Non-fungible tokens or NFTs, as they are commonly known or considered to be the next big thing in the crypto world. As much as 2017 was the year of initial coin offerings and 2020 was the year of decentralized applications, 2021 is considered the year of NFTs.
To understand what these NFTs are, you will need to understand the concept of fungibility.
What is Fungibility?
Fungibility is the possibility of an asset being exchanged for another similar asset without any change in value. The best example of a fungible asset is the dollar. You can exchange a $10 note for any other $10 note without any change in value. Although those two notes might not be the same, there is no change in value.
Mainstream crypto coins like bitcoin are also considered fungible as they can be exchanged and broken down into smaller constituents and sold in parts.
Non-fungible tokens, on the other hand, are unique and cannot be broken down into smaller parts. They have to be either sold in full or not sold at all!
The possibilities with NFTs
Non-fungible tokens, with their uniqueness and the versatility of blockchain technology that gives them support, present a wide variety of applications. It has been used by celebrities like Lindsay Lohan, musicians, and digital art creators. However, one of the most prominent applications of the NFT is in the world of video games.
A Brief History of Blockchain and Video Games
Video games have been existing for a long time even before the Super Mario Brothers became a global hit. However, with the introduction of the video game called CryptoKitties in 2017, the gaming world changed. This was a game where players could buy, collect, and sell virtual kitties. Every kitty that was created in the game was unique. There was a sense of ownership, and the uniqueness of the created kitty increased the value of the digital asset. This is, perhaps, one of the first and most popular instances of NFTs being used. It is to be noted that the game used the ERC-721 standard for developing its non-fungible tokens.
Surprisingly, the game creator netted a profit of more than $40 million from CryptoKitties. This prompted the same game company to collaborate with the NBA and they created a new game called NBA Top Shot. It was a game where basketball fans can buy and sell memorable video clips called "Moments" from the last season's games. They are, in essence, blockchain NFTs that signify the ownership of that particular video clip. Although the video clip could have been shared on multiple platforms, the right to ownership of that particular video clip lies with the person who purchased the NFT. It has been estimated that the total value of all the transactions on this game reached over $370 million.
The Applications of NFTs in Gaming
There are a lot of ways in which NFTs can manifest themselves in the blockchain gaming world.
There are certain NFTs called branded NFTs that are digital representatives of traditional collectibles. The collectibles may utilize established brands like sports franchises. Even baseball trading cards fall into this category. The demand of the people is what creates interest in these NFTs over time, especially in the NFT markets.
There are certain NFTs called the game-relevant NFTs that have their value defined only by the demand. The demand is generated when a lot of games incorporate the NFT. In-game items and skins fall into this category. It is to be noted that the players or the owners cannot directly impact the value of the NFT but is generated only through demand.
Even the world of gaming has virtual memorabilia. There are NFTs that represent such collectibles. The ability to stand as proof-of-authenticity makes NFTs stand taller. . Therefore, the possibility of counterfeits existing is almost 0. The generation of value for these NFTs requires a thorough knowledge of the in-game economy and end game design.
Some NFTs are driven by story. While they are quite congruent with game-relevant NFTs, the players and owners have the capacity to change the value of these tokens quite actively. A good example of this NFT is how you can sell heroes in the form of NFTs in World of Warcraft. This will help you max out the level faster than normal players.
What Makes NFTs a Perfect Candidate for Gaming?
NFTs exist on the blockchain and that brings a lot of benefits to the gaming world. The world of NFTs is truly decentralized because unlike the traditional games where the game developer grants access to a virtual asset in the gaming world, the transaction with NFTs happens between players.
Blockchain technology makes it possible for multiple games to flawlessly communicate with each other if they are built in a single blockchain. This presents a massive advantage over the traditional gaming ecosystem where one asset purchased for a particular game is useful only for that game.
The value of an NFT is proportional to the magnitude of scarcity. It is easy to prove the scarcity in the blockchain world because of the culmination of transparency, security, and immutability in a single distributed public ledger.
Above everything, when you purchase something in the gaming world, it is quite possible that if the developer decides to pull the plug for that game, all the virtual assets you have purchased go down the drain without benefiting anyone. However, in the blockchain world, because of the interoperability, ownership, and immutability, you can use that asset either in a different game on the same blockchain or even sell that asset to another user, making it possible to encash something that you bought with your money.
Conclusion
The utility of NFTs in the gaming world has been proved beyond question. It is to be remembered that every crypto craze has skyrocketed but has not fallen. In the same way, NFTs will continue to be prominent for quite some time, and now is a perfect time to invest in NFT development.
If you are one of those crypto entrepreneurs who would like to step into this world, all you need to do is get in touch with an NFT development company that understands the world of blockchain and gaming. They will take care to understand your business requirements and present you with perfect NFT solutions for your Gaming needs!