I’m confident that I’ll know inner peace again one day, and that day will come when I can go at least a week without hearing about NFTs. Right now it’s hard to go a single day without some NFT chatter popping up: a new tech company rolling out NFT avatars, a videogame executive bullish on NFTs and the metaverse, a startup angel investor posting a word salad tweet thread about how they’ll change art as we know it.
For the biggest buzzword in tech today, there’s little real substance to NFTs so far—at least when it comes to gaming. Discord walked back NFT plans after a very loud community outcry. Ubisoft’s first NFTs saw it merely dipping in a toe with one of its least popular games. Konami basically sold some animated gifs .
And once you look at the games built around cryptocurrency and NFTs that are playable now, there’s even more reason to be skeptical. If this is the future of gaming, we’re going to be spending a lot less time playing games and a lot more time trying to sell each other stuff. Okay, what’s an NFT again?
NFTs, or non-fungible tokens, are meant to be one-of-a-kind digital goods. Money is fungible, meaning it can be substituted for another identical item; one $5 bill is the same as another. The whole pitch for NFTs is that they’re unique digital items. A token, as defined by NFT marketplace OpenSea , is “a digital certificate stored on a publicly verifiable distributed database” called a blockchain. The information contained in that certificate or “smart contract” is what makes an NFT unique.
In practice, the distinction between an NFT’s certificate (that bit of data that says “You own this digital good”) and the digital good itself (a drawing of an ape, most commonly) has been messy. If you see people joking about NFTs being right-clickable JPEGs, this is what they’re talking about—despite the certificate saying you own a one-of-a-kind digital good, someone can still easily make a copy of the image it represents.
Critics of NFTs point out that NFTs are harmful to the environment because blockchain transactions are mostly done via a mechanism called “proof-of-work” tied to cryptocurrency mining—essentially, computers doing math problems to verify transactions. This consumes a lot of energy. Ethereum, the underlying cryptocurrency most NFTs are currently based on, will supposedly be transitioning to a more energy efficient “proof-of-stake system,” but it hasn’t happened yet.
That tension between an NFT’s proof of ownership and the JPEG anyone can copy is a bit different when we’re talking about videogames, though. The pitch is that NFTs could be used to represent unique in-game skins or items that you could own, and that it could then be possible to sell those items to other players or even carry them between games.
So… how would that work? Are NFTs basically just DLC?
(Image credit: Ubisoft) For games, how is an NFT different from any other microtransaction?
The key distinction between an NFT and the kind of downloadable content we’ve been buying in games for years is the blockchain.
When you buy a skin in a game today, the record of your ownership is tied to an account: It could be specific to that game, or a bigger one like an account you use for all Ubisoft games. The game developer has complete control over how that DLC works: how it authenticates your ownership, the server you download it from, and how the item is implemented in the game. The way a skin or a health potion is represented in one game may be totally different in another, depending on how they were programmed.
NFTs introduce an external element. Hypothetically, rather than your Ubisoft account data telling Rainbow Six Siege that you own a certain Hibana skin, the game would find out what you own by checking with an external blockchain. If you wanted to, you could transfer that skin—or, more accurately, the NFT that says you own it—to someone else, and Siege would then be able to check the blockchain to see that they now own it, and you don’t. Many of the pitches for NFT games are described as “play-to-earn,” since the NFTs you gain while playing could hypothetically be sold to other players for cryptocurrency which has real world value, assuming there are other players who want to spend money on them. There’s also the idea that by using the blockchain to verify these unique items, they could be interoperable between many different games.
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