There is a new trend in gaming: the blockchain and in particular the NFT (Non Fungible Token). There are now some companies that rely on NFT and are considered “unicorns”: they have a market value of over US$1 billion. Even large, established publishers are flirting with NFT. What’s behind?
What are NFTs really? NFT is the abbreviation of “Non Fungible Token”. It is a protected digital object based on blockchain technology. Cryptocurrencies such as Ethereum or Bitcoin are also blockchain-based.
An NFT is something like a limited digital collectible. It can be photos, videos, audio files or any other type of digital data.
Essentially, an NFT can be considered an artwork signed by the artist as “Original”:
- Without a signature, a file is basically worthless because it can be duplicated at will
- With the signature, it becomes an “authentic” work that has the value that others attribute to it.
Just as a famous painting can be auctioned at an auction, NFTs are also offered on auction sites: An NFT is then, for example, the image of a pixel monkey, these are the clips from a twitch streamer like Indiefoxx (cover image) or is it a video that shows how a basketball star dives spectacularly.
Like other collectibles, NFTs are treated by some as an “investment”: you buy a work of art with the belief that it will increase in value and you can resell it later for more money – a kind of like stocks going up in value. or may fall.
WoW: This 27-year-old player became a billionaire because Blizzard nerfed a hero 12 years ago
Investor pays nearly $70 million for digital artwork as NFT
What is the most expensive NFT sold to date? In 2021, the work “Everdays: The First 5000 Days” was auctioned at Christie’s auction house. It reached a value of 69.3 million US dollars, the artwork was paid for in ether currency (via Twitter).
A crypto programmer and investor from Singapore had donated the artwork, which is a collage of 5,000 digital images by artist Mike “Beeple” Winkelmann.
NFT is the new trend in gaming – it’s about huge sums of money
What does this have to do with the game? “NFT” and “blockchain” are considered to be the next big thing in gaming in 2021. There are several new companies developing games based on blockchain technology in the United States.
As the business site Venturebeat reports, there are already 4 gaming companies that have achieved unicorn status. This is what it is called when a young company is already worth more than a billion US dollars. These are the companies Animoca Brands, Mythical Games, Dapper Labs and Sky Mavis.
The company “Forte” was founded only two years ago. It wants to be a platform that allows other studios to develop blockchain games and provides them with the technology to do so. During an investment round, Forte was valued at $725 million.
For a young company to score such a high rating in such a short period of time shows how huge amounts of money are currently being invested in this business model and topic.
Own items – instead of just renting them
Why do you think this model makes so much money? Essentially, thanks to blockchain and NFT, players can now create value in a game that lasts and that players truly own:
- Typically, a player can only put money into a game by purchasing it, paying for a subscription, or purchasing items at the cashier. However, the items do not belong to the player: one particularly strong item in Diablo 2 Resurrected remains in the possession of Blizzard. You are only “renting” the items.
- However, the NFT should make it possible to actually own a digital object and resell it to another actor, for example.
“Playing” to earn money – Games for earning and economics of leisure
The Venturebeat site speaks of a “leisure economy”: you can earn money with the game by creating or acquiring objects that you sell to others.
Blockchain and NFT are seen as a “next step” in gaming. Gaming is also seen as a lucrative market in the entertainment scene by investors outside the industry as it is growing rapidly. The market value of game companies is currently further increased by technology trends and buzzwords such as “Metaverse”.
A company like Roblox was worth more money on the stock market than an established company like Activision Blizzard.
Investors are therefore investing a lot of money in the “NFT” field – even established game studios are now repeatedly offered to become active in the “NFT” field:
- EA CEO Andrew WIlson called NFT and play-to-earn games “the future of the industry” (via PCGamer)
- Ubisoft boss Yves Guillemot thinks blockchain and gambling will help the industry grow (via vice).
At the same time, you can see how “gamers” should be addressed: there are already a few videos on YouTube that feature current “NFT games”. The videos aren’t about whether these games are good or bad – it’s about how to make money in these games.
Companies are also actively promoting NFT with promotional offers by targeting popular Twitch streamers and offering them outrageous money.
There is a lot of opposition to NFT, mainly for environmental reasons
What is the criticism of the NFT? The criticism of NFT is the same as that of blockchain technology:
It is generally criticized that a lot of real energy is used to create virtual objects – that is, the technology directly burdens the environment.
For example, a Wired article reported in 2019 that a Dutch artist who created and sold six NFTs used more electricity in the few moments of the auction than his studio would need in 2 years ( through wired).
This shocked the environmentally conscious artist:
NFT has also been criticized for being used in some “art scams” which ultimately cheated investors out of their money.
The Kotaku site quotes, among other things, heads of game studios who say: NFT companies have no idea and have no connection with gaming. It’s a bubble behind which there is a lot of money, but which lives on buzzwords like “NFT” or “Metaverse” that almost no investor really understands.
Game studios that adopted NFT would quickly say, “Oh my god, I don’t know how to make a game,” and then turn to more experienced studios (via Kotaku).
There is strong antipathy for NFT items among gamers in many places. A common counter-argument is that you should pay “a lot of money for a few pixels”. Because gamers don’t understand why a digital item should suddenly cost several hundreds or thousands of euros – they are used to “normal prices” in cash shops.
There are already horror stories about NFT investments that have massively lost value in a short period of time.
As is often the case with speculation. In the end, opinions differ widely:
- Some think NFTs are the “new thing”, they talk about exponential growth and huge increases in value. It is believed that all the problems associated with high electricity consumption would be solved if the industry completely switched to “green energy”.
- Others believe that NFT is a bubble that could burst at any moment. And given the environmental damage that NFT is currently causing, they hope so too.
In any case, NFTs are currently like a red rag for some players:
Dead by Daylight Sells Controversial NFT Killer – Players Find It ‘Darn Suspicious’