Once upon a time, digital tokens weren’t a thing. First, came the Bitcoin in 2013. Then, one year later, came “Quantum,” the first non-fungible token in history. But everything changed in 2015, when Ethereum and its blockchain launched. The platform finally allowed developers to create their own tokens with standards that also applied to smart contracts. Two years later, famous projects like CryptoPunks launched and it generated $250 million in revenue in 2020. One year later, the first token “Quantum” sold at $1,4 million. So, the relationship between NFT and gaming isn’t new.
But it has been changing in the past months, especially since gaming platforms have introduced digital lands with freedom for both creators and players. However, it’s not all rosy. This particular story first started when developers and gamers discovered the potential of the blockchain, safe and decentralized. Then, digital tokens made their debut. And not everyone is happy about it.
NFT and gaming: a volatile hype?
Game developers are questioning the validity of NFT and gaming and the motivations behind the users’ hype. To them, tokens are only a way to profit, a scheme that is destined to collapse. Plus, people in the industry believe the promise of the metaverse won’t actually deliver and it’s another hype, just like tokens. Despite these negative views, digital tokens have entered the gaming industry, especially towards the end of 2021.
Game developers have a lot to say about NFTs, not all positive. If the Game Developers Conference says so in its research, then it must be true. According to the survey, developers are skeptical at best. In fact, 70% of them say their studios aren’t interested in NFTs and only 28% are somewhat interested in the tokens. Only 1% of them are already developing tokens or using cryptocurrency for their payments. So, the adjective skeptical is a compliment.
The industry’s website DappRadar reports that, only in one day in 2022, decentralized app games with NFTs generated $35 million in volume from 867,000 users. The future and more spread integration of digital tokens can reach over 3 billion gamers in the entire world. So, players love the idea of NFT and gaming, but giants of the industry don’t.
“We aren’t touching NFTs as the whole field is currently tangled up with an intractable mix of scams, interesting decentralized tech foundations, and scams,” said Epic Games CEO Tim Sweeney in tweet. But the company is open to “games that support cryptocurrency or blockchain-based assets.”
Developers and representatives of the industry see a difference between NFTs in gaming and blockchain technology in general. What are these differences?
Blockchain vs NFT game
Blockchain offers players and companies the opportunity to implement cryptocurrency in their platform. Transactions are safe and owners of coins such as Bitcoin or Ethereum can enjoy new games. But NFTs are different and, to many, they feel speculative.
“There’s a near-term kind of hysteria around NFTs, which I think is as much driven by speculation as real end-user benefit,” said Xbox chief Phil Spencer to Protocol, “in the long run, I think there is a real benefit to players to having open standards for digital entitlements, so that I don’t have to buy the same content multiple times on different devices.”
However, end-users seem to enjoy NFTs in gaming. New NFT gaming projects are taking off, with the support of both investors and crypto players. One example of this phenomenon is the platform Balthazar. It proposes the innovative idea of NFT game, which is a game built on the blockchain. Users earn cryptocurrency through gameplay mechanics. Recently, Balthazar raised $3 million during its first token sale. Plus, it also opened a private sale with the goal of raising $8 million by February 2022.
In 2021, NFT gaming platforms and startups raised over $4 in funding. These projects allow gamers to water NFT plants, build virtual lands, and own digital token cats. Without a doubt, they are a threat to “traditional” companies like Epic Games. For example, the NFT game platform Mythical Games, where users can purchase avatars with cryptocurrency and they don’t need to set up an e-wallet. The company believes ownership of digital assets is the future of the whole industry.
The investors of Mythical Games seem to believe the same, since the company raised $75 million in 2021 for its expansion in the crypto world. To keep the momentum going, this startup organizes digital events, like the Blankos block party gameplay. To these startups, NFT games aren’t a hype. They are their future.
The future of NFT gaming
Indeed, this is a frenemy relationship. Tokens offer new opportunities, especially to crypto startups who can capitalize on the innovation. But traditional gaming companies and developers are skeptical. Mainly because crypto poses a threat. The ownership model of NFTs allows players to sell their characters for profit, making the end-user a creator and not simply a player. It’s called a p”play-to-earn” business model and traditional brands aren’t ready for it. But, with crypto, users are at the center and they don’t need any intermediaries.
“It gave us a stone to use against the Goliaths,” said Jeff Zirlin, cofounder of Sky Mavis,”when you’re a startup, you’re always trying to figure out what is your secret sauce that you can use to create a niche for yourself in this market? For us, that was really this idea of community ownership, empowering gamers using this technology to create a new dynamic between gamers and developers.”
Needless to say, players love participating. The community drives the success of NFT gaming. With such a push behind these platforms, it seems like mainstream gaming companies will either catch up or stay behind and 2022 might be the year that gives us answers.