As you can see from the title of this article, it's not the type of subject that you would find on your typical video game blog, because this article isn't how to play a new game and nor is it an expose on the graphics or graphic user interface. This article is about money and the innovative way that special types of tokens call non-fungible tokens enable video game players to own the game accessories they work so hard to earn in the game, and how these non-fungible tokens are a vital part of the newly developing micro-economy now available to video game players to profit from the time and effort they put into playing video games, which was never available before.
Fungible and Non-fungible tokens
First in order to understand non-fungible tokens it's good to understand what are fungible tokens. Bitcoin, Hive or any other cryptocurrency are technically known as fungible tokens. That word Fungible means that each Bitcoin is worth the same as any other and they are interchangeable, just like you and I can exchange dollars we have in our wallets, because they are interchangeable or the same. Non-fungible Tokens or NFT’s are different, in that each is created to be unique, to represent something unique. They can describe an entire object or a specific piece. For example an NFT could represent your entire body or a piece of it, like your right arm or left leg. The NFT for your arm would differ from the one for your leg and they would not be interchangeable, just like your arm and your leg are not interchangeable. Nonfungible is a long word and not easy to say, so a popular abbreviation for it has developed and it is NFTs.
Video game assets can be changed to non-fungible tokens or NFTs
In your normal video game you win items. These can be clothing, armor, swords, bows, arrows, guns, knives and various other things, which are valuable in the game. But these things are software constructs, which don't exist outside the game and frequently can't be transferred from your old character to your new character. They certainly can't be transferred to another player the majority of the time and although they may represent hours of game play to earn these in game items you don't own them and can't sell them. However, if those items and the game they are in were on a blockchain, those items can be represented digitally as tokens and you could own them. Once you have ownership, you can buy and sell these unique in game items. But some in game items are so common that they have no value, but others are rare and are valuable to other players to use in the game or as collectibles. For these items it is perfect to represent them as non-fungible tokens or NFTs.
Tokenization
Tokenization is the process of converting rights of an asset into a token that can be subdivided, traded and stored on a blockchain system. Once the asset has been tokenized or more precisely, the rights of ownership of that asset tokenized, the asset ownership rights can be bought or sold.
New Micro-economy
This means that video games based on a blockchain can tokenize items from the game like clothing, armor, weapons or other items which have utility or value. Tokenizing these game items means the player becomes the owner of the item and can transfer it to a wallet or inventory. Then the player can use it on other characters or trade it to other players for other items or for a in-game currency. This allows the player to accumulate items of value while playing and sell them for in-game currency at the games end. If the currency has value outside the game players could use it to buy real things like food, clothing or pay bills like their rent. This new economy is made possible by the tokenization of game items into non-fungible tokens and the in-game currency.
As you may know, non-fungible Tokens, which by definition are non-interchangeable and unique, are used in the very popular decentralized gaming application called Splinterlands. This is a playing card game similar to the Pokémon Cards, but different in that Splinterlands are digital representations, which are unique. These cards are represented on the blockchain by a non-fungible Token. The non-fungible Token contains all the information about your card and the Token represents your card. This means your card or it’s Token can be traded, bought or sold. The fact it's now a non-fungible establishes that it is a unique item and establishes ownership. I think it’s valuable to understand how a tool which has monetized this game can monetize other things.
In game Currency
Currently the non-fungible tokens which are representing in game items can be traded, bought or sold inside the game for an in-game currency. As you can see the in game currency needs to be valuable enough to be sold outside the game for fiat currency or it has to be valuable enough to be traded directly for items in the outside world like food or clothing. We will talk about in-game currencies in our next article on Blockchain Games.
Title: Blockchain Gaming: Non-fungible tokens and video game monetization
Tags: #blockchain-games #nonfungible-tokens #tokenization