This year has brought NFTs into the limelight (again), not only in the crypto community but worldwide. With rising valuations and high-profile purchases, NFTs has gotten mainstream media coverage and even featured heavily in a recent special of South Park. Crypto games such as Axie Infinity have made crypto gaming if not mainstream then at least far more distributed than any crypto game before. This has resulted in crypto gaming and NFTs being an unavoidable topic for mainstream gamers.
Unfortunately, mainstream attention does little to explain the underlying technology – and most people outside (and probably quite a few within) crypto do not quite understand how it’s made possible as well as what the longer-term implications are.
Currently, traditional game studios are both seeking out opportunities and being bombarded with interest from crypto entrepreneurs and their backers. Indie studios are usually small, with grassroots ideals focused on creative quality and innovation rather than maximizing the profitability of their operations. To them, it’s natural that the NFT craze appears to be exploitive cash-grabs with no real interest in making better games.
The antipathy, nay, hate! towards crypto gaming has grown to epic proportions in Discords, on Twitter and Reddit across the internet recently. After Ubisoft announced their NFT platform Quartz at the beginning of December, the release trailer on YouTube had a 96% dislike ratio and was taken down.
However, the arguments brought forward are almost always rooted in technological misconceptions. Gamers and indie devs with little exposure or knowledge of crypto seem to have a hard time understanding exactly what NFTs are. Can crypto gaming even attempt to convert mainstream gamers to crypto gamers when the mob has dug their trenches and refuse to learn?
Let’s take look at the main arguments used by gamers (and gamedevs) against NFTs – both in general, and specifically for inclusion in games:
1. If you buy an NFT then you only get an image – which is stupid when you can just right click and save it
Many gamers think NFTs are literally just a URL to an image – at a centralized server at that! But NFTs are a data object of custom metadata with clear and transferable ownership – the data can be anything. In some cases, yes – developers are hosting it on a server – but assets utilizing IPFS, Filecoin or similar networks counter that.
Verdict: FALSE
2. You come for the entertainment but NFTs in games destroys all the fun of it
Can games still be fun when introducing real money into some or even all aspects of a game? How fun is Second Life, really? There’s myriads of game types and categories, and although NFTs may not be right for every single existing genre, it also creates new opportunities, especially for virtual economies/worlds.
So, some games with NFTs are more fun than others. That’s also true for games without NFTs.
Verdict: FALSE
3. It’s not true that you can take an NFT from one game to another – and it's nothing that developers would want to do anyway
Interoperability is more of a vague promise than a guarantee at this point, so this is not a completely honest statement. It is however a complicated issue and has numerous challenges. The challenges are not so much related to the graphical assets as it relates to specific implementation rules within each specific game. How does different types of NFT metadata decide/influence stats in the game? Are there unique graphical needs to cater for? Then you have questions such as “Why would Mickey Mouse be allowed into CS:GO?” remain unanswered and highlight the importance for a game to retain its environment and inner logic and not allow its players just anything that would ruin the immersion for others. It’s however an important piece of the metaverse puzzle and will most likely see blazing development over the years to come.
Verdict: TRUE – FOR NOW
(If I’m wrong, let me know about it)
4. As a studio - why would I enable someone else’s NFT in my game? I have no incentive.
This is directly related to incentive structures and business models in the metaverse to come. Commercial products would both require taxonomies, standardization and a business model that makes sense. Although competition is strong between crypto projects, the whole community has answered a call to arms to oppose centralized control from actors such as Meta and Microsoft. Success would depend upon successful incentives that work for all actors in the system.
Verdict: TRUE
5. Crypto is bad for the environment
Everyone has heard the stories of Bitcoin spending more energy than the country of Malaysia – the perception that crypto is a big waste of energy is widespread. However, the industry has moved away from energy-thirsty mining to variations of proof-of-stake, where network nodes can run on even on cheap $30 Raspberry PIs using hardly any power at all. Ethereum, the number 2 network after Bitcoin by valuation, is currently undergoing a transition that will reduce its energy spend by 99.95%. Bitcoin is still clinging onto its current mining, but nearly every other significant network protocol today has a sustainable computing approach.
Verdict: FALSE
6. Crypto steals all the graphics card for mining
Analysts claim that mining may be responsible for as much as 15-20% of all GPU sales in 2021. However, both a pandemic and supply-chain interruptions contribute to a “perfect storm”, making GPU-boards hard to track down and sending prices to the moon.
The bright side is that cards previously used for mining will flood the market as Ethereum finally turn off PoW-mining in 2022. This should contribute to significantly lower prices for GPU-cards again.
It’s not “all cards”, but mining is certainly one of several contributing factors right now.
Verdict: FALSE
7. NFTs doesn’t solve a real problem (in games)
Many gamers and game devs don’t have a problem with the way games are made and play today and evaluate NFTs as technology from the perspective of existing games. However, NFTs, crypto assets and decentralized governance instead create new opportunities. It’s especially well-suited to expanding the boundaries of free-to-play into Play2Earn territory, as well as creating new genres relying on player-owned virtual economies. During the next few years, we will see explosive innovation in this space.
Verdict: FALSE – MISSING THE POINT
8. There’s already existing technology that can be used instead of NFTs
Devs are used to the traditional client, server, and database architecture. However, many fail to grasp the benefits that user asset control, transparency and decentralized governance can bring to games. It’s not needed for every type of game, but it is certainly enabling technology for new types of games and game communities. So, no – it’s not “the same” as the traditional architecture.
Verdict: FALSE
9. All NFT-games are Ponzi-schemes depending on new players coming in until it all collapses
A Ponzi-scheme tries to defraud investors by paying out returns generated from new investors without exposing the true source of the yield generation. A bubble, however, sees inflated asset prices – driven by speculation to price levels that are unsustainable in the long run. Too few understand this important difference between very different beasts.
The tokenomics of crypto games vary greatly. If assets are plagued with faux scarcity, through distribution or mining rules, it risks becoming on object of intense speculative exuberance. This may certainly lead to great risk of a bubble with an unavoidable burst. Just as in the traditional financial markets, a game economy needs to have balance – either by its design, or through decentralized governance to stay true to the ethos.
There have been numerous examples of flawed virtual economies due to unbalanced sinks and faucets for asset supplies in the early days of MMOs. There is however no reason to believe that this won’t be solved in games utilizing NFTs and crypto assets.
There are many NFT-games with bubble-like conditions, either by design or through inconsiderate tokenomics design. This is, however, markedly different from a Ponzi-scheme – which is outright fraud.
Verdict: FALSE - BUT THERE ARE BUBBLES
10. The ownership isn’t real because the jpegs are stored on a server and not decentralized
NFTs are fully decentralized when ownership, metadata and the relevant asset(s) is stored on one or several decentralized networks. This is not true for all NFTs, as many older NFTs relied on URLs. Lately it has become best practice to ensure assets are stored on true decentralized file networks such as IPFS.
Verdict: FALSE
11. NFT games are not fully decentralized because the developer still owns and operates game servers
Depending on the type of game, backend services are often needed to improve the performance of clients. This can be running a full node with API access, caching of file storage, or other types of services such as chat, matchmaking, analysis, and stats aggregation – all depending on the type of game. However, the source code to operate a server should be open source, and the game client should offer flexibility choosing between community-operated backends to make the game more resilient. It’s still early days for many crypto games in this regard, but strides are being made and the ambitions are clear: Crypto games will become fully decentralized.
Verdict: TRUE – BUT IMPROVING
12. NFTs are destroying artists livelihood by stealing their art
Blaming NFTs for people defrauding artists by stealing and minting their art is like blaming internet companies for the existence of dark markets. Whenever new technology develops, some people will use it for fraud.
The emergence of secure, decentralized identities enables assured provenance for digital assets. This will be an important concept in the metaverse, where your avatar can be signed by a famous creator. The opportunities for artists and other creators from this technology have already been proven in the NFT art scene – and validated by the likes of renowned auction house Christie’s.
The few examples of fraud do not alter the fact that NFTs are already enabling many artists around the world to live off their creations.
Verdict: FALSE
13. NFTs are just vehicles for money laundering
This is nothing more than the classical logical fallacy of confusing Correlation with Causation. Just because NFTs can be used for money laundering, does not mean it causes money laundering. In fact, no real-life examples of NFT money laundering can be found even if you search for it – only theoretical postulation.
Have you heard of money laundering with modern art in freeports, or are you perhaps familiar with the concept of cash smurfing? Banks are also regularly exposed to active participation in money laundering schemes.
Wherever there’s financial assets you can be certain that someone uses it for money laundering, and crypto is neither worse nor better in that regard.
Verdict: FALSE
14. Crypto games have no “reverse transaction”-button, so there can be no support to help players with problems, bugs or help if they’ve been scammed. Players are losing protection they’ve had for years in regular games!
Provided proper oversight, the immutability of crypto games still allows for support departments that may be allocated assets for compensating or otherwise helping players.
Verdict: FALSE
Conclusion
Many of the arguments brought forward by zealous gamers on a crusade against NFTs stem from a lack of knowledge or imagination. There is a clear tendency to blame NFTs for many things that certainly could be improved in the crypto sphere, but where NFTs themselves are not the cause.
Mainstream gamers should not put all crypto projects in the same basket. It’s true that many projects are or may seem exploitive of investors and VCs chasing “the next big thing”, but that’s missing all the projects researching how new technology can be applied in a gaming context – experimenting with new business models that may ultimately suit indie developers far better than the EAs and Ubisofts of the world.
Also, many gamers lose sight of the fact that crypto has strong roots in the open-source scene. This is still the early days of a nascent technology that creates new, disruptive community-oriented game categories.
Do you agree or disagree with me? Hit me up on Twitter – I welcome your comments.
