NFT101: What are NFTs, and How are They Impacting the Gaming Industry
If you have been snooping around the crypto space in recent weeks, you may have heard about NFTs (non-fungible tokens). The hype started with mentions of people selling tweets, JPGs, GIFs for unbelievable sums of money. So, you may be wondering - what exactly is an NFT?
An NFT is basically any item that exists on the blockchain that can be authenticated digitally. The blockchain verifies the ownership of the asset. These tokens are called non-fungible because, unlike cryptocurrencies, they are all unique, and they cannot be traded in 'like' terms at the NFT marketplace.
This uniqueness is what makes NFTs desirable. This is where we introduce NFTs in the gaming industry. You may have heard about Cryptokitties, digitally-bred cats that are considered collectibles. This aspect makes them valuable in the market.
Now that you know what defines NFTs, we can now look at how these rare tokens affect the online gaming industry.
The Benefits of NFT Tokens in the Gaming Industry
The majority of NFTs use the Ethereum ERC-721 token standard. However, they can also be found on other networks such as EOS Knights, Blockchain Cuties, and Blocklords. The benefits of decentralizing the online gaming industry through NFTs include:
Ownership: in traditional gaming, purchases are made once and are non-transferable between games. However, in NFT-powered gaming, players have a privilege to the assets, and they can even resell them to other players or transfer them to other related games.
Rare: the one thing that collectors look for is scarcity and authenticity. By making in-game NFT purchases rare, a gamer can hold a rare asset that will be embedded on the underlying blockchain. The public Ledger will validate the unique nature of the NFT and its ownership.
Interoperability: traditional games are found on centralized servers, and hence in-game purchases are found in proprietary systems that do not communicate with each other. Games based on NFTs are decentralized and found on independent blockchains. For example, two games based on Ethereum can support similar purchases, including characters.
Immutability: NFT online gaming protects user in-app purchases. When traditional games are shut down, the players can lose all their in-game purchases. However, with NFT games, one can still trade the assets regardless of what happens to the game. Blockchain-based games are also not duplicable.
Not an All Rosy Affair
Many benefits arise from using NFTs in the gaming industry. However, these benefits don’t come without limitations. The most significant drawback of the technology is its non-recoverable nature. This means that when you lose the wallet where your NFT is stored, there is a very slim chance that you can recover it.
For this reason, you need to value their NFTs in the same way as any other valuable assets you own. You, therefore, have to ensure that your digital assets are protected.
The other drawback of NFTs is that there is a high cost associated with the same. To use the blockchain network, one needs to pay transaction fees and additional costs that can be high.
When using the Ethereum blockchain to launch your online games, you will be charged a “gas fee.” At the moment, these fees can be extremely high. However, Ethereum is looking to shift to a layer 2 solution that is cheaper and more scalable.
NFTs Shaping the Future of the Blockchain Gaming Industry
While the benefits of adopting NFTs in the gaming industry outweigh the limitations, it is also crucial to evaluate how the future looks for this sector. One major issue that needs to be addressed is equipping consumers with the required knowledge. While NFTs are a booming market right now, most people do not know what the concept is supposed to represent and are here just for the quick profits.
NFTs are also similar to all other crypto assets. This means that some gamers will purchase in-game assets and hold them for speculative reasons. If this is adopted by many gamers, it may potentially cause a crash in the industry. Furthermore, it may even affect the NFT gaming sector as a whole in the end.
Even with the aforementioned limitations, NFT implementation in the gaming industry is certainly a concept worth considering. Gaming DApps are becoming increasingly more successful, which will further boost the development of the NFT market’s infrastructure, as well as promote innovative solutions for the industry.
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