What are NFT games?

Non-fungible tokens (NFTs) have revolutionised not only our concept of digital ownership but also the gaming industry. NFT games, often referred to as “crypto games,” leverage blockchain technology to interact with players within and beyond digital worlds, enabling the trading of digital assets. But how do NFT games work, and what are their benefits and challenges? Find out all this and more here.

How NFT games work

NFT games are video games that integrate NFTs into their gameplay and digital ecosystem. Blockchain technology is used to create unique digital assets that players can own, trade, and often earn by playing certain NFT games. These tokens can include digital characters, equipment, land, in-game items, and collectibles.

How NFTs are used in games

In traditional video games, items and characters are typically tied to the player’s account and cannot be traded outside the game. NFTs, however, give players genuine ownership rights to these digital assets, allowing them to trade them on various platforms and marketplaces.

This introduces a new level of interaction and monetisation within the game world. Some games exclusively use NFTs in their rules, mechanics, and player interactions, enabling the creation and exchange of unique game characters and items.

Ownership and trading in NFT games

In NFT games, players truly own their digital assets, which are securely and verifiably theirs. Blockchain technology ensures the uniqueness and transaction history of these assets can always be reviewed and confirmed.

These assets can be traded on NFT marketplaces like OpenSea and Rarible, or even directly within the game itself. This creates a self-sustaining economy where players can generate income by trading and selling their assets. Some NFT games also incorporate decentralised finance (DeFi) elements such as staking and yield farming, offering additional revenue opportunities.

NFT marketplaces and gaming

NFT marketplaces play a central role in the NFT gaming ecosystem, facilitating the buying, selling, and trading of digital assets. Notable marketplaces include:

• OpenSea: One of the largest and most popular NFT marketplaces, where players can trade NFTs like art, collectibles, and in-game items.

• Rarible: A marketplace with community governance, allowing users to earn and use RARI tokens to vote on platform updates.

• Decentraland Marketplace: A platform for trading virtual land and items used within the Decentraland universe to create and monetise virtual experiences.

In-game currencies and rewards

NFTs can also serve as in-game currency or rewards for achieving specific objectives, completing quests, or winning competitions. Players can sell these NFTs on marketplaces or use them in other games, offering additional earning opportunities and gameplay options.

Many NFT games adopt a play-to-earn (P2E) model, where players earn tokens and NFTs simply by playing. This model is gaining popularity as developers seek to increase player engagement and enhance value creation within their games.

Integration of smart contracts

Smart contracts—self-executing agreements stored on the blockchain—play a critical role in NFT games by ensuring secure and transparent transactions. For example, when a player buys or sells an NFT, a smart contract automatically enforces the agreed terms of the transaction.

Examples of NFT game mechanics

Popular NFT games often feature unique mechanics that enhance gameplay while offering financial opportunities. Examples include:

• Axie Infinity: Players breed and battle creatures called Axies, each of which is an NFT with distinct attributes and abilities.

• Decentraland: A virtual real estate game where players can buy and develop parcels of land as NFTs.

• The Sandbox: Players create, own, and monetise virtual land and game content.

• CryptoKitties: A game where players breed digital cats with unique genetic traits, resulting in rare and valuable NFTs.

Benefits of NFTs in gaming

The integration of NFTs in games offers numerous advantages for both players and developers:

• Ownership and control: Players truly own their digital assets and can trade them independently of the game, protecting and maximising their investments.

• Earning potential: By playing and trading NFTs, players can generate real income, creating new economic opportunities and incentives to improve their skills.

• Enhanced gameplay mechanics: NFTs enable personalised gaming experiences, allowing players to create and customise unique items and characters that hold value across the game world.

• Sustainable economies: NFT games foster virtual economies where players are rewarded for trading and in-game activities, potentially extending the lifespan of the game.

Challenges and controversies surrounding NFT games

Despite their advantages, NFT games face several challenges and controversies:

• Ethics and economy: The monetisation of gameplay can create inequalities, as players with greater financial resources often gain competitive advantages.

• Security: Blockchain integration introduces risks like fraudulent transactions and hacking. Players need to adopt measures like secure wallets and two-factor authentication.

• Environmental impact: The computing power required for NFT creation and trading leads to high energy consumption, though solutions like Proof of Stake (PoS) are reducing this impact.

• Market volatility: The value of NFTs is subject to significant fluctuations, presenting financial risks for players.

• Regulatory uncertainty: The NFT and cryptocurrency market lacks clear consumer protection regulations, adding to its complexity.

What do players think?

Player opinions about NFT games are as diverse as the games themselves. Many appreciate the opportunity to own their in-game items and trade them on marketplaces, viewing it as a way to monetise their investments and skills.

However, others express concerns about the commercialisation of gaming and the inequalities NFTs may introduce. The idea that financial resources can provide advantages in the game has led to criticism about fairness and the potential erosion of gaming culture.

The future of NFT games

The future of NFT games promises exciting developments. As technologies like improved blockchain interoperability and energy-efficient protocols advance, NFT games are rapidly evolving.

Key trends include:

• Cross-game interoperability: Players will be able to use NFTs across multiple games for a seamless experience and increased value.

• Augmented and virtual reality: AR and VR will enable more immersive gameplay and interactive experiences in NFT games.

• Decentralised autonomous organisations (DAOs): Players and communities will gain more influence over game development and management, creating democratic and transparent environments.

• Expanded monetisation models: New strategies like renting and leasing NFTs could provide additional income streams for players and developers.

• Artificial intelligence (AI): AI will lead to more dynamic NFT games, allowing for real-time personalisation and optimisation of game content.

• Social media integration: Games may incorporate social features, enabling players to share achievements, connect, and engage in collaborative activities.

Integration into the mainstream

As NFTs and blockchain technology gain acceptance, NFT games are also becoming more mainstream. Integration into established gaming platforms and partnerships with major game studios hold the potential to attract broader audiences and introduce new business models.

However, strong reservations remain, including concerns about environmental impact, fraud risks, and excessive monetisation. Overcoming these challenges is crucial for NFT games to become a part of mainstream gaming culture.

Conclusion

The future of NFT games is bright, offering creative and profitable opportunities through innovations like augmented reality, AI, and cross-play functionality. Developers are continually exploring new mechanics and design approaches to enrich and personalise the gaming experience.

Nonetheless, players should remain aware of the risks associated with NFT games, including market volatility and fraud. A responsible approach to exploring these new forms of digital interaction ensures that fun and innovation go hand in hand, building trust and fostering the growth of NFT gaming in the mainstream.