NFT-based video games or NFT games represent a genre of video games built on the concept of tokenization and digital asset creation, and powered using blockchain technology. They are also referred to as play-to-earn video games because some titles use tokenized digital assets that could be sold and traded for cryptocurrencies, which in turn, can be converted into fiat money.
Underlying Technology: The Basics of Blockchain and NFT
To understand further what NFT-based video games are and how they work, as well as how they enable players to earn money, it is important to understand first the following concepts: blockchain technology, distributed ledger, and non-fungible tokens.
A blockchain is a type of database that stores data in blocks that are then chained together. More specifically, it is a digital distributed ledger of transactions. Each block contains data about a particular transaction and links with another black from a previous transaction.
The ledger is maintained and managed by multiple participants via a network of peer-to-peer computer systems, thereby decentralizing the records of transactions and enabling multiple benefits or advantages and applications.
Cryptocurrencies are one of the more mature applications of blockchain technology. However, the technology has also become a solution for tokenizing digital contents and turning them into digital assets or non-fungible tokens or NFTs.
A non-fungible token is primarily a unit of data stored on a digital ledger that can be added to a digital file to certify its uniqueness. It also represents a class of digital assets that have been certified to be unique and, therefore, not interchangeable.
Turning a digital file or digital content into a digital asset via NFT minting allows it to be sold or traded for money or other assets with similar value. An NFT asset is not only authenticated but also has proof of transferable ownership.
In NFT games, in-game assets such as playable characters and items are fundamentally turned into digital assets using the basic principles of blockchain and distributed ledger technologies. Hence, NFT games are also called blockchain games.
Revolutionizing Video Gaming: Defining NFT Games Further
Traditional video games usually involve players spending a considerable amount of time to earn points, leveling up a playable character, and/or acquiring and using items to complete a particular task of reach a particular end goal.
However, the problem with this model is that the points and other in-game assets they have accumulated have no real value. Note that a lot of game titles require players to spend money while most developers prohibit the selling of in-game assets and accounts.
Different play-to-earn models have been explored and applied. Competitive video games allow some players to earn via participation in sponsored tournaments. However, this model is not a straightforward way to reward players.
Participation in e-sports is also not readily accessible. Some players have monetized video gaming by creating video contents and branding themselves as gamers. But this is also an indirect model for earning from video gaming.
NFT gaming or blockchain gaming has been introduced as another play-to-earn model that works by tokenizing in-game assets and other in-game contents and digital properties. The tokenization process creates not only authenticity and ownership but also scarcity.
Integrating blockchain and NFT in video gaming fundamentally means utilizing the advantages of digital asset creation through NFT minting. The relevant advantage of NFT centers on licensing of digital creations to enable authenticity, ownership, and transferability.
NFT-based games are revolutionary because it enables the creation of a digital environment wherein players can acquire in-game assets that can be collected, sold, or traded in a manner that is similar to acquiring artworks, memorabilia, and limited edition merchandises
Emerging Play-to-Earn Revolution: Earning From NFT Games
Theoretically, in certain situations, especially if there is a demand, scarcity and supply limitation raise the value of a particular asset. NFT in-game assets can be valuable, especially if they are rare or have specific attributes that make them appealing.
A player can essentially earn from a video game by collecting in-game assets and selling them in a marketplace. What is more interesting to note is that NFT or blockchain gaming opens the possibilities for cross-title transferability of in-game assets.
For example, items such as weapons and gears can be collected and used in different NFT-based video games, thereby raising further the value of these in-game assets due to their expanded utility. Traditional gaming confines in-game assets within a single game title.
The assets essentially exist outside the game. There is real ownership. The ownership of these assets and their expanded usability allow the creation of a digital economy in which in-game assets are not only collected but also sold or traded.
Note that these assets can be sold or traded in an external marketplace that exists outside the game. Furthermore, several NFT-based video games such as Axie Infinity have enabled players to convert these assets into cryptocurrencies.
The earning possibilities from NFT games do not rest alone in collecting and selling in-game assets. For example, Axie Infinity rewards players, upon completion of tasks, with Ethereum-based tokens such as SLPs and AXSs that can be converted into Ether, the native cryptocurrency of the Ethereum blockchain.
Other game titles have utilized a combination of play-to-win and play-to-warn models in which a player uses real fiat money or cryptocurrency to purchase in-game assets that can be used to improve chances of acquiring more in-game assets.
Conclusion: Blockchain Technology and NFT Gaming
Based on the discussions above, the working principle behind NFT gaming or blockchain gaming is simple: using blockchain as a distributed ledger technology to converted in-game assets into NFT assets. This means ascribing these assets with the following attributes: authenticity, uniqueness, ownership, and transferability.
Most play-to-win video games have an internal digital economy. The same is true for blockchain games. However, their digital economies are expandable to other in-game economies, thus creating a multiverse, as well as other digital and physical economies. Blockchain technology provides a solution for the commodification not only of game titles but also of in-game assets.
