First, you need some simple background information.
Online games today use databases to store the items you play with. For example, if you purchase an outfit in Fortnite, the publisher records that you’ve purchased that item in their database. Whenever you login, the database is asked “Which items does this player own”, and then it lists out all the dope swag you’ve purchased.
This form of record keeping is standard amongst games (and most websites) today.
The issue with this model is its centralization - whoever owns the database has unrestricted control of the information (items) stored inside. This in itself isn’t an evil thing, but as we see more games building business models around in-app purchases such as cosmetics, we should begin to question if companies should have total control over those items. For example, peer to peer and real world trade are typically banned in games. When was the last time you bought an in-game item off another player rather than the publisher? When was the last time you resold items you purchased in-game to someone else? The answer is likely always never (unless you broke the games terms of service, in which case the publisher will ban your account and permanently take away the items should they find out).
So now that that’s out of the way, what benefits do NFTs bring to games? I’m not going to go into everything, as that will be saved for a later (longer) post, but with NFTs you can essentially:
- Buy, sell, and otherwise trade them with other people with it being impossible for the game publisher to restrict you from doing so. This enables players to do things like earn items through effort and sell them for real money, essentially profiting from playing a game. Additionally, if you ever get sick of a game, your time and purchases aren’t sunk costs, as you can sell those items.
- You can see the entire history of ownership. Remember, each NFT is unique and one of a kind. So, if a famous streamer won a tournament with a specific NFT, you’ll be able to actually buy that item and prove who’s owned it. Programmers can also create NFTs which “evolve”, for example, if you use a card to win a world tournament the NFT might evolve to have a 1st place badge on it.
- Items can be interoperable across different games. Because each NFT can be easily and transparently viewed on the blockchain, various games can all make use of each others items. We partnered with CryptoKitties, another game pioneering this technology, to showcase this exact thing.
- Audit-ability & provable scarcity. The code which is used to create NFTs also lives on the Ethereum blockchain, which means anyone in the world can verify that items are created in a fair and safe manner. Additionally, anyone can prove how scarce an item is (how many versions exist).
If you’re just learning about NFTs, we encourage you to join our Discord and chat with our community about the power of this tech.