The gaming industry is undergoing rapid changes with the growth and evolution of new technologies, particularly blockchain and NFTs (non-fungible tokens). These cutting-edge technologies have the potential to revolutionize the way games are created, purchased, sold, and played. Blockchain technology can create new opportunities for building integrated in-game economies with real-world value and rewards, while NFTs can ensure secure digital ownership of virtual assets and game content. Read on for the latest insights on how blockchain technology will impact the future of your favorite games.
Leveraging the Power of Blockchain
Blockchain technology, with its distributed database system, provides a secure and transparent platform for transactions. The Ethereum Virtual Machine and smart contract capabilities enable the creation of decentralized applications (DApps) and automate various processes, making blockchain an excellent solution for the gaming industry.
With blockchain technology, game developers can establish trustless and decentralized ecosystems for secure player interaction while preserving player control over their data and digital assets.
NFTs Beyond Images
A non-fungible token (NFT) is a digital asset that is unique and not interchangeable with any other asset. It is stored on a blockchain and often used to represent ownership of digital art or other collectibles. Unlike traditional cryptocurrencies or other “fungible” tokens, NFTs cannot be divided into smaller units. This gives NFTs a unique and individual value.
While NFTs are often associated with images, such as JPEGs, they can also represent other forms of digital content, including in-game assets or even complete games. The main advantage of NFTs is their ability to provide dependable ownership and authenticity verification for digital assets, a previously difficult task. This opens up new monetization opportunities for game developers and grants players true ownership of their virtual possessions.
As a decentralized public ledger, blockchain is also well-suited for protecting intellectual property (IP) and combating piracy. Tokenizing each copy of a game as an NFT creates tamper-proof records that demonstrate ownership and prevent illegal copying and distribution. The losses from global online piracy, which reach anywhere from $29.2 to $71 billion in lost domestic revenue annually, is a driving force behind the growing interest of gaming companies in NFTs and blockchain technology.
Power To The Players
For avid video game players, in-game assets play a significant role in their gaming experience. These digital items, including weapons, armor, and cosmetic items that alter a player’s appearance, often hold real-world value, with players willing to pay substantial amounts of money to obtain them.
Until recently, gamers had no way to truly own in-game assets. They could only access them while playing the game. However, with the advent of blockchain technology and Non-Fungible Tokens (NFTs), that is starting to change. NFTs allow gamers to own and transact their in-game assets and have a positive impact on the gaming industry as a whole.
The incorporation of non-fungible tokens enhances the gaming experience for players. NFTs add a new layer of excitement by enabling players to trade and sell various in-game items and features. They can also serve as a reward for player achievements, contributions, and event attendance, keeping players engaged and motivated to spend more time and money on the game.
Unlocking True Digital Ownership
It’s important to understand that NFTs operate differently than other digital assets. Currently, game assets are only accessible through the game developer or servers, which imposes restrictions on gamers as these assets are tied solely to the game and exist solely in the “game world”. In the event that the servers shut down or the game is discontinued, these assets will cease to exist.
Gamers globally spend billions of dollars on games and in-game assets every year. Despite the substantial investment, gamers do not possess these assets in the same way as physical goods. Instead, they are paying for temporary access to the assets while playing the game. This hinders the growth of a thriving and sustainable in game market that would enable gamers to freely trade and sell their assets.
In comparison, NFTs are stored on the blockchain and can be retrieved by their owners, regardless of the game servers. Gamers no longer have to worry about losing access to their valuable in-game assets. If the servers shut down or the game is discontinued, the assets will still be stored on the blockchain, which can be accessed through a personal wallet. This opens new opportunities for assets to be sold in the secondary market or even transferred between games.
Whether it’s a magical home, health potion, legendary armor, or a pet hippopotamus, all in-game assets can be tokenized to give players true ownership.
The Potential of Secondary Markets
Some argue that game developers may resist allowing players to sell their game assets on secondary markets, instead preferring to limit sales to primary markets. They fear that they will make less revenue if players can trade and resell games. However, trading and sharing games from a single license or copy is a common practice in the gaming industry, and secondary market sales have always existed. Gamers still search pawn shops and second-hand markets for games that were made 20-30 years ago, yet game creators receive no additional revenue after the initial purchase.
NFTs offer a solution for creators to benefit from secondary markets through royalties that pay out every time an asset is sold. This solution applies to games and in-game assets. To maximize secondary market revenue for digital collectables, some adjustments to the model may be necessary, including the introduction or increase of scarcity.
Games could offer limited-edition cosmetic loadouts or weapons instead of an infinite number of duplicates that anyone can buy for $20. This would create scarcity and allow creators to charge more for the initial sale. The scarcity would also boost the value of items on the secondary market, attracting players who missed out on the original run. By taking a percentage on every secondary market sale through royalties, the creator benefits from the scarcity as well.
Stepping Up In Game Economies
The gaming industry has already seen the success of player-driven game economies, such as in World of Warcraft and Path of Exile. Enabling players to trade and sell their in-game assets through NFTs would provide an opportunity for additional revenue and engagement. Gamers would be more likely to invest in games and in-game assets if they knew they had the option of selling them on the secondary market. This would not only allow players to explore more options within the game but also provide continued revenue for game developers through subsequent sales. Players experiencing more for their money and value that would otherwise be lost is recycled
Non-fungible tokens are a relatively new development in the world of gaming and the true impact is still being assessed. However, given that they are such a powerful tool for enabling the ownership and trade of unique digital assets, and are likely to continue to grow in popularity in the future.
Maximizing Gaming Experiences through Tokenization
Blockchain technology in the gaming industry offers more than just NFTs. Another significant application is tokenizing in-game currency. By issuing in-game currency as fungible tokens on the blockchain, players can own and control it in the same way as physical currency. This allows them to trade and exchange with other players in a decentralized and open manner.
Developers can create even more engagement by awarding players with fungible tokens for completing tasks or in-game achievements. In-game currencies and collectables are not a new concept, but with tokenization, the native currencies from different games could become interchangeable. Players could withdraw the native currency from one game, exchange it for the native currency of another at market rate, and take advantage of other opportunities in the market.
Players could spend their in-game currency in the game itself, in third-party marketplaces, or even cash out through regulated exchanges. It’s unlikely that players will become rich or even earn a living solely by playing games. However, giving them the option to sell their unused digital assets and earn tokens for their time spent playing can help them extend their gaming budget and experience.
The Future of Tokenized Gaming
Non-Fungible Tokens (NFTs) and blockchain technology promise to revolutionize the gaming industry with numerous benefits for both players and game creators. NFTs and blockchain empower players by allowing them to truly own their in-game assets and trade them freely, giving them greater control over their digital assets and creating new monetization opportunities. This energizes the in-game economy and generates new revenue models for game creators through secondary sales and royalties.
NFTs and blockchain in gaming also help bridge the gap between gaming and reality, preparing players for the multiverse integration and true virtual reality. As players get used to owning and trading digital assets across games and the real world using blockchain technology, they become better equipped to participate in and benefit from the emerging multiverse economy, where virtual and tangible assets are interconnecting. This opens up new possibilities for cross-platform collaboration and interaction.
The use of NFTs and blockchain technology in the gaming industry will be a major trend in the coming years with significant implications for the future. This will create a more dynamic and vibrant gaming ecosystem and open up new opportunities for players and game creators.