After the invention of NFTs, it did not take long for someone to think about using them in a video game. We are promised unique items that we truly own and can use everywhere, trade with other players and even earn money while playing. Well, all of these were already done without NFTs. So, what is the difference?
First, the obligatory “what is NFT” part. It is a cryptocurrency, but instead of every unit being the same as the others and thus having the same value, each unit (token) represents a different thing and may have different monetary value. If you don’t know how cryptocurrency works, there are many articles and videos that can explain that as simply or as thoroughly as you want.
The actual implementation of NFTs is more interesting. The tokens usually represent digital things which are possible to store within the blockchain but usually they are too big to make this feasible. So instead, the standard implementation seems to be a separate database that associates tokens with files, usually in form of links to server where the file is stored. Although there probably are some NFTs that store the link in the blockchain too.
There are few problems with this. For one, there is no single NFT blockchain that everybody uses. There are many different NFT blockchains, anyone can create more and even make tokens that link the same files as tokens in a different blockchain. This has a simple solution, the oldest blockchain is probably the right one, but it requires some laws and taking it to court to determine who has the ownership and who does not.
Then there is the problem of links going bad. Sure, as long as the blockchain exists and you have access to your wallet, you can prove that you own a token and thus the file associated with it. But servers get shut down, domains get bought and there may be no file linked anymore or the file gets changed. People will of course not like that their NFT of Mona Lisa turned to an NFT of Mona Lisa’s Fingernail, but unless there are laws regulating this, they can’t legally do anything about it.
I think that the only way how all of this can work, is if a government is regulating it, so that people can sue and persecute those who try to scam them. And that lessens a bit the benefits of having it decentralized, compared to cryptocurrency which can work without central oversight.
Back to video games though. As I said, everything I saw people say NFT games can do so far, was done in the past without any blockchains. We can already buy or get items in games like Counter-Strike Global Offensive or Team Fortress 2 which can be traded with other players for real money. You can also grind gold in various MMO games to purchase items that grant X months of membership which other players bought for real money and so you earn money for your subscription by playing. There are also games from single publisher where earning something in one game will give you something in another or promotional items you get for owning a specific game.
Using NFTs to implement this could bring a benefit of not losing your tokens when the game servers are shut down, but only if you actually have access to the wallet. I can imagine most people just using an account and thus losing access to their tokens anyway. But even if you keep the access, when the game goes under, the value of your tokens goes down too, because the value depends on what games can the token be used with.
You could hope more games get made that will use your tokens for something but why would anybody make them? Only when the company owns the NFT blockchain would it make games to support it, so that it can get a cut out of every transaction. It would then have to allow other companies to charge a fee too, otherwise they would just make their own NFT blockchain for their own games. I don’t think a company is likely to lower its fee, so every other company joining in would mean less money for the player actually selling the token. And even when the NFT blockchain is abandoned by the company that created it, it is unlikely anyone looking to make profit will try to resurrect it, because if they make their own NFTs, people will have to buy new tokens instead of coming in their game already fully equipped. So in most cases your tokens will hold some value only as long as the company that made them is still around.
Finally, there is the whole idea of earning money by playing. Disregarding variations on the Ponzi scheme, the only way how this could work is when a player does actual work in the game. For example, the player could spend time partially controlling monsters that other people kill, so that their AI seems smarter and more unpredictable and the company would pay them for it. Or they could straight up create content for the game. And there is also the good old rare item farming and selling them to players for real money. However, the idea of turning the fun art form, that games are, into another daily job does not sit well with me. Even the esports players are not paid to work in a game, they are payed to play the game.
The whole idea of NFTs is just to create an artificial scarcity. We spent thousands of years fighting scarcity and improving production, so that we can spend our day on other things than just obtaining basic necessities. And here we are, introducing scarcity to the digital world, where anything can be copied for few pennies worth of electricity, so that people pay more money. Regarding the art NFTs, in this article the author asks: if we don’t track ownership of a digital artwork, “what’s the point of spending your money on it?” Maybe so it gets made in the first place? I once paid a friend to make a wallpaper and he uploaded it to his page, so now I and anyone else can use it. Everybody is happy, no NFTs were needed and the money was well spent, in my opinion.