and companies will eventually decide that the costs necessary to keep these servers running are no longer worth it. Once that happens, all of the NFTs that players of that game have invested in will become essentially unusable, and all of the time and money that players spent on them will have practically gone to waste. It does not seem like many proponents of NFTs in gaming have seriously considered these long-term implications, which is strange since examples of online gaming servers going down have been all too common during the past several years.

Disregarding that, though, some have mentioned that if an NFT accidentally gets lost, then the creator could simply copy the NFT and resell it on another platform or on the original server if it comes back up. In the case of gaming, this would mostly apply to user-generated content, and the creator could only resell the NFT on another platform if that content was compatible with it.

NFTs gaming Wolf Enhanced Helmet

Not only is it far from certain that a resold NFT will make just as much money as the original one, but it also highlights the absurdity of the whole concept. An NFT is supposed to be valuable due to its imagined rarity, and yet people can just make another copy of it if something goes wrong. People see genuine value in physical scarcity because it is a real, tangible thing. Digital scarcity, on the other hand, is not real; it can only ever be artificially imposed, and NFTs do nothing to change this.

How significant is the opposition?

Even though the opposition to NFTs among the gaming public remains quite significant, research has implied that this opposition is not as widespread as it appears to be. According to a recent study by Interpret, around 56% of surveyed players have expressed interest in the idea of obtaining NFTs through gaming. This study suggests, at least at first glance, that once the initial backlash to NFTs begins to subside, the majority of players will warm up to them and embrace them moving forward.

However, there is a crucial question that this study does not answer: players may be interested in earning NFTs in games, but are they interested in purchasing them? The study’s finding that 53% of surveyed players prioritize the act of earning NFTs over the ability to sell and trade them makes this question especially important to consider. The idea of owning rare, unique digital assets certainly sounds appealing on paper, but there is a significant possibility that the novelty of NFT ownership will wear off for players once prices are factored into the equation.

A digital item’s value is entirely subjective, and many players will not necessarily see the value in spending large amounts of money on NFTs just because they’re rare. This represents one of the major reasons why NFTs make for such a volatile market; when the price of an NFT exceeds the value that customers see in it, then how can anyone feasibly continue profiting off of it?

An uncertain future

Ultimately, it is impossible to know for sure what the future of gaming will look like if NFTs become the norm. But judging by the current structure of NFTs and the blockchain as well as the ways in which the NFT market has panned out so far, there is every reason to be skeptical of the rosy rhetoric coming from the technology’s proponents. NFTs could easily turn certain games into grind-heavy slogs, and the markets they foster simply won’t be viable in the long term. It remains possible that technology will progress in ways that address many of the current flaws with NFTs and the blockchain, but for now, players are probably better off not bothering.

NFTs gaming Blankos

https://www.pcinvasion.com/debate-nfts-rages-might-impact-gaming/ The debate over NFTs rages on — How might they impact gaming?

TaraSubramaniam

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