We understand what blockchain is, where NFTs are sold, and how much you can earn on them by playing your favorite games. To understand what NFT is, what games have to do with it, how to make money on them, and why it’s better not to do this, you must first understand what the blockchain is, on the basis of which these tokens work, and also what cryptocurrencies have to do with it.
Blockchain without technical details
Blockchain is not directly related to cryptocurrencies. For the first time, this technology was used as one of the subsystems in the bitcoin payment system as a database used to store information about all transactions between users (settlements between buyers and sellers). Blockchain is a distributed database, that is, synchronized records of all transactions in the payment system are stored not on one central server, but on different computers.
To avoid inconsistencies that would allow attackers to spend the same bitcoin twice, transaction information is collected in blocks. Conflicting and invalid transactions are not allowed in the block. Each formed block refers to the previous one, up to the primary one, which has no parent block. Thus, a continuous chain of blocks is formed (in fact, “blockchain” is translated from English as such).
The transaction register is public, its copies are verified and stored by all network participants. Therefore, the origin of any currency can be traced using the appropriate software. However, only transactions are public. The owners of the funds between which the transfer is made remain anonymous (with some reservations).
An attempt to change any block and build a new branch of transactions on this block is stopped by the system. Until at least half of the computing power of the network is in the same hands, the likelihood of a successful attack to change the contents of records is very small.
The calculations required to form blocks and add them to the blockchain are handled by miners. Mining (extraction) of cryptocurrency, from the point of view of the functioning of the payment system, is a secondary task, and the main one is the formation of blockchain blocks. For this work, the miners are rewarded and take a commission. The more computing power, the more generated blocks and, accordingly, more earnings.
A database built on the principle of blockchain is suitable not only for storing cryptocurrency transactions. Blockchains allow relatively secure storage of any digital information about the transfer of something from one network user to another. For example, on the basis of the Ethereum blockchain (ether, Ethereum), not only the cryptocurrency of the same name works, but other cryptocurrencies, third-party services, as well as NFT. Including those NFTs that are used in games.
NFT without technical details
Tokens are a digital unit of accounting for resources. Moreover, resources can be both materials, physically existing in the real world, and intangible. Tokens backed by material resources are the digital equivalent of any goods, objects, or equivalent in traditional currencies. That is, there are tokens equivalent to 1 US dollar, 1 gram of gold, or 1 token equivalent to a specific existing work of art or real estate. Intangible resources include cryptocurrency, intellectual property, copyright licenses, digital images.
Bitcoin is a token equivalent to one coin (coin), its value in the cryptocurrency payment system is unchanged, and the value of other tokens is expressed in the coins of the payment system, in the blockchain of which they are registered.
In addition, tokens are divided into fungible and non-fungible (Non-Fungible Tokens, NFT). For the former, the uniqueness of the token is not a necessary condition. When purchasing a token for a ton of potatoes, it does not matter to you which tubers will be shipped to you, if the delivery complies with the terms of the contract. As well as acquiring bitcoin, you don’t care which coin you get out of all the existing ones.
With NFTs, the situation is different. The uniqueness of the token is necessary because it refers to the specific object with which it is provided. By purchasing an NFT for a work of art, you acquire the right to own not an abstract work of art, but a specific canvas or its digital copy of the author you need, or you acquire the copyright for a specific song.
We emphasize once again that the unique token (NFT) itself is an entry in the registry, and not directly a resource, i.e. an image, a game item, a musical composition. This is a digital container containing either a link to the resource on which the purchased object is stored, its serial number, its description, or any other unique identifier. At the same time, an object can exist in a single copy, as well as exist in many copies, the uniqueness of which is ensured only by the serial number, or not exist at all.
In itself, the possession of NFTs, if their use is not prescribed by law, does not guarantee the buyer any rights. The set of rights that a token gives depends on its author and agreement with him (preferably in the form of a traditional “paper” agreement), an agreement with an NFT exchange, as well as the desire of other users to recognize them.
In any case, the NFT on your crypto wallet does not guarantee that the object it refers to exists at the moment, because the service that ensures its existence may already be dead by this time, leaving you with a token and a list of previous owners in the blockchain. It also does not guarantee that the author who created the NFT token is the actual owner of the rights to the object, the equivalent of which is the token. In general, an NFT token does not guarantee a lot of things. Many artists are now howling because scammers are NFT-tagging their work and selling it for fabulous prices.
Judge for yourself how unique the objects that are traded in the form of NFTs are. In early 2021, Injective Protocol bought Banksy’s original work for $95,000 and burned it alive. Before that, the company created a digital copy of the painting and an NFT, which was then sold at auction. In this way, the Injective Protocol turned a physically existing work into a “digital asset”. The NFT buyer is now the proud owner of a unique digital copy of the Morons painting created by Injective Protocol. What does not prevent other users, From using the search engine, to enjoying the work of a famous artist in digital format? Alas, it will no longer be possible to see the original in the form in which the artist created it.
Operations for buying and selling NFTs are carried out on crypto exchanges. To buy or sell NFTs, you just need to register your own crypto wallet on one of the services, if this is allowed by the legislation of your country.
On the hype NFT and blockchain in games
If we consider blockchain and NFT in relation to games only, then:
- Blockchain is a digital register of transactions for the sale and purchase of game items and / or game currency for cryptocurrency.
- NTF is a token, a digital certificate that certifies the purchase of a game item with a specific serial number or other identifier.
- Transactions for the purchase or sale of in-game items are carried out on trading floors using cryptocurrency.
Blockchain technology and NFT do not bring anything fundamentally new to games, but there are certain nuances.
In-game items are not traded on a closed market, as is done with Valve games on Steam, but on an open market. Any network user, regardless of whether this user has a game or not, can purchase NFT. The sale itself can be framed as an auction or a direct sale.
Purchase and sale transactions are carried out in cryptocurrency on the blockchain of a specific platform. At the moment, the most common NFT platform is Ethereum. But it’s not the only platform. Ubisoft Quartz, for example, uses Tezos.
You will have to convert INR of dollars into the cryptocurrency you need to purchase NFT through exchanges, paying the appropriate commissions. At the same time, the purchase itself does not go through instantly – despite the fact that the number of miners is constantly growing, the creation of transaction blocks takes some time. The fewer fees you are willing to give to the miners, the longer the transaction will take.
It is the possibility of free sale of in-game items on the free market, as well as the ability to withdraw the proceeds to a bank card, that allows you to earn money in NFT games. This, in turn, creates a stir around NFT, because, in the closed Steam market, where sales and purchase transactions do not go beyond the platform, there is no such option officially.
Accordingly, the opportunity to “earn” replaces the main motive to “play” for greed. Therefore, blockchain games are increasingly reminiscent of financial pyramids. Games such as MIR4 do not attract players, but speculators expect to quickly resell an asset to someone who also expects to resell it to the next “fool”.
The gameplay in such projects is emasculated. Speculators will not savor the pleasure of well-thought-out game mechanics, gasp at staged videos and worry about plot twists. The gameplay is replaced by an automated grind. Users use cheats and bots. The end justifies the means. The main thing is to make money.
At the start, prices for game resources are usually high – the rush influx of “players” ensures high demand. There are not enough resources at the initial level. Over time, the situation levels off, and prices begin to fall rapidly. The end customer of in-game items in classic games has always been a passionate player. But there are practically no such things in blockchain games. In blockchain games, the last buyer is a sucker (the same big fool).
Unlucky “merchants” rushing into blockchain projects should be reminded that during the gold rush, it’s not the rare lucky ones who find gold dust in the tray that earn the really big money, but the sellers of shovels and land plots. In this case, the developers of such “games” and platform holders.
The excitement around NFT is very high and also attracts scammers. Phishing marketplaces, fake NFTs, and fraudulent sales to inattentive or inexperienced users in cryptocurrencies are used.
Attitude of gaming companies
The information background around NFTs and blockchain games has created a negative and nervous attitude towards such projects among the majority of players. The technology behind them is neither fraudulent nor illegal in and of itself. However, since the legal regulation of this zone has not yet been settled, blockchain games are attracted by the possibilities of dubious businessmen from the gaming industry.
At the same time, all the functions that it implements are available to developers without using it. A prime example of this is Valve games. It is unlikely that you will get rich on them, but you will definitely enjoy it.
The valve at this stage of technology development decided to ban blockchain games on Steam. And it’s not just about taking care of the players. The issuer of tokens in games is the owner of the game and not the platform on which the game is distributed. Accordingly, all commissions pass by Steam. Tim Sweeney, the head of Epic Games, which owns the Epic Games Store, in contrast, welcomed the introduction of such technologies into games. The company will not lose anything from this, since commissions from microtransactions in games in the Epic Games Store are already passing by Epic Games.
One gets the feeling that the leaders of gaming companies start talking about NFT when their games, their projects fail. It is doubtful that Ubisoft when announcing the Quartz NTF platform, or GCS Game World, announcing the desire to add NFT to STALKER 2, did not know how tokens are perceived by players. Unfortunately, the desire to ride the hype and ride it to a fabulous metaverse where money flows like a river turned out to be stronger.
NFT does not guarantee the original characteristics of the acquired object, its performance in-game services, and the existence of the games themselves. The latter, losing players, lose their attractiveness for publishers as well. Do you shoot a lot of frags from a machine gun with beautiful skin on disconnected servers? How to use the acquired virtual land plot in the game under development if the developers have not been able to release it? That’s it.
The blockchain and NFT technologies themselves are interesting and, if used correctly, can theoretically work well, including in games. Unfortunately, the current situation in the gaming market dictates other ways of using these tools. The current blockchain games are more like pyramid schemes. Chasing the ether, gamers run the risk of being left without money, turning into stupid biological bots that earn money not for themselves, but for the creators of such pyramids. Such games do not provide pleasure.
Added to this is the fact that the blockchain games market is not regulated by law in any way. Nobody guarantees you anything. Therefore, for now, players should avoid all blockchain games. There is a great chance to run into scammers who, having received millions, will dissolve into the night to start a new pyramid.