Games Gurus: What Role Do NFTs Play In Games?

Blockchain, whether it’s cryptocurrency, or non-fungible tokens (NFTs), have been around for several years now. However distributed ledger technology has recently hit new heights upon the Gartner hype curve, with funding deals, new games announced or published, and a dizzying amount of game content being turned into NFTs.

It has been hailed as a transformative technology, which will fundamentally disrupt the games sector and enable everything from play-to-earn games, through to the metaverse itself. It has also been dismissed as a pyramid scheme for suckers, with no redeeming value whatsoever, which is also killing the planet, pandas and eventually players.

We decided to ask the Game Gurus – the founders and leaders of the games businesses across Scotland for their thoughts on the role of blockchain and NFTs in games. Here are their replies:

Max Scott-Slade (Glitchers)

I think fundamentally the use of NFT’s is interesting, but not every item in games need to have value. By no means am I against the idea, but it’s important that the market economics required to actually build the functionality into games has to be considered and truly baked into the concept for it to make sense.

The limiting factor is when gameplay is wholly ignored for the sake of implementing a new technology. These types of products are merely proof of concept, but the future iterations need to be completely managed solutions with lots of flexibility for developers to keep focusing on gameplay.

I do quite like the idea of people having to effectively invest in the tokens to buy the NFT’s to get started. This is a really interesting new way to monetise players, or at least stimulate the player base, but I don’t like the tech heavy process required to make it all happen. There is such a huge barrier to entry for players: setting up wallets and transferring tokens between exchanges is a lot to ask from casual players. Then finally, there is the anticipation that the things people have bought are worth something.

Right now in the hype bubble, that might be true, but soon some stuff will be worthless and I do worry about people investing their time and money into something that has little to no value. I know that some onlookers will argue it’s better than buying a digital wheelbarrow in a free-to-play game that has no value whatsoever outside of the game you’re playing in — I tend to agree.

It will be an interesting future for players where digital and physical ‘anything’ can be attributed value on a blockchain, the handling of this stuff can be super interesting as it can be tracked, evolve over time and be transferable out of the game itself. I immediately thought of the weapon skins in CS:Go and all the exciting potential Valve has already explored for the rest of us to ‘borrow’ from.

In the end, it is exciting and as long as it compounds value for the player while at the same time improving the economics of game development — if those are both true, I’m in — and we should all be.

Nick Bell (Aetheric Games)

The topic gets me so riled up. It’s one of those things where I think “I can’t even believe we’re debating this.”

People always seem to focus on whether or not it’s a scam. Well of course it’s a scam, crypto is shady finance that was originally invented precisely for doing scummy things online, the whole point of it is that it’s unregulated libertarianism. That’s what it was invented for.

And that’s not even the conversation people should be having.

Every single game developer I know in real life or purely on social knows that NFTs in games is a terrible idea. It’s the worst kind of pay-to-win manipulative game design. The concept of game items that you own outside of or between games would need a shared tech framework to make it work, like a common format and protocol. If you have that, you don’t need NFTs. We haven’t added that to games yet for one reason, it would ruin games. You can’t design or balance a game to account for that. The problems with hardware availability are also not good for the games industry.

And that’s not even the conversation people should be having either.

Both of those debatable points above should fade into the background when we consider the environmental impacts. Crypto and NFTs waste an absurd amount of energy. That cool monkey profile pic or whatever, that costs upwards of 4 days of your household energy consumption. Having your WoW mount into GTA or whatever, that’s going to cost that and also more and more every time it’s validated. We, the human race, are not in a position to be creating new ways to burn more energy and output more CO2 or to find new reasons for harmful mineral extraction. Manmade climate change is undeniably real, and at a time when we are failing to handle it properly, along comes NFTs to use more energy to do something we don’t need or want.

The house is on fire, and everyone is debating whether they were scammed when they bought the petrol they are using to put the fire out.

Anyway, I’ve not encountered an indy dev or AAA worker who didn’t have strong negative opinions about NFTs.

Colin Anderson (Denki)

Here’s the thing – I know a LOT about cryptocurrencies, and I know a LOT about videogames, and yet I don’t have a strong opinion on this. I completely understand the potential of digital collectibles – after all, that’s precisely what bitcoin is – and yet I’m not entirely sure what problem NFTs solve in videogames at a fundamental level. I understand what they promise at a psychological level and an economic level, but… at a fundamental design and engineering level? I’m still not sure.

That’s because I see cryptocurrencies a bit like I see fracking or nuclear energy – they’re all perfectly fine in theory but they’re completely dependent upon the ultimate quality of design and engineering used to construct them for their effectiveness. If the design or engineering is compromised in the slightest way then they can prove ineffective at best or dangerous at worst. So far, the only cryptocurrency that I consider well-enough designed and engineered to deliver true digital scarcity in a robust way is bitcoin. In everything else I just see various shades of compromise that could be exploited by sufficiently incentivised parties if that incentive ever became large enough. That’s not to say these cryptocurrencies have no value, or that they don’t offer genuine utility; they may. It’s just that, to me, they all appear to be compromised in various ways when compared with bitcoin, and that makes me question their ability to deliver their ultimate purpose when it matters most – i.e. in adversity.

So that’s my starting point – NFTs are usually built on Ethereum or other newer chains that I consider to have notable design or engineering flaws. The purpose of cryptocurrency, as I see it, is to secure property rights for individuals independently of any centralised authority. That makes a lot of sense when we’re talking about wanting to store the value of our own labour in a secure way that lets us deploy it when we have need of it, and that’s what bitcoin does. I get that, and see it as a genuine disruptive invention – never before has any individual, anywhere on Earth, with an internet connection had the ability to store their wealth independently of any centralised authority and transfer it as they see fit – that’s an epoch defining moment right there for sure.

But when it comes to videogames, these are already controlled by centralised authorities – that’s what games companies are. So regardless of any independent property rights that may be granted for digital collectables within a game by way of a cryptocurrency, players are still at the ultimate whim of the videogame company themselves. A player may own the best unique sword in a game, and that ownership might be recorded within the transaction record of a particular cryptocurrency, but ultimately they still need to log into the game’s servers to play online with other players.

That requires accounts, terms & conditions, and trust in the centralised authorities that builds and distribute the game. No amount of NFT ownership can circumvent a player being banned by a game’s maker, and at any point they could just as easily inflate the supply of that unique sword the player owns to create another, because they define the rules of the game. So… yeah… I don’t really see the value of NFTs in games at this point because the ‘ownership’ they purport to offer appears somewhat illusionary and could be provided to players by way of centralised databases.

For NFTs to have true value in a game the game itself would need to be open source and development decentralised, so that owners of NFTs could create their own version of the game and deploy their NFT protected property in that new version in the event that the game developer decided to implement rule changes or account bans the player disagreed with. Game development may well move in that direction over time, and I certainly know some developers working on making that a reality, but it’s still in its infancy at the moment. For now I sense that many developers and players are using “NFTs” as a short-hand for ‘ownership of items within a game world’ without really appreciating the technicalities of what that means in practice.

Which is fine – it’s exactly what happened when the web appeared and many people believed that applying web technology to anything automatically created innovation. The reality is much more complex, and most people don’t have the time or the inclination to dig into that, which creates asymmetric markets for a time. One thing that never changes unfortunately is the willingness of opportunistic participants to leverage asymmetric markets for their own benefit whenever and wherever they appear.

So, in summary, I’d say that NFTs may well have a use in videogames but I’ve yet to see it. I’m certainly keeping an open mind about it as an enthusiast of both videogames and bitcoin; that said, I see little (if any) truly meaningful application of them to videogames happening at this point. Almost all the innovation I see proclaimed around NFTs in videogames right now could be replicated just as effectively and much more efficiently by implementing standard, centralised databases within the core game designs. If anyone knows otherwise, then I’d love to hear about it.

Jason Wagner (Ping Creates)

I’ve been reading with interest the exceptional growth of NFTs used within the creative industries and specifically, “ownership” of digital artwork. There are two distinct camps, one that sees it as a way to prove ownership, validity and scarcity in unique digital assets and the other that are copy-pasting the digital artwork and are known as the right-click savers. There appears to be no middle ground here, with a furore of opinion that it’s the future of a virtual world for art or a scam perpetrated by the tech-giants the world over. It’s even got to the point where Anil Dash, one of the inventors of non-fungible tokens has written an article titled NFTs Weren’t Supposed to End Like This and that the aspiration to create something that would protect artists has been taken over by tech-world opportunism.

Within the gaming industry you could see blockchain and NFTs as a possible route for a means of remuneration for a games creators; building in at a core level the ability to unlock new rewards and mechanics as shown in Age of Rust, within the engine itself. However, a recent update to its terms of sale from Valve has seen it ban blockchain games and NFTs on Steam. In a counter-move, Epic decided it’s open to blockchain based games on its store.

In my opinion, NFTs are unregulated and currently high risk investments. I’ve likened it to ownership of brand perfumes, where you buy the cheaper copy from Lidl but some people choose to pay premium for the original as a way to flex and show off their digital net worth. But when any digital item is a series of matching one and zeroes, the only unique identifier is the token at the end of “Non-fungible”, that’s what people are buying. The upshot is that what people think they own, may not actually be the case.

The fundamental issue for me though is that it’s effectively a form of gambling. The uproar from parents and carers when young people purchased in App will be insignificant compared to an purchases of an in-game NFT. Considering its current state, when the system itself is disavowed by its creator and artists are spending 100s of dollars just to mint their creation, it seems, in my mind, only one group is winning here, the people behind the NFT marketplaces. And within gaming, how can that make for a fair playing field.

Jamie Wood (Independent Game Developer)

For me, seeing that people are making blockchain more energy efficient through Proof of Stake etc. doesn’t solve the other issues around NFTs like the blurry line between selling digital art and promoting a very risky investment market. Of course if it is going to exist it is better for it to have a smaller impact on the climate but I don’t want to get involved myself. There are lots of parallels between the gun skins market in CS:GO and NFTs and I hope people would agree that is not a good thing.

Theo Priestley (Carbon Based Lifeforms)

The fact that a simple farming game using crypto allowed people in the Philippines to survive a pandemic when they had no source of income due to lockdown shows that there is a real world value attached to gameplay now.

The current crop of traditional video game studios have an inherently negative bias towards this because they’re limited to viewing it as another microtransaction, or associated with meme tokens, JPEGs and scams. Not every game fits the model – but imagine giving guilds in World of Warcraft the means to earn real money from the goods and assets they create?

There has to be a real, functioning player economy to begin with that allows value creation for this to work beyond collectable trading card mechanics.

I think they’d also be surprised that Hilmar of CCP Games has personally invested over $10m into a blockchain and bitcoin wallet startup, meaning that eventually EVE Online, that “little” MMO that’s been running for 18 years is going to turn to play-to-earn one day soon!

These CEO’s are essentially gatekeepers mate, the old guard who won’t be in their jobs for very long once this takes off because the shareholders will be questioning their lack of strategic vision.

Ronan Sandford (Etherplay)

I think NFT can be an interesting mechanism to bring a different relationship between players and developers than we are accustomed to with traditional games. We can see that with project like Loot and Dopewars where games are being build from the ground up by the community (who do not necessarily even own the NFTs) with the only starting point being the NFTs themselves catching up imagination. This is quite unique though, but exemplify a possibility not thinkable before.

I would also add that not everything is bright in the NFT space, it almost goes without saying and I am thus also wary of its potential abuse. For that reason, in the context of games, I value functional NFT more than purely aesthetic one. And proper functional NFTs require the  game to run on the blockchain  itself (which limit what can be done) and this is exactly what we are building with Conquest. Most blockchain games today do not follow that rule and are basically traditional game with NFT added on top. This is not necessarly without merit though as the relation between developers and players is different than traditional games.

As for NFT in general I always recommend to read this blog by Simon de la Rouviere which not only explore innovative ideas but gives an overview of what is possible.

Join The Discussion

If you have an opinion on the role of NFTs, or if you want to be a part of the Games Gurus column in the future, let us know.

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